Wednesday, 30 May 2012

How to waste half a day of your life

I own and run a small educational consultancy and IT company, and have done since 2001. In all that time I have never had a major cash flow problem ... until now.

Thanks to cutbacks across the whole of the education sector the company has had an increasingly difficult time getting some clients to pay promptly for the services we have provided. As a prudent businessman I decided that the company needed to arrange an overdraft facility to ensure that the company's cash flow was secure ... so I paid a visit to my bank to arrange it.

This was the beginning of my wasted half-day.

When I arrived at the bank I had to join a queue at the reception desk. There were only two people in front of me ... but I did not reach the front of the queue until fifteen minutes had passed. I was then sent to the waiting area ... where I waited ... and waited ... and waited. Eventually I managed to speak to a customer adviser ... who told me that they no longer dealt with business clients in any of the bank's branches. (Why they could not have told me at the reception desk, I don't know.)

What the customer adviser did give me was the telephone contact details of the bank's business advisers, whom I was assured would be able to help me. It was interesting to note that the telephone number was a Premium Rate one ... and that the bank would make money just by answering my telephone call.

I rang the number ... and, after listening to some somewhat poor quality recordings of classical music, I was eventually connected to a business adviser ... in Mumbai. After answering numerous security questions and explaining what I wanted, I was put on hold before being forwarded to yet another adviser ... this time in the UK.

I had to answer all sorts of questions about my company's finances ... and then the questioning switched to my personal finances. I asked why this was relevant as the company is a limited liability company and has a twelve-year trading record that shows good financial management has been in place all that time. The reply was that because the company had never borrowed money before, it had no record of repaying debts, and I had to show that I had a good personal credit rating.

I reluctantly agreed to answer the personal financial questions ... but when the questions switched to my wife's finances I became very uncomfortable answering them ... and said so. I was told that if the company needed the overdraft facility, the answers had to be provided. In the end I agreed to answer them in writing after asking my wife's permission.

This whole process took from 9.30am until 12.30pm ... and at the end of it I felt that I had wasted my whole morning. I also felt that the bank was singularly unhelpful, and proved the old adage that banks are willing to lend you an umbrella when the sun shines, but want it back when it looks like it will rain.

In the end my wife refused to fill in the Overdraft application form that the bank had emailed to me (as I had expected she would) and I have gone elsewhere to find the money to ensure that the company's cash flow is secure. If I had realised what a waste of time it was going to be dealing with the bank, I would have gone elsewhere from the start.

The morale of the story is that if you want to waste half a day of your life, try borrowing money from a bank!

12 comments:

  1. Hi Bob,

    How very frustrating and I cannot understand why the branches no longer have business advisors on site. Sadly many of the financial institutions now make use of centres in India on the grounds of cost. Charging a premium rate phone call as part of the process only adds insult to injury. I hope you have better luck elsewhere!

    All the best,

    DC

    ReplyDelete
  2. David Crook,

    I suspect that it is all a result of someone, somewhere 'having a good idea that will save the bank money.' I was definitely left with the impression that they wanted to 'sell' me an overdraft rather than listen to the situation and give me advice. After all, I was talking to a 'business adviser'!

    The 'adviser' did not seem to understand the difference between a sole trader and ownership of a limited liability company, and when I asked her if all businesses had to get personal financial information from each of its directors to get an overdraft, she could not provide me with an answer ... which makes me think that the real answer was probably 'I don't know.'

    Ironically, the reason why I need the overdraft facility is because I have taken on an additional part-time member of staff, and he is working for a rather inefficient client. The member of staff has to be paid at the end of each month, but the client can’t seem to get their act together to pay (they are a large Further Education College that just seems to work with a persistent two to three-month delay in paying its bills). So at a time when small businesses are supposed to be getting help from financial institutions to reduce unemployment … I get no help at all!

    Mind you, if I was running a small country with massive debts they would probably have been falling over themselves to help me out. Luckily I have found another source of short-term finance should I need it.

    All the best,

    Bob

    ReplyDelete
  3. Bob

    It is a commonly held misunderstanding that Banks are there to help small business. They're not. They exist only to make money out of you by selling you a whole range of products.

    I was one of the last of the old school "Captain Mainwaring" type Bank Managers, in the bank I worked for there were 1,500 of us, one in every branch in the UK. In 1990 1,200 of us were made redundant, never to be replaced. The rot had set in long before that with the professional judgement of the manager being replaced by credit scoring and "computer says no" When they offered us a package most of us were happy to go, that says it all.

    And yes.....it was about saving money.

    ReplyDelete
  4. Brian Carrick,

    I would not mind, but the bank regularly sends me letters about the specialist services they offer to small businesses ... but the reality is that - as you write in your comment - all they really want to do is to sell customers services they may not actually need.

    I suspect that the current anti-bank attitude within the UK population is partially the result of the disconnection between the local bank branches and the customers they serve. The front-line staff do their best ... but they are under pressure to sell products rather than provide a service. I also suspect that the old-style bank managers would not have allowed the level of product mis-selling and over-lending that took place over recent years.

