p18 columnist jan9V2 6/1/09 14:59 Page 18
ttglive.com
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Chris Lee Barclays Commercial
“It is helpful if the banks
know the shareholders and
consider them dynamic,
capable and trustworthy”
I
n the current economic climate, with If a bank is already close to its customer, the
some companies failing through a lack majority of this work can be kept up to date on
of cash, there has been a lot of talk an ongoing basis.
about maintaining a good relationship If not, a customer can find themselves
with your bank. starting the process from scratch with a bank
Travel is not a debt-led industry like property manager they may not know, at the same time
or manufacturing, and therefore larger travel of year as a mass of other companies.
companies have less of a requirement for In the majority of cases borrowing require-
borrowing. This means many travel companies ments can be reasonably foreseen in advance.
are not used to borrowing and are not familiar It is certainly best to avoid phoning your bank
with what information lending banks require to a day or two before requesting six or seven-
agree loans. So there can be problems if the figure overdraft facilities.
customer approaches the bank at the last To give you a better chance of getting a
minute for facilities. positive and speedy response, it is important
No bank is likely to lend without to meet regularly with your bank manager,
proper financial information and a ensure your management and shareholders are
good knowledge of the business and known to him/her, keep a close eye on your
its directors. cash position, do not incur unnecessary fixed
One strategy to avoid is that costs and bear in mind that banks like to see
practised by some larger businesses, requests supported by cash flow
where the managing directors and chief projections, not just guesswork.
executives completely abdicate the If you need to borrow, be specific
banking relationship to their finance about the purpose the money will
directors. be put to, and what benefits will
While the finance team can normally accrue as a result. If you are
keep the bank happy with performance buying a capital item, ensure
figures, it is the person at the top who is often that it pays for itself over a
the company’s biggest asset and in most reasonable period of time.
companies holds the majority of the shares. Expect to be challenged on
If facilities are suddenly required then it is your figures and assumptions by your
far more helpful if the banks already know the bank, which will use this as an opportunity to
shareholders properly and consider them test your views. Despite the reports regarding
dynamic, capable and trustworthy. the credit crunch, most banks are still open
Banks will need to write a detailed credit for lending business and will want to help
paper: this will include profitability analysis, businesses wherever they can.
cash flow forecasts, trading activities, pricing
models, competitors and, if applicable, security. Chris Lee is head of travel at Barclays Commercial
18 09.01.2009
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