customers across all channels from
the same database of products, prices,
and promotions, which provides
consumers with a consistent brand
experience across all channels. With
this approach, brick-and-mortar
stores become an extension of the
supply chain, serving as “
mini-warehouses,” where customers can
purchase items that they may have
researched through other channels.
As companies become more focused
on being effective omni-channel
retailers, lenders should familiarize
themselves with a client’s online
strategy. They should view the various
mobile apps and other Web channels
the company offers to experience
firsthand the ease of use, practicality,
and functionality of these channels.
No matter the size of the company,
exploring its strategy in this regard
provides insights into its ability
and foresight for addressing future
challenges. It further provides a bank
with an indication as to whether
the relationship is a quality long-term credit to maintain or possibly
one that should exit the portfolio.
Performing this hands-on, tactile
review and analysis can produce
valuable insights into potential or
existing problems, including:
• Production problems
and late shipments.
• Customer dissatisfaction.
• Product returns.
• Low employee morale.
• Reactive or disengaged
management that cannot
provide timely and accurate
Performing research and analysis to
uncover these early warning signals
can provide a bank the basis for
further investigation as to the quality
of the company, its management,
and its strategy or lack thereof for
addressing future challenges. This,
in turn, aids in determining whether
identified problems are fixable and the
relationship should be maintained.
Whether a company is in consumer
goods or the retailing industry, some
analytical tools are useful across
industries and for companies of
any size in providing a snapshot of
performance or an early warning of
financial issues. These are know your
customer basic financial analytics
that can provide data points to discuss
with the company in conjunction
with the information gathered
from qualitative examination of
stores, websites, and products.
Some early and medium-term
financial distress signals include:
• Increasing days receivable
outstanding, which may indicate
that purchasers are of lower credit
quality and/or that the internal
effectiveness of collections efforts
by the company is diminishing.
• Increasing days payable, which
may indicate that the company
doesn’t have the cash to meet terms
required by its vendors, raising
potentially serious implications
for supply chain management and
the terms and conditions under
which trade credit is extended
to the company in the future.
• Slowing turnover of inventories,
which may result from
• Financing purchases of long-term
assets or capital expenditures
with a revolving credit line or
other short-term facility, which
may create a mismatch of assets
and liabilities, and result in the
eventual overleveraging of the
company, limiting its flexibility
in addressing challenges or
• Financing losses with revolving
credit line borrowings, which can
ultimately only be repaid through
improved cash from operations.
• Declining margins, sales, or per-unit sales values. It is important
to refresh the understanding of
break-even volume or pricing
analysis. Determining whether a
company has a basic grasp of its
own break-even metrics provides
insight not only into the quality of
management but also into whether
the company will be able to sell
its way out of a potential crisis.
Win up to $3,000 and a trip to Scottsdale.
This award recognizes outstanding MBA student achievement
in the field of corporate renewal. Papers are judged in
two categories: case study and theoretical/conceptual.
Entry deadline is June 1.
for entry forms and complete details.
continued on page 26