eNews May 9, 2013

May 9, 2013


News Briefs

  1. FCIB Partners with U.S. Agencies, Expands Role as Export Facilitator
  2. Preferences to Be a Hot Topic at ABI Hearing during Credit Congress
  3. Exports Dip in March as Ex-Im Faces Conservative Coup
  4. Y2Y Chapter 11 Bankruptcies Down, Ninth Circuit Tops List
  5. Fed Chides Congress, Pledges More Accommodative Fiscal Policy


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FCIB Partners with U.S. Agencies, Expands Role as Export Facilitator

The Finance, Credit and International Business Association (FCIB) is already an important global source of exporting education and professional networking. Now, however, the association is expanding to become a portal through which exporters of all sizes can find the tools and resources they need to effectively grow their business through international trade.

Most recently, at the Port of Los Angeles' Trade Connect seminar held on May 8, FCIB, in partnership with the U.S. Department of Commerce's International Trade Administration (ITA), unveiled the first-ever Spanish-language edition of the ITA's Trade Finance Guide. FCIB member and credit analyst Diego Jiménez, ICCE was instrumental in the review of the translated guide, as well as to the program of this week's Trade Connect seminar. Another FCIB member, Timothy Bastian, ICCE, corporate credit manager for Western Oilfields Supply Company, also presented a session at the event.

The announcement came on the heels of FCIB and ITA signing a new memorandum of understanding (MOU) in order to increase awareness in the U.S. business community, particularly among small and medium-sized businesses, of the opportunities offered by exporting, as well as the tools and resources available to companies through the two organizations. The MOU builds on previous collaborations between FCIB and ITA, beginning with the drafting of the original Trade Finance Guide, its subsequent updates and now its first Spanish-language edition.

"By working together, FCIB and ITA are making it easier for all U.S. companies to take advantage of the exporting opportunities offered around the globe," said FCIB's Director–Americas Marta Chacon, CICP. "The Trade Finance Guide, which is now in its third edition and is now available to Spanish-speaking business owners, is only the first step in what will be a long line of collaborations geared toward unlocking world markets for businesses of all sizes."

Through the MOU and updated Trade Finance Guide, FCIB is becoming more deeply ingrained in the policy goals outlined in President Barack Obama's National Exporting Initiative (NEI), which aims to double U.S. exports by the end of 2014. FCIB's partnership with ITA puts them in good company with the U.S. Commercial Service's other strategic partners and will enable the association to better support the goals of the NEI by educating U.S. businesses about the benefits of exporting and directing them to the wealth of public and private resources available to assist them.


Make Better Credit Decisions with Industry Credit Groups

Credit groups are an effective management tool, allowing credit professionals of different companies servicing the same customer, regardless of industry or trade, to compare information on collection history and provide a forum for the exchange of data about the most recent payment practices. The purpose of exchanging information is to help group members separate fact from fiction, so competent and realistic credit decisions about a customer can be made.

Managed and operated by NACM Affiliates nationwide, credit groups:

  • Provide unparalleled networking opportunities
  • Assist in the exchange of credit information on common customers
  • Facilitate the receipt and analysis of information to make unilateral credit decisions
  • Provide a forum to discuss the latest developments on credit department procedures,
    equipment and other credit management functions
  • Support the discussion of account information and delinquent account reports
  • Adhere to federal antitrust guidelines

Contact your local NACM Affiliate to learn more about NACM credit groups and to find the group for your industry.

Preferences to Be a Hot Topic at ABI Hearing during Credit Congress

Ask a seasoned credit professional about their views on preferences, and what will likely follow is a horror story about defending a preference claim. Their experience paints a clear picture: the original intent of the law regarding preference recovery has essentially been lost, as has the realization of leveling the playing field for U.S. businesses.

However, experienced NACM members are ready to testify on preferences in an effort to update the U.S. Bankruptcy Code during a field hearing being conducted by the American Bankruptcy Institute Commission to Study the Reform of Chapter 11 at this year's Credit Congress on May 21 (see story 2 in the May 2 eNews for background on the Commission and hearings).

