Firing Up Professionals

If bankers and chartered accountants were more pro-active in helping their clients understand some basic business management, there might be less failure.  A commercial banker is the first person to be aware when a business shows the warning signs of heading into financial trouble.  They should see all the signs; the lack of fluctuation in the company's account, frequent excesses of arranged overdraft limit, and actual financial trends bearing no relation to budgets.

When these warning signs appear, bankers should be liaising with their customer's accountant to jointly determine what the trading problems are and a course of action to fix the problems.  Appointing an investigating accountant 18 months after the warning signals is of no practical use to anyone.  By then the company is usually beyond help.

Ask any of the major industrial federations, like the Manufacturers Association, Retailers Association, or Printing Federation, and you'll get the same reply.  They all say, `When any of our members get themselves into difficulty they've usually had little help from their chartered accountant.  We mostly turn to business advisers to help members resolve their trading difficulties.'

Similarly the majority of these business associations advise that while bankers provide a satisfactory service with the financial products they promote, most commercial account managers have neither the skill nor the time to help SMEs view their businesses strategically.

8 points to progress

The Independent Business Foundation has come up with an eight-point plan for bankers and accountants which they believe will make a difference to the survival rate of businesses in New Zealand.  These are:

1)  As soon as a banker sees the warning signs of a customer getting into trouble they should immediately liaise with their customer's chartered accountant.  The three parties then discuss the problem areas and form a plan of action.

2)  Bankers and accountants should know who the competent business advisers are in their area.  These people should have the skills, knowledge and experience to help resolve the customer's trading problems.

3)  Bankers and accountants should encourage their customers to prepare a business plan.  A lot of trading problems could be identified at an earlier stage if the appropriate systems and processes were in place.

4)  As a general rule, bankers should decline to provide finance for those of their potential business start up customers who don't have a business plan.

5)  Bankers and accountants should regularly hold seminars (for which a fee is charged) to help clients understand the critical success factors required to run a profitable business.

6)  Bankers and accountants should learn the art of asking the who, what, why questions and act as devil's advocates to help their business clients be aware of the keys to business success.  As in 2) above, where there's a need identified, they should direct them to people in the business world who have the skills they don't have.

7)  Bankers and accountants should regularly attend seminars or university and polytechnic courses where basic business skills are taught.  All business people want to know more about the process of how to improve profits rather than just learn what the end result was (or what happened when the horse bolted).

8)  To help gain the practical experience they lack, bankers and accountants could spend eight days a year, with, say different clients (two days per client) from different industries.  Over a period of three to four years the knowledge gained from this experience would be immeasurable and help them be more pro-active with their clients.