May 8, 2014
A California Assemblyman's bill that would impose new regulations on commercial credit reporting agencies took a hit this week after the State Assembly Committee on Banking and Finance removed the bill from the agenda for a recent hearing.
AB 2564, introduced by Assemblyman Brian Nestande (R), was set to be considered by the Banking and Finance Committee at a legislative hearing on May 5, but the bill was scratched late last week. This doesn't mean that the bill itself is defeated, just that it will not be considered by the California State Assembly. Under the state's legislative procedures, the bill can be repurposed and reconsidered in the Senate under certain circumstances, but the Committee's decision to exclude the bill from the hearing agenda should be welcome news to opponents of the bill who feared that the legislation would pose a threat to the free flow of commercial credit information in California.
As drafted, AB 2564 would: (a) require a commercial credit reporting agency to furnish a source of information to the subject of a commercial credit report upon the request of a representative of a subject; (b) require a printed copy of the report to be provided at no cost to the subject of a report; (c) prohibit an agency, or a business affiliate of that agency from assessing a fee upon the subject of a report in connection with ensuring the proper data is contained within the commercial credit report of the subject; and (d) require an agency to endeavor to maintain the most accurate data possible regarding the subject of a report.
The bill closely resembles Virginia House Bill 2198, which Virginia's legislature considered over the course of 2013 before eventually abandoning it. NACM worked successfully to defeat HB 2198 in Virginia last year, opposing the bill on the basis that requiring commercial credit reporting agencies to reveal the identity of their sources would have cooled the free and open exchange of credit information in that state, and submitted a letter to the California Assembly Committee on Banking and Finance last week objecting to AB 2564 on similar grounds. The letter can be found here.
- Jacob Barron, CICP, NACM staff writer
Credit Congress Session Highlight: A Conversation with a CFO
Moderator: Pam Krank, The Credit Department Inc.This session is a rare opportunity for credit managers. The CFO provides insight into what is truly expected from the credit team and what kind of reporting is beneficial to them. Find out how to better understand the importance of the credit function from those who must interpret the value of the receivable asset, impact on cash flow and the resulting strategies from maximizing results of the receivable management. Find out how credit professionals can advance their careers by learning to better communicate at the treasury level and by understanding what treasuryâ€™s expectation is of the credit department. The CFO will share experiences to help credit managers understand the strategic skills a credit manager can provide that will be most valued at the top of the corporate structure. Questions are welcomed to generate a constructive conversation and glean the most from this unique session.
Learn more and register for Credit Congress here.
A trio of technical reports looking into standards and common occurrences in B2B payments has been released for free download by a collective spearheaded by the Federal Reserve Bank of Minneapolis.
After being reviewed and given the green light by the American National Standards Institute, the Remittance Coalition, which includes a number of top industry groups including NACM, has made available the following technical reports, which aim to identify common problems, verbiage and best practices in the industry:
- Core Adjustment Reason Codes: Identifies the most frequently used adjustment codes found in B2B payments and provides an overview of how to use these codes in the exchange and processing of remittance information. View the report here.
- Remittance Glossary: Lists key terms and phrases used in B2B payment matters in an effort to clarify and standardize communications between businesses. View the report here.
- Remittance Standards Inventory: Geared to B2B solution and service providers and companies trying to implement efficiency improvements related to payment and remittance data. View the report here.
Also noteworthy this week is the end of the survey period on payment fraud being conducted by a collective of five Federal Reserve Banks. The survey, open through May 9, is available here. The Fed specifically reached out to NACM to ask for increased participation from trade credit this year. 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.
- Brian Shappell CBA, CICP, NACM staff writer
Hear representatives from the Federal Reserve speak and field questions during "Payment System Priorities: What the Federal Reserve Has Learned," a June 11 session during NACMâ€™s 118th Credit Congress in Orlando. For more information and to register, click here.
Feel the Power of an NACM Industry Credit Group
Need information? Need to separate fact from fiction? NACM Industry Credit Groups are one of the best sources available to the credit professional to help form sound judgments on their customers. You'll enjoy the benefits of open communication lines for the exchange of credit information and discover new networking opportunities. The cumulative experience and expertise of many is power indeed!
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.
The House Judiciary Committee advanced a bill endorsed by the National Association of Credit Management (NACM) last week. The Security in Bonding Act (H.R. 776), which would require all sureties on federal construction projects to meet the same financial and actuarial requirements as "corporate sureties," will now be considered by the full House of Representatives after the Judiciary Committee reported the bill by a voice vote.