Kathleen Tomlin, CCE, credit and collections manager with Central Concrete Supply Co., Inc., and Val Venable, director of credit at Ascend Performance Materials, are two of the three-person panel that will speak on the topic. Venable, particularly, said change is needed because the money generated by the current, poorly functioning preference law has led to a cottage industry, but not for suppliers or even debtors. "I don't recall ever seeing trade creditors receiving any distributions as a result of preference recoveries from the trade creditor class," said Venable, who has served on ABI's Unsecured Trade Creditors' Committee and as well as its Ethics Committee. "I have never seen any of the trade credit preference recoveries going into the unsecured creditors' pool for distribution. The funds instead are primarily paid to those seeking the recovery."

Tomlin, meanwhile, argued that fear over the potential for future preference claims often forces protection-minded businesses into making overly cautious business decisions that aren't good for creditors or debtors. "We are often reluctant to extend additional credit or stretch out payments from a customer, even if we believe a company's distress is temporary, simply because we want to avoid the time and expense of a preference situation," said Tomlin in prepared testimony, noting that preference demands are often made without proper analysis to verify validity. "This uncertainty is not helpful to our company or our customers, and I firmly believe it drives up the costs of credit by a significant amount."

The Commission expects to present its proposed changes to the U.S. Congress next year.

- Brian Shappell, CBA, CICP, NACM staff writer

Preferences will be the focus of one of the two panels that will testify before the ABI Commission to Study the Reform of Chapter 11 at this month's Credit Congress. The other panel will focus on Section 503(b)(9) of the Bankruptcy Code and will be spotlighted in next week's edition of eNews.

Good Behavior Rewarded

Your company’s good corporate behavior is now worth participation points on the NACM Career Roadmap and for CCE Recertification! The NACM Education Department is pleased to announce that we will now reward credential holders for their company’s contribution of their A/R data to an NACM Affiliate credit reporting database. A member of a company that contributes full A/R data to an NACM Affiliate credit reporting database may claim one point per year on the Career Roadmap and 0.25 points per year on the Recertification Report.

Contact the NACM Education Department at education_info@nacm.org with any questions.

Exports Dip in March as Ex-Im Faces Conservative Coup

Exports fell to a still-strong $184.3 billion in goods and services in March 2013, down from February's total of $186 billion. Total exports of goods and services over the last 12 months totaled $2.2 trillion, which is still 39.7% higher than export levels in 2009, and in the past year, exports have continued to grow at an annualized rate of 10.8%.

Export-Import Bank (Ex-Im) Chairman Fred Hochberg credited President Barack Obama's National Export Initiative for the reliability of U.S. export figures and for "helping businesses across the country remain globally competitive." However, if certain advocacy groups get their way, Hochberg won't get to issue such high praise for much longer, nor will Ex-Im be able to support U.S. exports through its varied suite of loans, guarantees and financing programs.

That's because Hochberg's nomination for a second year as Ex-Im chairman is on the bubble, and the fiscally conservative Club for Growth is urging Senate Minority Leader Mitch McConnell (R-KY) to block the nomination entirely. Ex-Im's charter requires at least a quorum of three of its five-member board of directors in order to approve transactions. In addition to Hochberg, the terms of two other Ex-Im board members expire in July and President Obama has yet to nominate replacements, meaning that the Senate's failure to confirm Hochberg before his term's expiration would essentially shutter Ex-Im's operations.

Ex-Im has long been a target of free market advocates like the Club for Growth, who most recently attempted to prevent the reauthorization of the bank's charter last year, but failed to do so after business groups like the U.S. Chamber of Commerce came to Ex-Im's rescue.

Democratic leaders in the Senate urged quick action on Hochberg's nomination. "If we do not again confirm Mr. Hochberg before July 20, we run the risk of leaving the bank without a quorum to act on many of the transactions before it, which will hurt American workers and exporters," said Sen. Tim Johnson (D-SD), chairman of the Senate Committee on Banking, Housing and Urban Affairs which held a nomination hearing for Hochberg this week. Johnson's counterpart on the committee, Ranking Member Mike Crapo (R-ID), was one of the 19 republicans who voted against Ex-Im's reauthorization in 2012, and needled Hochberg during the hearing with concerns that the bank was "basically providing corporate welfare to some of America's largest corporations."

In his prepared statement, Hochberg defended Ex-Im's record, noting that while in fiscal year 2008 the bank only offered $3.2 billion in small business export financing, in FY2012 the bank financed a total of $7.5 billion in small business exports, of which $6.1 billion was direct. He also touted Ex-Im's low default rate (0.307%) and the fact that its operations are revenue-positive for the U.S. and have generated $1.6 billion for taxpayers over the last five years.

