eNews April 17, 2014

April 17, 2014


News Briefs

  1. Fed Asks NACM Members for Help in Fraud Study
  2. NACM-STS Update: Mississippi Lien Law Signed, Now in Force
  3. EU Votes to Include Commercial Cards in Interchange Fee Limits
  4. Report: Single Asset Real Estate Cases Don't Belong in Chapter 11
  5. Demand Exceeds Supply


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Fed Asks NACM Members for Help in Fraud Study

A collective of five Federal Reserve Banks is spearheading a study on the challenges of payment fraud through early May. Participation is requested from payments risk management professionals, including those in credit and finance, as well as compliance, risk management, treasury and audit departments. Specifically noting that credit professionals are an underrepresented group, the Fed hopes to see greater representation from NACM members in this online survey.

Representatives from the Federal Reserve Bank of Minnesota, which also heads the Remittance Coalition in which NACM is a member, believe that credit professionals in the B2B sphere could have an important impact in this survey if more participate in the online questionnaire. The survey is open now, through May 9, and is available here. The survey addresses the various payments-related fraud experiences of financial institutions and businesses.

NACM strongly encourages its membership to take part in this important venture, as the more data that is available on topics like payment fraud, the more equipped federal agencies and private businesses alike will be able to combat such problems. The survey should take about 30 minutes to complete and, to help with tracking purposes, please write "NACM" in the field marked "Other, please specify" for the question about trade association membership on page three of the questionnaire.

The effort dovetails with NACM's involvement in the Remittance Coalition, which is a group of organizations working to promote greater use of electronic B2B payments and electronic remittance data exchanges. Among the coalition's priorities for 2014 are improved outreach to small businesses, a comprehensive B2B directory project and promotion of a remittance terms glossary. More information on the Remittance Coalition is available here.

- Brian Shappell, CBA, CICP, NACM staff writer

Upcoming Credit Congress Session Highlights: Spotting the Distressed Customer

Speaker: Lynnette Warman, Esq., Culhane Meadows PLLC and Toni Drake, CCE, Connection Center

Have you ever had the feeling that something was not quite right with a customer even though everything seemed to be going just fine? It's not always easy to spot distressed customers, but it can be done. This session teaches you how to use all the tools available to spot a distressed customer and take action before it is too late.

Learn more and register for Credit Congress here.

NACM-STS Update: Mississippi Lien Law Signed, Now in Force

Mississippi Governor Phil Bryant signed State Senate Bill 2622 into law on April 11, extending the lien rights that previously only belonged to parties with a direct contract with the owner to subcontractors and materials suppliers operating in Mississippi as well.

Prior to the bill's enactment, Mississippi was the only state that did not have a lien law statute that applied to subcontractors. SB 2622 remedied that, however, and put an end to the state construction industry's woes that followed in the Mississippi Supreme Court's decision last fall to declare the state's stop notice statute unconstitutional, thereby revoking one of the only payment protections previously available to Mississippi subcontractors and materials suppliers.

Advocates were quick to rise to the challenge of enacting a new lien law in response to the court's ruling, and rather than simply reinstating the incomplete coverage of the state's former stop notice statute, the construction community came together to enact a full array of lien rights and protections modeled after those in Georgia.

The bill's expansion of lien rights applies only to subcontractors and materials suppliers that are properly certified by the Mississippi State Board of Contractors, as required by law. Claimants without a direct contract with the owner must provide a pre-lien notice within 30 days after first furnishing, and then file a claim for the lien within 90 days of last furnishing. Subcontractors, materials suppliers and any lien claimant looking to foreclose on the lien must commence their payment action within 180 days of the date the lien was filed.

Material suppliers selling in Mississippi would be wise to adjust their credit strategies to take full advantage of the expanded rights made available by this new law. Sales representatives should be instructed to gather all the job information necessary to preserve rights during the sales process and credit departments should take care to use the correct statutory forms to send preliminary notices that in most cases must be sent within 30 days of first furnishing to preserve lien rights.

As it is with all states' lien laws, there are several more details that subcontractors and materials suppliers must be aware of in the statute, including different regulations for single-family residential construction.

- Jacob Barron, CICP, NACM staff writer

Look to a valued partner like NACM’s Secured Transaction Services (STS) to assist you with this new law. STS’ Lien Navigator is the authoritative guide to notice, lien, payment bond and suit time requirements for all 50 states and Canada. If your company works with liens and bonds, check out what this service can do for you at http://www.nacmsts.com.

Need Information? Join an NACM Industry Credit Group

NACM Industry Credit Groups open communication lines for the exchange of credit information. Credit executives receive invaluable factual credit information upon which to base independent decisions with respect to the extension of credit.

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.

EU Votes to Include Commercial Cards in Interchange Fee Limits

The European Parliament voted earlier this month to include commercial credit cards in their new statutory limits on credit card interchange fees.

Previously, the proposal would have applied the limits only to consumer cards, but the Parliament's Economic and Monetary Committee (ECON) removed the exemption for commercial credit cards in February. European Commission representatives recommended that the exemption be added back into the proposal, but the Parliament adopted ECON's original revisions. The European Union Council of Ministers, which represents individual member states, also has to approve the regulation before it becomes law. If it does, merchants in the EU accepting payments on a commercial credit card would see their fees capped at 0.3%.