Upon its introduction by Rep. Richard Hanna (R-NY), H.R. 776 was referred to both the Judiciary Committee and the Small Business Committee. While action on the bill was deferred in the latter committee, the former body considered the legislation over the course of April, ultimately approving it for further consideration on April 30.
"Current law allows prospective bidders to use individual sureties to obtain the bonds guaranteeing their performance. The law also permits individual sureties to support their bond with illiquid and risky collateral," said Judiciary Committee Chairman Bob Goodlatte (R-VA) after his committee's markup, referring to current surety policies on federal contracts as presently outlined under the Federal Acquisition Regulation (FAR). "As a result, there have been repeated instances where the federal government and subcontractors turn to individual sureties for a recovery only to find that the collateral simply does not exist. The Security in Bonding Act addresses this problem by requiring individual sureties to provide low-risk collateral to support their bonds."
NACM offered its support to H.R. 776 in March, citing the potential positive effect the bill could have on the extension of commercial credit to general contractors working on federal projects. "For our members, when extending credit to a general contractor, the presence of a bond from a so-called 'individual surety' can often be considered a financial red flag. This is because when a bond is posted via an individual surety, rather than a federally-assessed and approved corporate surety, it's often a sign that the general contractor could not meet certain underwriting requirements, and could therefore be in financial distress," said NACM, in a letter of support signed by Chairman Chris Myers and President Robin Schauseil, CAE. "This makes it harder for our members and their companies to provide the goods and services that are necessary to the project's completion, and limits the flow of commercial credit that drives the nation's economy."
"H.R. 776 is a vital piece of legislation that can broadly increase the flow of commercial credit in the construction industry, greatly enhance the cost effectiveness of the federal procurement process and contribute to small businesses' ability to grow and create jobs," the letter added.
In addition to continuing through the House, parts of H.R. 776 could also be included in the National Defense Authorization Act (NDAA), an omnibus bill Congress passes annually to detail the Department of Defense's budget while simultaneously enacting several other provisions. For more on H.R. 776 and on NACM's positions on construction law, check out the upcoming June 2014 issue of Business Credit.
- Jacob Barron, CICP, NACM staff writer
FCIB's ICRM Courseâ€”The Foundation of International Credit Learning
In 13 weeks, confidently manage and mitigate the risks inherent to global commercial credit by leveraging the knowledge and experience gained by completing FCIB's International Credit & Risk Management Online Course.
The next course is in session from May 12 to August 10.
- Earn the most recognized and prestigious lifetime designation in the industryâ€” the Certified International Credit Professional (CICP).
- Course is comprised of 12 modules ranging from international trade and law to cash and treasury management.
- Online learning allows you to access course materials and interact with your instructor and peers 24/7.
Next FCIB ICRM 2014 Course Date: September 8, 2014
These online courses have approved ICEU points, which count toward ICCE accreditation/re-certification. For more information, click here.
The Experian/Moody's Analytics Small Business Credit Index report for 2014's first quarter did not sugarcoat existing conditions, noting in its opening sentence that the year started on a decidedly "sour note." Still, some analysts believe there is reason to be bullish for a strong second-quarter comeback.
The Index, which measures credit quality for firms with fewer than 100 employees, declined by 0.7 points to 110.5 for the quarter. Perhaps most troubling is that delinquency rates increased, even if just by 0.2 percentage points to 9.8%. Still, analysts hope this was an aberration and leaned on an often-used culprit: bad winter weather. "This should prove temporary, as the broader economy revives from the severe winter weather," said Mark Zandi, chief economist for Moody's. "All the preconditions for stronger credit growth and fewer credit problems are in place, including sturdy profits and cash flow, record-low interest rates and low debt services burdens."
The following are among interesting findings in the latest Experian/Moody's report:
- Retail sales growth deteriorated to a worse-than-expected 0.3% loss from 2.9% gain in 2013â€™s final quarter.
- The biggest categorical rise within delinquencies took place in the 60- to 90-day bucket.
- Credit balances declined despite reportedly looser bank lending standards in the first quarter.
- Construction, known to be generally more likely for delinquency, is improving its image thanks to a notable rise in spending.
- Transportation companies had the worst delinquency rate (18.1%) among large, significant industries, and the rate continues to falter.
- Agriculture showed an uptick in delinquencies, albeit from low levels.
- The gap between the best- and worst-performing US states is widening.
- Florida, again, topped the worst-performers list.
- Utah and other Mountain-West states reported the lowest delinquency rates.
- California and Texas were among the best-performing, high-population states.
