What sort of Christmas tree is it anyway?

Christmas tree before snow covered trees at night
Christmas tree before snow covered trees at night
Opinion by Alex Drummond

It may surprise you to learn that Christmas trees can be confusing things – especially in the world of finance writes Alex Drummond, Managing Director, Drummond Finance.

When I first came to Aberdeen as a Relationship Manager with one of the major banks my first task was to get to know my clients.  That process started with a pile of files to read however, I was very conscious that I was reading someone else’s notes based on someone else’s viewpoint.  Preparing for my first meeting with an oil and gas client, I had limited knowledge of their business and their sector.  However, when we met, they showed me round, explained what they did and as I got to see, hear and feel it I left with an understanding of their business and how it worked.

Fast-forward 15 years and these businesses are still out there with the same needs.  The challenge they now have is that they may no longer have a local Relationship Manager who can meet them, understand their needs and put together a lending proposition to support that business.  Unfortunately, if they are dealing with a distant call centre, then they may be back to the scenario my clients initially faced of talking to someone who doesn’t know them or their business.  If the lender doesn’t understand what you do, you will struggle to get the lending.

Alex Drummond

This is a risk particularly here in the North East, which is so sector-specific, and it is festively exemplified by a situation I learned about recently concerning a local engineering business servicing Christmas trees offshore.  After a tough few years, they were seeing a bit more activity and business starting to pick up which created a requirement for working capital.  They called their bank and were directed to a call centre to explain their business (in spite of being a long-term client).  On hearing that they serviced Christmas trees, the call handler believed their business to be a seasonal one and could not understand how the client could work with Christmas trees all year round, especially on oil rigs.  This illustrates the wide gap that still exists between what a business does and the bank’s understanding of what it does – not one providing festive decorations for the home.

A lot of businesses have done fantastically well to survive the recent downturn but this has had an impact on their reserves and cash flow.  Now there are emerging opportunities for many of them to pursue but there is the upside risk of how contract wins can be financed and that risk only increases if there is not a local banker to speak to.

For me, the answer is quite simple.  It is very important for all of us in the finance industry to remember that tomorrow’s stars are still in their infancy and, if we are to be the wise men they need to support and grow their business, we need to follow them, know them and understand them – not only at Christmas, but all year round.