Friday, 28 October 2011

'Pub Talk'

Banks get a mixed press and I for one have been very disappointed in a number of things I have seen with my clients in recent months. However sometimes the bank is justified in its view. I was once called upon by an SME to advise them because their bank was suddenly taking away their £65k trading overdraft.
The reality was that they had had a £25k overdraft which had been increased after consultation to £65k for a 3 month period to cover the circumstances. That 3 months had expired and an extension had been granted to cover some further crisis and so on. 6 months after the first expiry the bank was saying 'this can't go on, we want to revert to £25k at the end of the month'. Not unreasonable when you examine the case and quite different from what I was told initially.
By producing information, preparing forecasts and approaching the bank properly Bob Shepherd Associates managed to get the £65k retained as their normal overdraft. While I was at it I noticed the company's leasing arrangements for equipment were all over the place and I re-sheduled that lending creating £4k extra cash per month in the business.
I call it 'pub talk' where an ill informed half story gains currency. Banks are wide open to it all the time and often cannot answer without breaking confidentiality.

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