February 2, 2010
Easily overlooked and frequently misunderstood, antitrust law can bedevil credit professionals and their companies in a number of different ways.
Although primarily thought of as regulations against anti-competitive behavior or monopolies, antitrust law also includes provisions that govern the exchange of information and collaboration between companies in the same industry, dealing with the same customer base. And sometimes, all it takes to cement a violation of the law is a simple, innocently-sent internal company communication.
"If you think about the Microsoft lawsuit that went on for years that hit every newspaper, one of the things that absolutely was the nail in the coffin on the Microsoft antitrust litigation was an internal email that was found in their systems that Microsoft never intended anyone to see," said Wanda Borges, Esq. "The system had been purged but the email was uncovered and said 'we are going to launch this product and bury the competition:' clearly an intent on behalf of Microsoft to destroy their competition."
Borges recently led the NACM teleconference, "Antitrust Issues", illuminating the myriad ways companies can run afoul of the law and potentially expose themselves to harmful civil and, even in some cases, criminal penalties.
For most credit professionals, the greatest risk for antitrust violations comes from exchanging information about customers between colleagues at other companies. Whether it's an informal chat on the phone or an organized credit group meeting, certain types of information cannot be shared and credit professionals need to be aware of this to avoid possible prosecution.
"You have to be careful that the conversation does not go beyond actual, factual and complete," said Borges. "Somebody might be tempted to say 'you know, the customer used to be at a $30 million credit limit; we just brought them down to $10 million.' This is factual."
"They might continue, saying 'and unless they pay us on time, we're going to cut them off altogether,'" she added. "That's something that could happen in the future. Therefore it is an improper statement to make."
Problems tend to creep in when credit professionals exit the protective confines of an industry credit group meeting, like the ones hosted by NACM. "You might get a phone call at that point from one of your competitors. 'You were talking at the meeting about customer X and you say you brought them down, but you wouldn't say more than that,'" said Borges. "'But now that it's just you and me on the phone, what are you going to do in the future?' You never ever talk about future activity."
As a rule, Borges suggested that credit professionals stay away from conversations about credit terms in general, especially in an informal setting. "You don't ever want to have a discussion about credit terms," she said. "It's very interesting to note that from time to time one of your so-called friends will rat you out. I have gotten phone calls telling me about the tennis game or the golf course, or the dinners, and all of the sudden in the middle of dessert, 'oh by the way, what are you doing about this customer?'"
"These kinds of impromptu conversations can get you caught," she added.
Jacob Barron, NACM staff writer
What You Can Do About Your Employment Security
While the nation's current unemployment problems aren't exclusive to the B2B credit sector, credit jobs are still facing a rate of elimination that's faster than the speed at which openings are being created. The only way to stay ahead of this trend and keep, or even move beyond, your current position, is to prove your worth and the worth of sound credit management. Learn how to make yourself a less likely layoff candidate by joining Susan Lujan, CCE for her latest NACM teleconference, "What You Can Do About Your Employment Security," on February 8th at 3:00pm EST. Lujan will offer proven methods for illustrating your worth to a company long before cost cutting and layoffs even become an option, as well as ways to add value to your company while employed and decrease the time your resume sits on the job market, unanswered, when you're not.
To learn more, or to register, click here.
The nation's small businesses have much to hope for following President Barack Obama's inaugural State of the Union address.
In a 68-minute speech focused primarily on job creation, Obama called for a major increase in exports and business tax incentives, drawing cheers from the nation's business leaders.
"We will double our exports over the next five years, an increase that will support two million jobs in America," said the President. "To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security."
Exports have remained one of the only reliable bright spots throughout the recession, and an increase like the one proposed by Obama in his address had previously been suggested by the U.S. Chamber of Commerce, which offered its support to the President's initiatives. "The President has acknowledged that the true engine of job creation in this country will always be America's businesses, and America's businesses are ready to respond," said Thomas Donohue, president and CEO of the U.S. Chamber. "Our nation's leaders need to forge ahead with a job-creating agenda that embraces free enterprise and removes uncertainty for businesses small and large."
"We are pleased that the president recognizes the importance of these initiatives in putting Americans back to work," he added.
