Do what you said you would do, or tell me why you won't

Northwestern Financial Review, Jan 1-Jan 14, 2005 by Telschow, Tony

The last thing a customer wants to hear when receivables dip is that she can't tap all the credit her bank had offered her back when times were flush.

Barbara Peterson, founder and CEO of New Brighton, Minn.-based BLS Carpets, has a multi-year carpet-installing contract with the state. It generates 80 percent of her company's business, which has been solid since Peterson opened the company in 1992. She also has a line of credit worth $450,000, to help her when cash flow is little tight, as it has been since September 2001.

Only this time, when times got tight, so did the nationwide bank that holds the credit line. It locked down Peterson's line at $400,000 and stipulated that she could not tap it again until she had paid the balance down by half.

"Right now I'm just sweating payroll for my small crew. I have to call customers and ask them if they would please pay forward a little bit," Peterson said. On one particular day recently, there were tens of thousands of dollars of credit theoretically available through the line that Peterson couldn't touch.

How helpful would it be to tap even that little bit of credit?

Peterson responded exuberantly, as though mere mention of the possibility brought relief. "It would be awesome," she said.

Times like these make customers yearn for those mythic days when bankers made loans based on character. "I work very hard for my company and I have a lot of respect for my employees, and I choose to continue to provide jobs for them and to pay their salaries," Peterson said, in what seemed like an ongoing attempt to convey that there's more to business than what's on the balance sheet.

Her bank has not been persuaded by the message and has traded platitudes about partnership for a stricter sentence: You're on you own, for now.

Succeeding in spite of your friends

It might be too much to say that the bank is now an impediment to its client's success. But it has chosen not to share the risk of rebuilding, and it sits neutrally on the sidelines, watching as BLS Carpets slowly picks up more projects. There is enough business for four installers, four office employees, a warehouseman and a truck driver. Peterson is optimistic and even confident that her business can rebound to pre-9/11 robusiness, but she'll give her bank little credit for helping her through the downturn.

The bank's inflexibility is an ongoing source of frustration for Peterson. It is particularly difficult to get a sympathetic hearing or to establish close working relationships, because turnover among the bankers is high. Peterson said it seems as though she has to train in a new relationship manager every few months. "They're fill-ins, or they come over from another department. And they have that bank policy drilled into their heads: no we can't do that, no we can't do that. And I say, well, do you have authority to say yes to anything?"

Peterson said that it is irritating when "you've got to train [bankers] over again, keep going through the process. And they don't take notes. When you talk to them, you at least like to think that they're listening. But when it comes back to you, you know darn well they didn't listen."

"I think customer service is a thing of the past," she said.

A problem nhe didn't expect to have

Peterson did not choose her current bank. She was quite happy with the large privately-held bank she did choose, but it was purchased in 2001.

She still misses her relationship manager from the original bank: "She was fabulous. She understood ... I could talk to her and tell her what I needed, and she could move those boulders." That banker left immediately after the acquisition.

And it seems as though she took the bank's last stores of reliability and candor, the two traits that Peterson finds indispensable in successful banking partnerships.

"If [bankers] say they'll do what they can to help you, [they should] follow through with that," Peterson said. If they decide that they can't deliver on their promises, she wishes they would: "Tell me why. Be blunt with me and tell me why. Why you can't do it. Down to the dollars, tell me why."

Why does she suppose that some banks won't do that?

"I think they're scared to turn anybody away. They're afraid they'll lose the business."

Which apparently would be slightly more troublesome than keeping it.