    Someone, somewhere in the banking sector seems to have forgotten that easy profits are usually only made at a long-term cost ... and that 'get rich quick' can easily become 'end up poorer''.

    All the best,

    Bob

    PS. I worked for a small, private bank when I first left school ... and 'service to our customers must always be foremost in everything that we do' was the byword by which we always worked. Things had certainly changed since the late 1960s.

    ReplyDelete
  5. I don't know about Britain, but here in the States we have "Credit Unions", small localized banks. The one I belong to caters to local union members, although they will do business with anyone. As a union member, when I first started with them I got a discount on the rate of a loan. Since then I've financed a couple of loans for home repairs, a car loan, and last year refinanced my mortgage along with extra money to redo the entire exterior of our home. We just walked in the front door and in 10 minutes had the ball rolling. In less time than your 1/2 wasted day we had everything done for our new mortgage. And Bank of America, probably the most reviled bank in America, lost another customer. Hope you find a bank with the same service I found.

    ReplyDelete
  6. Jhnptrqn,

    Credit Unions exist in the UK, but I suspect that they would not have been able to help me in this instance. I know people who have used them, and were very pleased with the help and service they received.

    Some time ago my wife and I were considering remortgaging our house so that we could move my father-in-law into sheltered housing. We had repeated 'knock backs' from various banks and building societies because our particular circumstances did not meet the 'lending profiles' they had. Eventually we met a mortgage adviser who actually took time to go through the value of the assets we were offering as collateral for the mortgage ... and she could not understand why previous possible lenders had not offered us a loan as we were such good risks!

    Unfortunately my father-in-law died before we could move him into his new home ... but if I ever need to think about re-mortgaging my house again, I know which lender I will go to.

    All the bet,

    Bob

    ReplyDelete
  7. Its painful isn't it.... For my previous company I decided to bank with the only community bank I could find in the UK (the Islamic Bank of Britain) and they have been excellent.

    Unfortunately our new business needs a local branch and we have been forced back into the arms of the big banks so we chose one of the few banks that still has face to face Business Account Managers - NatWest.

    If you ever need to change I can recommend our Account Manager who is based out of the Woolwich branch incidentally as (unlike his peers) he is contactable AND accountable.

    ReplyDelete
  8. Just realized what a poor state banking must be in if the only plaudits we can give a banker are that they answer the phone and take responsibility for their actions....

    ReplyDelete
  9. Telemachus,

    Thanks for the suggestion but I regret to say that my business account is with NatWest ... but not the Woolwich branch.

    I would consider transferring my company account to the Woolwich branch if it wasn't for the fact that my wife and I are planning to retire this summer.

    All the best,

    Bob

    ReplyDelete
  10. It sounds as if the service you were getting was cheap (for the bank, expensive for you), nasty and unprofessional - as I would now expect from banks into whose power your Government (and mine in New Zealand) has delivered us.

    Does the UK have a banking Ombudsman? Might be worth running the whole gig by this person. If there is such an animal as a Fair Trading Act (New Zealand has this), that might be a way to go: basically with the view of making this Bank's life miserable for a while. I mean, good heavens, there has to be some kind of professional standard!

    Mind you, we know as well as they do just how short a leash the Banks have upon their lap log, Westminster.

    You have my sympathies.

    ReplyDelete
  11. Archduke Piccolo,

    I have discussed what happened with a number of friends, and they all have had similar experiences.

    Complaining to the Banking Ombudsman is an option ... but the complaint will take months to be dealt with, and in the end I doubt if anything will change.

    As a businessman I know that the first objective of any business organisation is to make money … but I also know that if people trust you, they will give you more business. Like so many other businesses (and I include most of the major service and retail businesses in the UK) loyalty is what the businesses expect of their customers, but do not give in return. It is all about short-term profit … because tomorrow somebody else will have to deal with the fallout.

    For forty years I have been involved in education, and at times I have likened it to growing trees. You plant the seed and nurture it until it can grow on its own, but you do not harvest the results until the tree is fully grown. Nowadays you have to plant the seed in exactly the way you are told to, regardless of the soil, drainage etc. You must give the growing tree the same amount of water, nutrients, etc., as every other tree … and measure it regularly. If it is not growing at the right rate, it is your fault. When the process is over, the tree will be regarded as fully grown … even if it is not … and your skill will be measured in terms of how tall it is on a certain day. But not content with that, you will constantly be told that you need to water the tree differently, use different amounts of nutrient today because someone has a theory that yesterdays level of feed was wrong … and tomorrow somebody else will come along with a different theory that you will have to implement. All the time the trees continue to grow … but you will not know how they will turn out in twenty, thirty, or forty year’s time.

    The modern world is obsessed with a ‘quick fix’ solution to problems and ‘quick returns’ on their investments. This is great if you are the person who is benefiting from the ‘quickies’ … but not if you are not.

    Rant over! Let’s get back to some wargaming!

    All the best,

    Bob

    ReplyDelete