How Much?

Coming back to work after a two week holiday always takes some getting used to, especially if all or part of that holiday has been taken abroad. On holiday you get out of the usual rhythm of things, forget the early starts. When abroad you ease yourself into the day noticing that the world around you doesn't generally get up until 10 but that it finishes a little later, quality of life is more important, the only place that is open is the bakers and possibly a bar for the serious drinkers.

Returning to work the Monday before last the pile of post on my desk was a little smaller than in previous years, that in itself was good, no point starting the week under pressure. Unfortunately most of the post concerned a group of companies we act for and the request from their bank for a report on the past twelve months trading together with what they called an 'integrated summary' of the financial projections for the next twelve months together with the directors expectations.

Now this is the equivalent of high-wire walking without a balancing pole, how can you project how a business will do as we emerge blinking into the bright lights of post recession with the knowledge that for the past eighteen months (and longer in some sectors) the economy has been, like the proverbial frog, bumping its arse on the ground? Well you use what is now referred to as 'professional judgement' - that's to say the quality of judgement you would expect from a professional given their background and experience. It sounds great but what it means is that you can no longer fall back on that well worn expression, "the man on the Clapham omnibus," and let's face it most people on the buses coming out of Clapham will have English as a second language anyway so by the time you've finished explaining the question to them, with the aid of a very expensive Home Office interpreter, the moment will be lost.

I read through the contract and the e-mail's that accompanied the request and basically what has happened is that the client's bankers are concerned with exposure, the client does have significant borrowings but these are more than covered by the property values, and they have commissioned a report from one of their divisions that deals with restructuring. It is the division that is putting together this report that has asked me for my report so that they can evaluate the continued support of the bank. With me so far? I am preparing the report so that the restructuring advisers can take it and assess the group of companies, they aren't doing any work beyond reading my report and compiling there own based on what I tell them, I've done all the 'number crunching' and the forecasts.

For preparing this report I have to quote a fee to my client, having taken the worst case scenario in terms of time required, including a visit to their premises and putting together projections for four companies across four different types of business I suggest a ceiling of £4,000 plus VAT. I produce a report that is 42 pages long within five working days, the client pays on the day of delivery, the fee incidentally is less than the ceiling quoted.

Oh, I forgot to add, the bank division doing the report state in the terms and conditions that the client is not entitled to see their report - so they are paying for something they won't see!

So how much do you think it is reasonable to expect to pay for a report which you have already paid just over £3,000 for its main components and which you won't get to see anyway?

The contract states that my client will pay £15,000 plus VAT.

It is that sort of attitude which makes me think, more often than not these days, that banks deserve every little bit of hardship that comes their way.