Goats in the Cloud

Every corporate or institution has structured protocols of communication to simulate theoretical order amongst the masses.  They are motivated by providing mutually inclusive layers of experience to capture, report and minimize risk within the system.  The army has a clearly defined chain of command, university fraternities have partitions of social destruction, corporates love having layers of (ineffective) middle management.

Within the cockpit of an aircraft you will have the captain then the first officer.  Communication between the two is structured, orderly and concise.  The result of error is too catastrophic not to be.  If the first officer suddenly announces “why are there goats in the cloud?” the system of observation and communication has obviously broken down as the plane is about to slam into a mountain.


Goats and Banking

With banking and debt management, it is the same.  Who is the first captain overseeing the flight deck and trawling through all of the financial indicators?  In most cases, businesses are flying on autopilot with warning lights flashing rampant.

So I am going to provide a cheat sheet detailing 10 indicators that all may not be as it seems with your banking relationship.

  1. An application for finance extends beyond what would have been commercially practical with continual requests for further information.

  2. The bank takes a very long time to deliver a formal response to a funding request.

  3. The bank now seeks principle and interest payments beyond what may be practical against your projected cash flow.

  4. The bank has formally requested additional covenant reporting against the business financial performance.

  5. The bank has increased its reporting cycle.  Example annual reviews have moved to semi-annual or quarterly reviews.

  6. The bank has asked for budget vs actual performance with explanations around certain variances.

  7. The bank is quite comfortable lifting your rates without face to face correspondence and with lack of concern that you as a client may consider refinancing.

  8. Your file is continually shifted from manager to manager (indicating that you are NOT considered a highly valued client).

  9. Band aid solutions are only provided to more long term funding issues.

  10. Your pricing is out of market.  Regardless if RBA rates are at 1.00% or 10.0%, if you are paying too much for your funds then you are paying too much.

  11. BONUS:  the bank continually takes 2 or more days to respond to your phone calls / emails.

Call Robinson Sewell Partners if any of these symptoms prevail within your arrangements.  As financial surgeons, we will quickly remedy the situation for you.

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