Five phrases to use with your credit provider

It is an inevitable fact of life that the finance rug is most likely to be pulled out from underneath you just when your business is the most unsteady on its feet. Financial institutions are businesses like any other and they too need to receive some return on investment. They do not want to hear that the investment is not performing as expected.

Importantly, when in discussions with the credit provider for your business it can be wise to avoid treating them as a confidant and remember who it is you are talking to. When in consultation with a banker or other credit provider, no matter how desperate things may be, always choose your words carefully.

Here are five essential phrases to use when times are tough.

"Our sales pipeline is full."

Even the most cynical banker wants to know that your situation will improve in the future. Your ability to pay back a loan will rely as much on future customers as on current ones, maybe even more so.

If your sales pipeline is not currently overflowing with new opportunities, there's no need to let on. Pick your best opportunities and talk them up. Describe how many prospects you have spoken with this week or this month.

There is a side benefit to using this half-truth: It might just motivate you to go out and fill up that pipeline. If you don't know who your next ten customers are, you should.

"We expect to collect almost all our accounts receivable."

When your customers stop paying their bills or accounts receivable, your cash flow slows down and it can become incredibly difficult to make loan payments to your credit provider.

Of course you expect to collect on your invoices but your banker doesn't need to know that your best customer just filed for bankruptcy, or how many customers no longer take your calls. Focus on the positive -- you are owed the money and you are doing everything in your power to collect it.

If your collections numbers are telling an increasingly sad story that you can no longer sweep under the rug, it is time to hire a collections company. The banker wants to know that you are aggressively chasing the cash, even if they know it is not coming in as fast as you would like.

"We are talking with some new investors."

These types of transactions are sensitive and confidential, so it can be difficult to divulge too much, even (especially) to your banker.

But you can assure them that you are looking for financial partners who could put up some hard cash to get your business growing again. It is the perfect cover for the short term, just make sure you don't use the same excuse next year without some real progress to show.

"You are our principal banking partner."

This approach can work well, as it maintains your credit provider's interest because as your situation improves, you will be sending more accounts and more transactions their way.

But the reality is that you should have several banking relationships- and each one should believe they are the most important banker in your life. During softer periods, a good personal relationship with a banker may be the only way to save the day.

Place a priority on maintaining positive, constructive relationship with those who helped make your businesses operational.

"We are right on schedule"

What you are really saying here is that you have adjusted your plans to reflect the current economy. Last year's plan did not come to pass, so today's plan is different. But that is fair. All great companies keep looking forward and making adjustments. In tough times, your plan helps you avoid nasty surprises. And bankers hate surprises.

So build realistic forecasts and plans. Make sure that they start with where the business is today. Of course they will show an optimistic future (remember the unwritten rule), but in the short term at least they are realistic and always maintain that today's reality is just what you expected.


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