21 Mar The Elephant in the Room
In 1814, Ivan Andreevich Krylov (1769-1844), poet and fabulist, wrote a fable entitled “The Inquisitive Man” which tells of a man who goes to a museum and notices all sorts of tiny things, but fails to notice an elephant. The phrase became proverbial. The first widely disseminated conceptual reference was a story written by Mark Twain in 1882, “The Stolen White Elephant”, which slyly dissects the inept, far-ranging activities of detectives trying to find an elephant that was right on the spot after all. (Wikipedia)
On all matter of tones, it symbolizes the iconic truth that certain critical matters are never discussed or addressed. In the financial universe and from observation it becomes a herd of elephants.
As a credit advisor, we must focus on educating our agribusiness and commercial clients on the downside or funding risk inherent within their borrowing structures to ensure we can implement loan configurations or financial strategies to assist in mitigating these risks. Too often financial grenades that are launched onto balance sheets could have been avoided or commercially resolved prior to the collateral damage being invoked if this basic level of understanding had been noted and responded to (refer to a previous article Left of Bank).
The trappings and pitfalls are generally buried deep within the Terms and Conditions of loans, but there are more intricate layers beyond the T&C’s that need to noted.
It can be behaviorally challenging to have these discussions with your bank manager as you naturally do not want to give off signals that may misleadingly alert to financial duress. It is the Elephant in the Room. Likewise, it is naturally unnerving for an inexperienced bank manager to drill into these topics in order to avoid throwing a negative vibe into the relationship on the risk of losing the business. So how can you assert these parameters into your working knowledge of running your business to be financially lean and strong?
Give Robinson Sewell Partners a call, and we will be happy to discuss all matters relating to agribusiness and commercial loans to assist you in your educational journey of financial freedom.
Make contact with us so we can begin your journey.