January 26, 2012
In his third State of the Union speech Tuesday night, President Barack Obama laid out his blueprint for the nation's economy, starting with manufacturing.
"We will not go back to an economy weakened by outsourcing, bad debt and phony financial profits," he said. "Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that's built to last—an economy built on American manufacturing, American energy, skills for American workers and a renewal of American values."
The president also tipped his cap to a recent trend among businesses bringing jobs back from other countries historically thought of as sources of cheap labor. As previously reported, "insourcing" is now frequently taking the place of "outsourcing." "We can't bring every job back that's left our shore. But right now, it's getting more expensive to do business in places like China. Meanwhile, America is more productive," said Obama. "A few weeks ago, the CEO of Master Lock told me that it now makes business sense for him to bring jobs back home. Today, for the first time in 15 years, Master Lock's unionized plant in Milwaukee is running at full capacity."
"So we have a huge opportunity, at this moment, to bring manufacturing back. But we have to seize it. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed," he added.
Obama went on to suggest tax reforms that would incentivize companies to bring jobs back to the U.S. and relocate to recession-hit communities. Exporting, which figured heavily into last year's speech, also received a small amount of attention, mostly as the president burnished his credentials and highlighted the success of the past year's free trade agreements (FTAs).
In essence, the speech focused on the idea of economic fairness. "The debate now will be over what constitutes fair," said NACM Economist Chris Kuehl, PhD. "The speech had very little to do with the current condition of the U.S. and its economy, but that was expected in an election year. The overarching message is that the wealthy should be taxed more."
"The fundamental issue driving the two sides remains how to deal with the debt at the same time the nation has to expand economic growth," he added. "Without more revenue, the government can't sustain current spending. Some would have that spending curtailed further while others assert that austerity is already compromising growth. The reality is that taxation and differing concepts of fairness will be at the heart of the election for the duration."
Jacob Barron, CICP, NACM staff writer
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As trite as the "There's an app for that" saying has become with the growing cultural dominance of smart phones and similar devices, a new application apparently does exist to help professionals quickly determine the likelihood of a corporate bankruptcy. And it's coming from a source familiar to veterans of monitoring trends in bankruptcy.
New York University professor Edward Altman, father of the 1968 bankruptcy predicting model known as the "Z-Score," is up to his old tricks, but in a whole new, high-tech world. Altman has unveiled a new application (or "app" as the tech-friendlies refer to them) for iPhone/iPad, Android and BlackBerry products called the "Altman Z-Score Plus."
The app, which retails for about $100, relies on the Z-Score model to determine the likelihood of publicly-traded U.S. company bankruptcies, like the original model from four-plus decades ago, as well as new wrinkles including many private firms, notably in the manufacturing field, and some internationally based outfits, particularly some key ones based in China.
Brian Shappell, NACM staff writer
FCIB'S New York International Roundtable
March 14, 2012
Use this fantastic one-day opportunity to network with your peers and find solutions to the industry's most challenging current issues.
Experts will discuss how to:
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Budget shortfalls remain widespread in the wake of the financial crisis. One notable, and oft-overlooked, casualty of the worst recession in a generation is lax administration of escheatment and unclaimed property rules by state authorities. Where once companies could often pay little mind to local laws governing unclaimed property, now, as recent studies have shown, enforcement is ramping up as local governments look high and low for ways to fill in budget gaps.
With this in mind, Val Jundt, managing director of Keane's consulting and advisory services, recently offered her best recommendations to trade credit professionals beset by this new environment, where stringent enforcement of unclaimed property liabilities is the norm, rather than the exception. "Though accounts receivable credit balances are clearly within the definition of an unclaimed property liability, it has only been within the past five to seven years that this category of property has become a primary focus for the auditor," said Jundt. "The responsibility of the credit manager to ensure that the identification, tracking and posting of all customer credit balances is done accurately, and completely, is critical."