To reach the ambitious new trade goal, Obama suggested continued work on global agreements as well as stringent enforcement of already existing ones. "If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores," he said. "But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. And that's why we'll continue to shape a Doha trade agreement that opens global markets."
"We will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia," Obama added, stopping short of endorsing the full-scale approval of the nation's three pending Free Trade Agreements (FTAs) with the previously-listed nations. Business leaders and the U.S. Chamber have repeatedly called on the administration and Congress to approve all pending FTAs in addition to implementing new ones.
Not all things that involved global trade were endorsed by the President in his address, most notably when it came to labor. Obama suggested that outsourcing and offshoring companies may face a tougher tax code in the future should they continue to create jobs in other countries at the expense of jobs here. "To encourage businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America," said Obama.
Jacob Barron, NACM staff writer
New MLBS Half-day Workshop Coming in March!
Join NACM's Mechanic's Lien & Bond Services (MLBS) President Greg Powelson for his next half-day lien and bond workshop on March 19th at the Norwalk Marriott in Norwalk, CA. In "Liens & Bonds: Building the Optimal Credit Department," Powelson will take attendees through the many idiosyncrasies that accompany construction credit and the many ways in which liens and bonds can be used to secure payment on what are often risky projects. From collecting job information all the way through foreclosure, attendees will get a fast-paced look into how they can create the optimal construction credit department.
To learn more about the program, register or read testimonials about Powelson's previous presentations, click here.
Powelson will also be conducting the following half-day lien and bond seminars in February:
Building the Optimal Credit Department
Thursday, February 4, 2010, 8:00-11:00am - Oklahoma City
1725 NW 1st Street, OKC, OK 73016
Friday, February 5, 2010, 8:00-11:00am - Catoosa, OK
Hard Rock Casino—Wild Potato Restaurant (Private Room)
Call 216-212-6020 to register.
A recent webcast hosted by the American Institute of Certified Public Accountants (AICPA) explored the ins-and-outs of XBRL (eXtensible Business Reporting Language), an "open data standard for financial reporting," which is a significant part of a new filing program that has been rolled out by the Securities and Exchange Commission (SEC). The "XBRL—Preparing for Phase II and Detail Tagging" webcast was led by two staff members from the SEC's Office of Interactive Disclosure, Jeffrey Naumann, CPA, assistant director, and Susan Yount, CPA, and moderated by John F. Hudson, CPA, president, Hudson Consulting Group LLC.
Splitting up their roles within the presentation, Naumann summarized the interactive data rule and provided SEC staff observations based on initial reviews of XBRL reporting while Yount discussed detailed "mapping notes" to financial statements. Throughout the webcast, viewer questions were answered by both.
Broadly speaking, the interactive data rule refers to the phase-in of XBRL reporting, which is based on company size and the accounting standards a company has in place. For example, large accelerated filers (LAF) with a public float of more than $5 billion that follow generally accepted accounting principles (GAAP) began submitting XBRL reports with block tag notes in June 2009. This initial group of filers represents Phase I and will be required to submit XBRL reports with detail tag notes in June 2010. The next group of filers, all remaining LAF using GAAP, will begin Phase II in June 2010 as well, though their XBRL reports will only require block tag notes. Phase II filers will submit detail tag notes in June 2011. All remaining filers that follow GAAP will submit XBRL reports in 2011 and 2012 while filers that use international financial reporting standards (IFRS) will follow a 2012-2013 schedule.
The block and detail tag notes comprise the "mapping notes" discussed by Yount. These notes are based on a resource known as the U.S. GAAP taxonomy, which is a detailed listing/dictionary of accounting and finance terms covering both standard and new elements. The taxonomy is available online and is an integral part of XBRL reporting (http://xbrl.us/taxonomies/Pages/USGAAP2009.aspx). Tag notes specifically apply to any footnotes in a company's financial statements.
While the intricacies of XBRL may seem to be far removed from the credit field, the ways in which this financial reporting system can affect SEC reports, including the 10-K, may also affect certain day-to-day responsibilities of credit professionals. After all, SEC materials like the 10-K are sometimes used when measuring the creditworthiness of new and established customers. Additionally, credit professionals may be in a unique position to offer useful contributions to XBRL reporting once their companies are phased into the process.
