Bank relations
The topic of this thread went from Perez International to Bank relations for reasons unknown.
Everything I've read regarding the global recession indicates that Canada should weather this economic climate better than most G8 countries. I think this is a result of our strong bank regulations, and the Banks own very conservative lending practices.
Banks operate with the same rational that you should - self interest. That is, their only mandate is to preserve and improve the value of the outstanding shares for the benefit of the shareholders. They are able to achieve this end because they manage risk far better than most business people. They are not in the business of gambling with the shareholders capital, and always make certain that they are in the position of a secured creditor. I know that it is impractical to operate with the same degree of fiscal conservatism that the banks do, however, I think most brokers and carriers would do well to learn how to better assess and manage risk. That, coupled with extremely aggressive collection practices, should enable anyone to form what I consider a great bank relationship - I don't borrow from them, they don't borrow from me. If you have to borrow working capital then logically you are going to lose a some control of your operating/management practices to satisfy the lender's conditions. This is how they manage risk. The credit limit I impose on even my best customer, is determined not so much as a result of their credit worthiness, but more so by the limits of my working capital. I will refuse additional work from them if it would exceed my ability to pay all the carriers involved should this customer unexpectedly fail. The banks call this "limiting exposure to risk". In fact, sometimes a customer will pay down the amount of outstanding invoices (before they're due), in order to have us move more of their goods. If I lose their business because of this, then at least my carriers and I can sleep easily, and awake refreshed.
It amazes me that some of this forum's contributors are seemingly unwilling or reticent to immediately take the gloves off when your creditors don't respond to requests for payment when due, or at least provide a commitment to pay by a specific date. If getting serious about collecting amounts that are way past due might cost you the customer, then you (and your bank) are probably better off without them.
