Pharmacy Daily | The Credit Squeeze

For the past two years Australian business has been experiencing global economic unrest. Based on recent events we are now entering a “Credit Squeeze”. Should we be concerned? NO! This is merely the stage in the banking cycle when the Credit Managers rule supreme. Banks like most public companies are guided by shareholder need for high returns and low risk. In times of economic buoyancy Marketing Managers develop products and bring on business. When the economy is not so bright, Credit Managers are told to protect the banks position and view with scepticism clients wishing to swap banks. Financiers suddenly enforce credit guidelines and business people are left with serious cash flow problems. But is the bank at fault asking the client to operate within their limits? Or is the client at fault for not telling the bank they need a bigger facility? To ride out the credit squeeze you need to understand the financial needs of your business. The next is to communicate those needs to your bankers within a business plan, supported by cash flows. If you need funds to expand tell your bank. If you need funds because you are experiencing losses then have a plan to rectify the situation before you speak to your bankers. Two-way communication between financiers and business is the only solution that will actually negate the need for a credit squeeze. Owners understand your business, Financiers understand your borrower and talk, and it’s that simple! This week’s contributor is Paul Rowe, CEO of the Razor Group of Companies - razorbs.com.au

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The above article was sent to subscribers in Pharmacy Daily's issue from 26 Mar 12
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