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Published Articles by David Balovich

Title: Keep It Simple
Published in: Creditworthy News
Date: 9/2/08

Riding the elevator down from the 18th floor of the luxury resort hotel to the mezzanine where the meeting rooms were located, I began to experience the usual pre-speaking jitters only this time, where normally I’m not, I was concerned. My address this morning was before an industry group of senior credit executives. Looking over the attendance sheet the previous evening, upon my arrival, I noted that none of the attendee titles were less than corporate credit manager and there were few listed. The majority had titles of director or vice president and the companies they represented were impressive. These would not be the usual group of credit managers; they would be the cream many having graduated from top-notch business schools spending a few years in finance as they fast-tracked their way to senior management. I began to think once more about the topic they had requested, how to improve performance in a declining economy, and began to have second thoughts about the material I had prepared. Well, it was too late now to change and all I could do was present what I had and hope for the best. 

Upon entering the meeting room I noticed that there were far more in attendance then had been listed on the roster I had seen the night before. Part of making a good presentation is to know your audience and I began, once again, to feel un-prepared upon realization that I only knew the background of half my audience.

Vaguely I recall being introduced by the chairman of the group but I did feel calm in the room as I realized, upon listening to my introduction, that my credentials were as impressive, if not more, then my audience. After all, they had invited me to speak before their group and regardless of education and title I was listed among the experts in our profession.

It was no more than a few minutes into the introduction segment of the presentation when I was interrupted by one of the attendees with a question. During my opening I had made reference to capacity as being one of the essential “C’s” of credit and now he was asking how many “C’s” there were and what were they. I recognized the inquisitor as one who was listed as a V.P. for a large manufacturer-distributor of products found in every household. Dumbfounded I provided the answer with a brief explanation of each and continued where I had left off prior to the question when another attendee asked a follow-up question to my previous answer. The next thirty minutes were spent discussing the “C’s” of credit and the role they played in the credit process and the implications they could play on performance.

Afterwards, more questions followed and I soon found myself ignoring the prepared material as the audiences hunger for information began to direct the presentation to the topics they were most interested in. During the presentation we discussed credit enhancements including guaranties and security devices. The differences between applications and contracts, the Uniform Commercial Code and the role it played not only in credit and collection but in overall business practices.

Quickly my allotted time to speak was over and the attendees still had questions. I was asked to join the group during their social hour after the remaining days’ presentations and for dinner where conversation and questions continued concerning activities that were the basics of credit and collections. Later in the evening, when many of the attendees had ventured off to experience the local nightlife of the resort city where we were staying, the chairman and my host pulled me aside for a quiet chat.

To my surprise, he thanked me for abandoning my presentation and addressing the questions his members asked. “Too often, he went on, the presentations we receive, although interesting, are not truly beneficial to our group because they don’t provide the type of information our members can take back and share with their subordinates. The information you provided them today will not only help with their careers but will also benefit their subordinates and in the long term their organizations as well”. As I listened to what he was saying I thought to myself “if you only knew”.

During the plane ride home I began to reflect on this experience. I had made an assumption based on indirect information provided about the members of the group I was speaking to and based on those assumptions had prepared material that although was in line with the topic was neither beneficial or practical to the attendee as far as application was concerned. I realized at that moment that regardless of topic the information conveyed had to be of benefit to the participant and most importantly they had to recognize the benefit.

The lesson experienced can be applied in numerous situations but the lesson learned is that too often we get caught up in making our tasks more difficult then necessary. We simply forget the basics. We assume that if it is too simple then we are doing something incorrectly or we are not smart enough to carry out the assignment. More often than not the task is not difficult, but simply requires due diligence and follow through. However, when we fail to perform due diligence because of say time constraints and we fail to follow-up timely for the same reasons then we begin to look for solutions beyond the basics that cloud our endeavors and make the task seem more difficult.

Every one is looking for a better solution and has been for some time but the reality is the solutions have already been discovered and there is nothing new that will improve upon what already exists. We have to become aware of what is available to us and learn and train our subordinates in how to use these resources.

For example; recently, after making a presentation on security enhancements, I was contacted by a participant who informed me that their attorney said that “In twenty-seven years of legal practice they had never encountered the use of a security agreement for credit purposes”. I do not find that surprising as there are many attorneys, like credit professionals, who are un-familiar with the Uniform Commercial Code, but the fact that one attorney has never had an encounter with Article Nine does not mean that it cannot be employed. As many of our readers know, the use of security agreements for credit purposes is used on a regular basis by banks, finance companies and trade creditors. What was necessary was for the participant to provide examples to their attorney of how creditors have employed the UCC to minimize risk and guaranty payment.

There exists in our vocabulary the acronym K.I.S.S., Keep It Simple Simon. We should always look for ways to keep things simple and thus make our objectives less complicated. 

I wish you well.

The information provided above is for educational purposes only and not provided as legal advice. Legal advice should be obtained from a licensed attorney in good standing with the Bar Association and preferably Board Certified in either Creditor Rights or Bankruptcy.  

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