One of the underappreciated dynamics of a rocky credit relationship is lender fatigue. Lenders are doing their best to work with the customer to improve the credit – monthly financial reviews, weekly touch-base calls, and a constant flow of advice – yet, the customer is still conducting business as usual. Nothing is happening! The situation is exactly the same today as it was 4 months ago. In addition to the lender growing weary with the customer’s lack of progress, they’re tired of getting their butts kicked by the “higher-ups” because nothing is happening. … Lender fatigue has officially set it.
What do you do?
Get your head straight and understand your role
Trust me when I say, we’ve all been there before. There isn’t a banker alive that hasn’t, at some point in their career, found themselves working harder than the customer to resolve the problems. But… that’s not your job! You don’t own the business. You’re not in control of the decision-making. When the circumstances have soured, your job is to maximize the bank’s ability to get all (or most) of its money back.
So, if you think you’re the “white knight” banker… here to save the customer… you’re not. Honestly, if that’s your approach, you likely have as much to do with a prolonged workout situation as the customer. Likewise, you’re not “Judge Dredd” either. Bankers with a “hair trigger” are just as bad as “white knight” bankers.
In a problem situation, the right approach is that of an umpire. Your job is to call balls and strikes – that’s it. Your eye needs to be clear and fair to all concerned.
Know when to hold ‘em and know when to fold ‘em
Kenny Rogers could have been a banker.
When the customer is being real and making progress to improve their situation and, thereby, the risk to the bank, that’s when you should be cooperative and assist them through challenging times. Those are the moments that solidify banking relationships that last generations. Know when to hold ‘em.
Did the customer follow through on their commitments? Did the customer meet their projections? Did the customer take ownership for any mistakes or did they pass the buck or minimize it by attributing the lack of success to external factors?
You must have clearly defined actions and dates! If you cannot “check a box” to know if the customer met the objective… it’s not an actionable item. Time is rarely your friend in a problem credit situation. The longer the situation drags out, the less likely the bank is to recover all of its money.
If the customer is participating in a fantasy land, and you’re participating too, wake the hell up, and find the exit ramp – fast! Know when to fold ‘em.
It’s not personal
A mentor gave me some really good advice once. It’s okay to be friends with your customers… provided you’re comfortable with the idea of foreclosing on them in the future. If you’re not, then either don’t be their banker or don’t be their friend. The choice is yours.
When people sign promissory notes, both the customer and the banker are agreeing to a specific set of terms. And if those terms are not met, then other items in the agreement kick in. That’s business!
We must carry out the uncomfortable parts of our job in a professional and considerate manner. Everyone, regardless of their circumstances, deserves courtesy and respect. It’s not personal.
Final Thoughts
If you’re experiencing lender fatigue with a problem credit, I challenge you to review the circumstances, identify the issues, set clearly defined action items and dates, and then hold everyone accountable.