For more information about XBRL, visit dedicated websites hosted by the SEC (http://xbrl.sec.gov) and the AICPA (http://www.aicpa.org/Professional+Resources/Accounting+and+Auditing/BRAAS/XBRL.html).
Laura Redcay, NACM staff writer
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C4F: Employment Connections for the Business Credit Community
Three experts from Thomson Reuters recently offered credit professionals a solid and thorough background in understanding the nation's unclaimed property laws in the NACM teleconference, "Unclaimed Property Compliance Part One." Parts two and three of the series will continue later in the year, in June and November, respectively.
Led by Thomson Reuters' Senior Managers Sam Schaunaman, Susan Han and senior business process consultant Michael Wood, the teleconference delved into the ins and outs of unclaimed property compliance and why it matters to sellers and credit professionals.
While ruling laws on the subject can change from state to state, Schaunaman noted that a uniform version of unclaimed property law does govern the majority of the country's jurisdictions. "Probably about 44 states have adopted a form of the Uniform Unclaimed Property Act," he said. Schaunaman also detailed the three Supreme Court cases that form the body of unclaimed property, or escheatment, law as it works today. "The seminal case is a 1965 U.S. Supreme Court decision called Texas v. New Jersey," he said, which, contrary to its title, consisted of a dispute between four states in total. "Each of those four states had an interest in Sun Oil Company," said Schaunaman, noting that the company had abandoned certain property and that it was unclear as to which state had the right to claim it. "Texas said, 'Hey we have the most contents, so we should be entitled to the property.' New Jersey said 'No, they're incorporated in our state, so we should be entitled to it.' Pennsylvania said 'No, Sun Oil is headquartered here so we should be entitled,' and Florida said 'No, the owner is in our state so we should be entitled to it.'"
Congess had yet to really legislate in this matter, so the parties wanted one rule to ease the administration of unclaimed property. "Therefore, the first priority rule is the last known address of the creditor or the owner of the property is the state entitled to the property," said Schaunaman. "There might not be a last known address and in that case, the secondary rule will be that if there is no address, the holder's state of incorporation will govern."
Two other later cases, Pennsylvania v. New York in 1972 and Delaware v. New York in 1993, failed to change the established priority rule.
In addition to the governing laws and cases, Schuanaman, Han and Wood also discussed the role of A/R credits in unclaimed property, the holder's responsibilities once property goes abandoned and how unclaimed property intersects with the Sarbanes-Oxley Act (SOX).
To learn more about NACM's teleconference series, click here.
Jacob Barron, NACM staff writer
Credit Words Contest Winners
Did you miss the recent announcement of the 2009 winners of the NACM and Business Credit magazine contest?
1st Place: Jennifer Hudgens, vice president, The Kreller Group, Cincinnati, OH
Runner-up: Norman Cowie, CCE, vice president, finance, Evergreen Oak Electric Supply and Sales Co., Crestwood, IL
Runner-up: Allen Vickers, CCE, corporate credit manager, A&K Railroad Materials, Inc., Salt Lake City, UT
Read the winning submissions here. The winning story also appears in the February issue of Business Credit. Catch the runners-up in the March issue!
The latest data are starting to turn in a decidedly positive direction; GDP numbers are the best in over a year and a half, suggesting that the recession is in clear retreat. After a mild recovery in the third quarter, numbers jumped 5.8% in the fourth. The bulk of this growth is attributed to manufacturers starting to replenish inventories, mostly since the beginning of December and this shift in strategy is reflected in the Credit Managers' Index (CMI) numbers as well. "The jump in manufacturing was stark and unexpected and, since the decline registered in the last iteration of the index, there has been a major leap in some critical areas," said Chris Kuehl, Ph.D., economist for the National Association of Credit Management. "The combined CMI saw a jump from 52.9 to 55.1, which is impressive enough, but the real movement came from the manufacturing side," he said. Reinforcing the message coming from the economy as a whole, the manufacturing sector jumped from 52.1 to 55.1, reversing the trend from the December index when the sector stagnated and slipped in terms of positive factors.
