Do you say yes when the bank says no?

Do You Say Yes When the Bank Says No?

A lot of directors do. And there is nothing wrong with that, on the face of it.

But here is what the bank does before they say anything at all. Credit check. Six months of bank statements. HMRC position. Underwriting. All of that, before they release a single penny. Because when you extend credit to a client, you become their bank. You are lending them money on trust, the same way a bank does. The only difference is, the bank has a personal guarantee behind it. You do not.

I had a client once. I told him until I was blue in the face that none of the credit insurance companies would touch his biggest customer. Not one of them. He told me it was impossible. That it simply could not happen.

The customer went into liquidation. And six months later, my client went out of business too. Taken down by the bad debt. A domino that had been wobbling for months before it finally fell.

I just do not want that client to be you.

In my experience, the warning signs are nearly always there. The problem is most businesses are not in a position to pick them up. The simplest thing you can do, and almost nobody does it, is put every client on ongoing credit monitoring. It costs a few hundred pounds a year. Every client, watched. Any change in their credit position, you know about it before it becomes a problem rather than after.

That is what I want to talk about this week.

Have a great Monday.