Card networks warned corporate users that the regulation, should it ever enter into force with the commercial credit card interchange limits intact, could lead to greater fees in other forms as banks make up for the estimated 6 billion euros the new rules would cost them.

"MasterCard is concerned that today's vote in the European Parliament is bad news for consumers and small businesses in Europe," said the company in a statement. "While the idea of capping fees may be politically attractive, it makes little sense if consumers and small businesses end up paying more for their cards."

The EU has taken an especially strict approach to regulating the way card networks charge interchange fees, and has historically been more rigorous in its enforcement of antitrust regulations in general. Officials in the EU have repeatedly accused Visa and MasterCard, which collectively control more than 95% of the European market in terms of value, of anticompetitive behavior and that the fees themselves artificially increase prices for users.

- Jacob Barron, CICP, NACM staff writer

Now Surveying: Asia

FCIB's International Credit and Collections Survey is the only monthly survey of its kind. The easy-to-answer survey asks credit and risk management professionals to share payment trends and collection experience in categories like:

  • Top payment method
  • Average number of days granted
  • Average number of past due accounts
  • Average payment delay

The unique survey results, in conjunction with invaluable archived data, give participants critical insight into current and past global credit practices. Participation* enters you into a raffle for a chance to win a complimentary live or recorded one-day webinar of your choice from FCIB's Webinar Training Series.

Click here to participate.

*International Certified Credit Executive (ICCE) applicants and renewals earn 1 participation point per post, per month.

Thank you for your participation!

Report: Single Asset Real Estate Cases Don't Belong in Chapter 11

A single asset real estate (SARE) case, as defined by the Bankruptcy Code, is one wherein the debtor possesses "real property constituting a single property or project, other than residential real property with fewer than four residential units." This asset generates "substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental."

Essentially, it's a case where a debtor has that one big piece of property, and according to some experts, it's time for those filings to be excluded from finding their way into the Chapter 11 process. Jonathan Landers of Scarola Malone & Zubatov LLP, in his April ABI Journal article "Time to Exclude SARE Cases from a Reformed Chapter 11," argues that any reforms to the Bankruptcy Code's reorganization process should force SARE cases out of Chapter 11 because he finds it hard to justify the expense of a Chapter 11 when the debtor's only asset is of little or no going-concern value.

"SAREs do not belong in Chapter 11 because Chapter 11 is intended to preserve going-concern value that would be lost in liquidation and to protect the rights of creditors," Landers said. "SARE is simply a contest between the secured lender and the property-owning debtor in which the debtor seeks to preserve its equity interest by using the tools of bankruptcy to reduce the lender’s secured debt."

Typical SARE cases are disputes between the lender and debtor where the debtor cannot pay its secured debt under the terms and conditions of its loan and needs more time, lower payments, lower interest rates, reduced principal or different terms altogether. "If the lender agrees to these terms, Chapter 11 is not needed, so SARE cases are filed when a consensual arrangement cannot be reached," Landers said. "Such cases do not accomplish any significant social or policy benefit, unless reducing the lender's claims and transferring value to the debtor is considered such a benefit."

SARE debtors also typically have nominal amounts of unsecured debt, and service providers and employees that will, in all likelihood, follow the asset into new hands. "Chapter 11 has never been justified as a mechanism to transfer value from creditors to the debtors," Landers said.

- Jacob Barron, CICP, NACM staff writer

"I use NACM National Trade Credit Reports because the information is accurate and up-to-date." - NACM Member

When it comes to providing businesses with factual, accurate and relevant information, the NACM National Trade Credit Report is the right choice. NACM National Trade Credit Reports include trade payment data, days beyond terms and fresh, robust and timely business information.

NACM has more than a century of experience supporting trade credit, and we'll be here tomorrow and beyond to support you.

Click here to contact a participating NACM Affiliate today!

Demand Exceeds Supply

The German government meant this to be a gesture of support for the governments struggling with high rates of youth unemployment. It didn’t hurt that the plan would also help address a labor shortage in the country. The idea was to offer a program of language instruction and job skills to young people from counties like Greece, Spain, Italy and Portugal. The response was overwhelming and the Germans have been forced to curtail the program for the time being. Some 9,000 applied by March, almost three times what was expected.

It is a little hard to understand why the Germans would be shocked at the response. These are nations with youth unemployment rates of close to 30% and there is an allure to Germany unmatched in the rest of Europe. The program will have to take time to adjust to this rush, but in the end, the Germans will have a true job-creating engine in place that may end up becoming a model for nations like the US as a means to address skill shortages.

- Armada Corporate Intelligence

Recent Job Listings in NACM's Credit Career Center

Leasing Credit Sr Officer at Bank of America in Providence, RI
Credit TRX Analyst at Sysco Memphis LLC in Memphis, TN
Credit Analyst at Automation Service in Earth City, MO
Credit and Collections Manager - Domestic and International at Bridgewell Resources LLC in Tigard, OR
Corporate Credit Manager at WSM Industries in Wichita, KS

NACM's Credit Career Center is your industry-specific job board offering employment connections for the business credit community. 

Current Job Postings

Are you an employer? If you are an NACM or FCIB member, post your job now for FREE.

Click here to get started today!


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