There was an improved atmosphere in both manufacturing and service sectors with the most activity in the combined index's favorable factors, specifically sales and new credit applications. Sales in the combined index jumped from 56.7 to 60.7, marking the first time this figure has been above 60 in 18 months. There was also progress in new credit applications—a jump from 54.2 to 57—signaling movement in the credit sector despite ongoing issues in the financial community. One of the biggest leaps came from dollar collections, which sported readings in the 40s just nine months ago and is now at 61.3. The same pattern was seen in amount of credit extended, now standing at 58.8 after sitting in the 40s just five months ago.
"The past pattern in the index suggests that this is developing into a classic recession exit," said Kuehl. "The deterioration of inventory and the dramatic reduction in capacity utilization meant that any spark of demand would propel business out of this predicament and, as in past recessions, the months following the end of these strategies would show substantial growth. The trillion-dollar question is whether this growth surge can be maintained throughout the rest of the year."
Thus far, these are the highest numbers seen in the index since February 2009 when the initial impetus of the recession was broken. Since then, growth has been even, but not dramatic. That trend of slow growth is likely to return, but the suggestion from this month's data is that there will be pretty substantial gains for the bulk of the first quarter.
The service sector was not as dramatic as the manufacturing sector, but there was growth. The same factors seemed to be at work-increased sales and expanded availability of money. In both sectors there has been some improvement in terms of the number of accounts placed for collection and the number of disputes, and there has been a fairly steady decline in the number of bankruptcies as well. All in all, the CMI numbers of the last few months signal that business is attempting to catch up and position itself for the growth that has now finally arrived.
View this month's complete report and archives here.
Distressed Business Services
Many NACM Affiliates are involved in a national network to provide assistance in the rehabilitation (if possible) or liquidation (if necessary) of businesses in severe financial difficulty.
While courts can take several months or more to start a reorganization plan, NACM Affiliates can assist in getting a plan approved in as little as 30 days. Most helpful is the knowledge that experienced professionals are ready to step in at the most difficult time. NACM Affiliate staff members can serve as secretary to creditors' committees, provide other needed advisory services and are fully aware of the prevailing laws and regulations relevant to each situation.
Click here to learn more about NACM's Distressed Business Services.
In today's employment environment, temporary work continues to stand out as a bright spot. And, according to leading temporary financial staffing firm Accountemps, companies are beginning to turn these positions into full-time roles more frequently.
"Many companies that cut staff too deeply or are not quite ready to hire on a full-time basis are bringing in project professionals at all levels to maintain productivity and keep initiatives on track," said Max Messmer, chairman of Accountemps and author of Job Hunting For Dummies®, 2nd Edition. "When a position warrants full-time status, businesses commonly look first to staff who have excelled in the role on an interim basis."
Messmer added, "Temporary assignments allow professionals, in essence, to audition for an employer while at the same time determining if the situation is right for them."
Accountemps offers the following five tips for turning a temporary assignment into a full-time job:
1. Choose the right partner. Reach out to your network and tap the services of a staffing firm specializing in your field. Staffing professionals are well connected in their local business communities and can serve as advocates for you when speaking with hiring managers. Also, take advantage of free training opportunities offered by the firm to help build your skills and the value you bring to employers.
2. State your objective. Let staffing firms and potential employers know you're ultimately looking for a full-time job. If they understand that upfront, they may be able to place you in a role more likely to lead to that result.
3. Take a long-term approach. Once you're on the assignment, bring the same intensity to the temporary job you would to a full-time position. Adapt quickly to the organization's corporate culture and start contributing immediately. In addition, maintain a positive attitude: Employers will assess how well you handle constructive criticism, setbacks and other job-related challenges as part of your overall performance evaluation.
4. Observe the written and unwritten rules. Follow office protocol and ask questions when clarification is needed. For guidance, watch how top managers respond to certain situations and model your behavior on theirs, as appropriate. Also seek feedback on how you're doing and how you can improve in the role.
5. Let your personality shine. Employers want to see how well you'll fit in with the team. Actively participate in meetings and join colleagues in offsite events where possible. Expanding your connections within the company will work in your favor, so be sure to build rapport with other employees.
To view past eNews issues or to visit the NACM Archives, click here.