- Jacob Barron, CICP, NACM staff writer

UCC Filing Services: Put Yourself in the Best Possible Position to Get Paid

NACM's UCC Filing Services determines the most effective type of filing for your business and assists you in writing the security agreement and collateral description. Then you're ready to file!

Start filing blanket and purchase money security interest filings, perfecting consignments and more, today! Contact Greg Powelson, director of NACM's Secured Transaction Services at gregp@nacm.org or call 410-919-8680.

Y2Y Chapter 11 Bankruptcies Down, Ninth Circuit Tops List

The Third Circuit has long been perceived as the most efficient, and perhaps most filer-friendly, when it comes to corporate bankruptcies. Perhaps that is why the district is seen as the most likely choice for filings. However, the latest numbers from the U.S. Bankruptcy Courts note that business filings coming from the district place it only third among the 11 districts.

Chapter 11 bankruptcy filings throughout the nation declined by more than 10% during a one-year period between the end of March 2012 and this year. The total now sits at 9,811 (8,413 of which were categorized as business filings), down from March's 11,339. The total of all types of bankruptcies also dropped by more than 10% to 1.17 million. Of the total, 37,552 were businesses. Still a tiny percentage overall, Chapter 9 (municipal bankruptcy) filings increased to 20 between March 2012 and March 2013 from 13 during the previous 12 months.

Within the numbers, the Ninth District (West Coast) had the most filings for the period at 2,418, down significantly from the 3,188 last year. It was followed by the Eleventh Circuit (comprised of Florida, Georgia and Alabama) with 1,288 filings, and the aforementioned Third Circuit (located in Delaware and including New Jersey and Pennsylvania), which had 1,213. The lowest total of filings, excluding Washington, DC, came out of the Eighth District (comprised of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), which had just 317.

- Brian Shappell, CBA, CICP, NACM staff writer

"I started calling members to network with, as I wanted a mentor."

"We wanted all our credit individuals to become educated."

These quotes from a March 14, 2013 eNews story convey the vision of NACM's Credit and Financial Development Division (CFDD): to be a leading provider of professional development opportunities through learning, coaching, networking and individual enrichment.

Meet and get to know some of the most valuable resources in the industry: other credit people like you.

Click here to learn more about this highly-social group!

Fed Chides Congress, Pledges More Accommodative Fiscal Policy

The Federal Reserve took a swipe at Congress last week as it reiterated its commitment to exceptionally accommodative fiscal policy for the foreseeable future.

According to the Fed's Federal Open Market Committee (FOMC), information since March suggests continuing economic growth at a moderate pace, but despite some improvements, there's one thing that continues to force the Fed's hand when it comes to economic stimulus. "Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated," said the FOMC. "Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth."

That reference to fiscal policy is a minor dig at Congress, which continues to be mired in partisan stagnation and legislative paralysis. As long as this continues to be the case, and inflation continues to run "below the Committee's longer-run objective," the FOMC announced that it would continue purchasing additional agency mortgage-backed securities at the continued pace of $40 billion per month, along with longer-term Treasury securities at a pace of $45 billion per month.

"The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction," said the FOMC. "Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

The FOMC began buying such securities as part of a stimulus plan hatched last September. As the results of the program continue to pay dividends without putting too much upward pressure on inflation, the Committee has seen no reason to pull back. Thus, interest rates will remain low, and in its release, the FOMC pledged to keep the target range for the federal funds rate between 0-0.25%, at least until the unemployment rate falls beneath 6.5%. Most recently, the unemployment rate fell to a four-year low of 7.5%.

- Jacob Barron, CICP, NACM staff writer

Manual of Credit and Commercial Laws, Volume III: Construction Issues—Do You Have the Update?

New for 2013, language and state laws have been updated throughout the entire volume including:

  • Chapter on Personal Property Liens
  • Chapter on Trust Funds
  • Chapters on Liens and Bonds

The entire volume has been updated to reflect the liens, bonds and trust funds applicable to the 21st century!

Watch for future updates of volumes I, II and IV.

Click here to purchase volume III and get more information about the wide array of resources available to today's credit professionals.


To view past eNews issues or to visit the NACM Archives, click here.



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