Where To From Here
Over the past 2 - 3 weeks I have been inundated with people enquiring about whether they should be moving their banking. When asked why, most have quoted a recent television or newspaper report speculating about the welfare of our banks and the impending doom about to descend upon us.
Granted, this is the first time a generation has actually had to deal with a downturn of any magnitude. But fair dinkum, what do they think will happen if everyone suddenly deserts their bank? My advice to most people is to stop reading the newspaper and turn off the evening news. Make their own decisions based on what the successful and educated people around them are doing, not on what some journalist who has no business experience whatsoever has to say. Doom sells news stories and the journos have had plenty to feed on in recent times. But they need to be careful they do not become self-fulfilling prophecies!!
So what should businesses be doing?
This is the perfect time to review those Business Plans. Take advantage of the lower interest rates, lock in some longer term debt. The “Credit Crunch”can be a blessing in disguise if you let it. Now is the perfect time to review your borrowings. Your Banker will inevitably be struggling to meet his budgets and if approached I can almost promise you a reduction in the interest rates and fees you are currently paying if there is a chance that it may lead to you borrowing some more. Worse still, what if you were to consider refinancing to another bank?
Our Banks have been inundated with deposits from the non-bank institutions as investors rush to take advantage of the government’s deposit guarantee so they are very well placed to be lending from their own balance sheets.
Call your finance broker. If he or she is full of doom and gloom (and I assure you many of them are) then perhaps it’s time to move on. Find yourself a broker who has realised the opportunities that exist in this tightened credit market and is prepared to aggressively pursue the banks to lend. Be careful with your broker choice. The Banks (and non-banks) have all reduced their commissions to brokers whilst tightening credit policies and implementing new application processes which places additional workloads on the brokers. As a result many brokers are feeling hard done by and are quick to try and lead you away from the major lenders and steer you towards non-banks. Beware, and make sure that the lender being offered to you can provide ALL of the services you require.
These are interesting times which we find ourselves in, and I will have plenty of useful tips over the coming weeks so stay tuned.
Banks - Do I Really Need One?
I’m guessing that if you’re reading this post then you already have an opinion of the banking system, and in all likelihood it is a negative one!
Modern day banks provide a lot more than the traditional deposit taking facilities and loans. Sure , these are the things upon which the banking system is based but in today’s economy the Banks are incestuously involved in almost every aspect of your business. Just think about it. Writing a cheque to pay an account is almost an obsolete occurrence and cash purchases in our shops are increasingly unpopular.
How many people have their superannuation invested in a financial institution? The answer of course - LOTS!
How many of the major insurance companies are either wholly owned or are strategically alligned with a major bank? Again - MOST!
Where do you go whem you need to purchase a new home, car, or business? Yet again, in most cases the answer is - THE BANK!
SO in most cases, the answer to whether you really need a bank is YES! The key is to make an informed decision on which bank you need and in ensuring that you take the necessary measures to maintain an appropriate level of contact with your bank. I’m not talking about contact in the context of a lovely mid-morning chat and coffee with your bank manager, because we all know that that won’t happen unless the bank has something substantial to gain from such an interlude. By contact I mean just checking on the type of account or loan you have and comparing the fees and rates that you are being charged (or for those lucky enough to have investments, the returns you are receiving) and comparing them to what is on offer by the competition.
There are numerous market comparisons available on the internet which you should familiarise yourself with and make a point of checking them every month or two. If it becomes obvious that your facilities are out of touch with the competition, then the next move is an obvious one.
Unfortunately for most of use, our lethargy in monitoring the fees and charges being charged by our Bank has led to our own downfall.
Banks R Bastards - Love Em or Hate Em!
Welcome to my new website dedicated to discussing the Pro’s and Con’s of the cornerstones of our financial system - The Banks!
Love ‘em or hate ‘em, Banks have done little over the past year or so to endear themselves to the general public. However, if you are in business then it is an unfortunate fact of life that they are a necessary evil. Besides being simply a place where you can store your extra cash or borrow for your investments, the Banks have now positioned themselves where they are virtually involved in every aspect of our daily lives.
My goal in these pages is to discuss ways and means of ensuring that you are getting the most out of your banking relationship and to suggest ways of keeping your Bank honest when it comes down to charging or paying interest or charging those exhorbitant fees.
Over the coming weeks I hope to touch on measures you can take to minimise the impact on your business from the global credit crisis. We will also share some real life stories where I have been able to help people find their way through the financial maze to achieve some bast case scenarios.
Please feel free to send me any stories or questions which you may have and may wish to share with other readers.