Certain obligations can be very easily overlooked by creditors and their companies, Jundt noted, and being aware of these common mistakes can prevent a great deal of troublesome penalties down the road. For example, "There are often contracts with vendors that allow for certain discounts if paid early, or legitimate offsets due to damaged goods, which could appear to be obligations from an accounting perspective," said Jundt. "If these items are not documented carefully, the auditors often operate under an 'assumption' that a liability exists; often creating an estimated liability that can exceed several thousand, or even million, dollars."
"Whether the credit is still on the books or has been reduced to a check, the auditor will carefully review this area to identify a potential liability," she added.
For companies looking to increase compliance and protect themselves from newly zealous auditors, Jundt offered these helpful hints to get started:
• Confirm that your department is properly identifying and tracking customer credit balances.
• Make sure that unclaimed credit balances are being reported as unclaimed property.
• Follow up on customer credits early and often to resolve them where possible.
• Document your policies and procedures—and test them to make sure they are being followed.
To learn more about trends in unclaimed property and best practices in compliance, check out Jundt's presentation, "The ABCs of Unclaimed Property Compliance," at this year's upcoming Credit Congress, scheduled for June 10-13 at the Gaylord Texan in Dallas. Click here to find out more, or to register today.
Jundt will also lead a special "Added Advantage" NACM teleconference on unclaimed property in April. Click here to find out how to register.
Jacob Barron, CICP, NACM staff writer
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A recent "friend of the court" brief on the part of the American Subcontractors Association (ASA) and its Minnesota chapter is seeking to overturn an appeals court decision that could leave subcontractors in a precarious spot.
A recent appeals court ruling in Engineering & Construction Innovations, Inc. v. L.H. Bolduc Co., Inc. overturned a previous district court and jury decision that barred a general contractor from shifting liability for damage caused during a project. The subcontractor alleges it had no part in the damage. ASA noted that a jury found the general contractor at fault for the damage to a pipeline.
ASA is now urging the Supreme Court of Minnesota to uphold its interpretation of the state's anti-indemnity law in order to protect subcontractors from such liability.
"Engineering & Construction Innovations, Inc. v. L.H. Bolduc Co., Inc. is one of those unfortunate cases where there's damage during construction, everyone runs from the liability, there's litigation and there's no real clear cut answer as to who should or who is going to pay for the repairs," said Greg Powelson, director of NACM's Mechanic's Lien and Bond Services (MLBS). "It doesn't surprise me that the prime tried to push down liability, but I think the case will be overturned. I don't think it would be a surprise to anyone if, in the end, the subcontractor is not held liable for damages it didn't cause. I believe, at the end of the day, logic and cooler heads will once again ultimately prevail, and the prime will have to pay for the damage."
Brian Shappell, NACM staff writer
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The United States is seeking greater investment and trade with countries undergoing major governmental transitions, starting with Egypt.
Following a meeting between U.S. Trade Representative Ron Kirk and Egyptian Minister of Industry and Foreign Trade Dr. Mahmoud Eisa, both countries endorsed an action plan designed to provide job opportunities for Egyptians while boosting exports, expanding investment and supporting small and medium enterprises (SMEs). According to a joint statement, the U.S. will work with the private sector to promote investment in Egypt, provide expert technical assistance to buyers in the country and share best practices in SME support.
In essence, the U.S. is taking the opportunity presented by Egypt's regime change to build itself a stronger economic ally. Ambassador Kirk suggested that similar agreements could be sought with other countries in North Africa and the Middle East as well.
"In the wake of the extraordinary changes underway...we want to help Egypt empower individuals to make their own economic, as well as political, choices," he said. "Under President Obama's leadership, we are actively working to broaden and deepen commercial links with Egypt—and other countries in transition—because we are convinced trade and investment liberalization will help drive the economic growth that is so critical to Egypt's and the region's future."
While officials from both countries have yet to finalize the specific details of the plan, part of it will at the least include a pledge on the part of Egypt to assure the world of their commitment "to enhance the conditions for a dynamic economy, based on open markets, rule of law, innovation and full utilization of the talents and imagination of its people." In addition to increasing exports of goods, the U.S. will also aim to export "good regulatory practices" while protecting U.S. intellectual property rights.
Jacob Barron, CICP, NACM staff writer
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