Banks don't need an effective business

A few days ago, I had an opportunity to read some articles about banks. It's a strange thing, but banks are very upset, when their clients are trying to upgrade their business, especially, if clients are from supply sector.

When the bank gives a loan for business, the bank doesn't want that business would reduce its demand for loans. Is it the truth that those who are unlucky with their business, earnings and savings often acquire loans?

If the bank gives a loan for the company, which is working with sales, this company buys supplies from the loan and sells them. For instance, unsold supplies become like a loan returning warranty. But that's not truth.
The real causes are hiding somewhere else. They are simpler. Too simple and clear, that causes would be easily noticed. How strange that would look, but effective clients' work is not profitable for banks.

Indeed, every banker knows, that if the company is not able to return loans, probably company's supplies are not realizable and there aren't any benefits from this client. So, thoughts that size of the warehouse will ensure bank security - are the simplest nonsense. However, if the client is planning to prick out bank, so its possible that bank won't do anything to get back bankroll. It's because banks don't have permanent control, guards and executives for each loan.

Every ToC supplying circuit buffer management refers to very simple idea: if there often are large frozen means in warehouses as well as large risk not to sell anything (e.g. have a loss) - it's not good. So, if we would make more frequent smaller orders instead of large orders, then less means will be frozen and less risk we'll have. On top of that, it will be easier to adjust to the market needs.

Typical optimization: we are checking and ordering more often, but in smaller amounts. In a result, we have small frozen means, good profitability. More chance that things will get better in the company, where large loans are not acquired.

Take a look how bank sees this thing. 1st situation: ''Client took one million pound loan and orders a large amount of supplies one time in 3 months." 2nd situation: ''He optimized his business - client orders supplies one time in 1-2 weeks.” Instead of one million loan - he needs two hundred thousand pounds. It's many times less amount, from which bank gets many times less profit.

So, client in bank view just increases money circulation frequency. For instance, he circulates the same amount many times quicker. And then, client can manage with smaller income, because he is wise. Banks need to earn from loan interest. If ordering frequency will be infrequent, then more larger loan client will require. Bank logic is very simple: if client will work worse, then bank will earn more.

The bank is not benefactor, who helps in a difficult situation. Certainly, any bank representative won't tell you that the bank is not interested in badly funded company work. Banks will better speak about that, if client has small resources, there are large risks and trust in client is minor and etc. Or banks would say that client needs to have more savings in order to secure solvency stability and etc.

It often looks like, they will avoid traps. But if traps are insignificant for companies, whose banks bother optimizing their warehouses, is it really everything clear for everybody? Good traps are always such, that the victim couldn't suspect traps.

Do you know how things are with fast loans? These firms are interested that you would take a bigger loan for longer time. They are not interested in your well-being. More business is unlucky for you; more chance you will be addicted to fast loans. The same is with the banks.

Just take it like reality: bank money is essentially poisonous, because bank is interested in maximum company solvency increase and warehouse means decrease. For instance, if you become addictive from the bank so much, that it could influence your business decisions, then the bank will force you make decisions, whose are beneficial only for the bank, but not for you or your well-being.