The Australian today reports that Treasury Wines Estate has taken a profit hit due to blockages being experienced at key ports that has slowed down product sales. If this is happening to Treasury then SME’s dependant on exporting will be having as hard a time if not worse. Here are a couple of tips that they might consider to manage their bank communications:
- Come clean early – your bank is your partner and needs to know the headwinds that you face. It’s better that you take the message to them than letting them start thinking about it themselves. Arrange an update meeting with your key bank relationships to give them an update
- Model out the consequences – banks speak first in numbers. If you don’t have the inhouse expertise get your Accountant’s help. The model must consider both P & L consequences and balance sheet consequences, and it must show expected cash and debt performance over the next few months.
- Show the bank the plan – never present a problem without having a suggested solution, preferably not involving the bank needing to fund a cash shortfall. What creditor support are you seeking? How are you managing the freight companies to minimise the impact, how are you managing your customer requirements and expectations to ensure that the impacts are simply delaying sales rather than losing them?
A presentation like this will build bank confidence in your management and even bad news becomes less inflammatory when the bank believes a competent manager is at the helm to steer the business through the challenge.