- Brian Shappell, CBA, CICP, NACM staff writer
Recognized Path to Success for 40 Years
NACM's Professional Certification Program was established in 1974 with the ACE (Accredited Credit Executive) designation. The ACE designation was named ABCE (Accredited Business Credit Executive) in 1975 and then evolved to become CCE (Certified Credit Executive) in 1988.
When you apply to participate in the Professional Certification Program, you are on your way to demonstrating that you are among the best. Youâ€™ll join a select group of individuals who have made the commitment to excellence in credit management, career advancement and an ongoing pursuit of knowledge. Throughout the process, you will be recognized for your achievements.
The certification program, sponsored by NACM, has helped define and establish professional standards in this demanding and rapidly-changing field, and fosters recognition of those individuals who possess special expertise.
Click here to learn more.
The US trade deficit narrowed in March, falling from February's downwardly-revised figure of $41.9 billion to $40.4 billion. The slimmer deficit was driven primarily by an increase in exports, the total of which improved by 2.1% in March to $193.9 billion, with goods exports increasing by 2.8% to $135.1 billion and services exports lagging with only a 0.4% increase to $58.8 billion.
Exports in the first quarter totaled $576.3 billion, exceeding the first quarter of 2013's total by 3.2%. Exports in services, including travel and tourism, as well as capital goods, consumer goods and petroleum played a major role in export growth in the first quarter, according to the US Department of Commerce. "US exporters are off to a great start in the first quarter of 2014," said Commerce Secretary Penny Pritzker. "With 95% of world consumers living beyond our borders, more American businesses of all sizes must seize the opportunity to sell their goods and services all over the world."
Still, despite the rise in exports, analysis from Wells Fargo suggests that overall trade will drag on US gross domestic product growth for the first quarter of 2014. "The increase in exports was welcome news after the drop of 1.3% reported in February and the paltry 0.6% gain recorded during the first month of the year," said Eugenio AlemÃ¡n, senior economist with Wells Fargo Securities, LLC's Economics Group. "However, this improvement in exports will not be enough to help brighten GDP for the first quarter of the year."
AlemÃ¡n noted that March's deficit figure was still higher than what the Bureau of Economic Analysis (BEA) had estimated when releasing its advance GDP results of 0.1% growth for the first quarter of 2014. "This means that if all of the other components of GDP remained the same, which is a highly unlikely event, we continue to expect trade to modestly detract from real GDP growth in the first quarter," he said.
- Jacob Barron, CICP, NACM staff writer
See These Job Listings and More in NACM's Credit Career Center
Credit Manager - Contractor Direct at Bridgewell Resources LLC in Tigard, OR
B2B Collections Specialist at Dayton Superior Corporation in Elk Grove Village, IL
Credit TRX Analyst at Sysco Memphis LLC in Memphis, TN
Risk Management Collections Manager at Paychex, Inc. in Rochester, NY
NACM's Credit Career Center is your industry-specific job board offering employment connections for the business credit community.
Click here to get started today!
Purchase Managers' Index (PMI) levels for April diverged little from trends in place in March, with the United States and European Union continuing to rebound from adverse economic fortunes. Also failing to divert course, but in a bad way, is the fate of Chinese manufacturing.
Though the US Manufacturing PMI was little-changed at 55.4 for April, good news was plentiful within the statistics. Output expanded at its fastest pace in three years. New order growth was among the best so far this decade. And input cost inflation hit an 11-month low. There is, however, some concern from Markit Chief Economist Chris Williamson over pockets of weak overseas demand. But the problem isn't necessarily coming from the formerly long-struggling European Union.
The Eurozone Manufacturing PMI advanced again in April, reaching a three-month high of 53.4, according to Markit. Every nation tracked in the zone reported output and new order growth, while most saw input and output prices falling. Individually, Ireland's 56.1 reading, a 38-month high, significantly bested runners-up Germany and Italy, the latter of which posted its own three-year-high (54.0). The Europeans are enjoying a period where both domestic market conditions continue to stabilize and export orders accelerate nearly across the board. Manufacturing production has now risen for the tenth consecutive month.
There was little in the way of positive news to report in the Markit-compiled HSBC China Manufacturing PMI. It is now at 48.1, and though it did not represent a decline from March, underlying factors show that the real health of Chinese manufacturers has been worse in each month of 2014 compared to its predecessor. Output rates, order rates and staffing numbers all dropped in April. "The manufacturing sectors and the broader economy as a whole continue to lose momentum," said Hongbin Qu, chief economist for China and co-head of Asian Economic Research at HSBC. "Beijing has introduced more reform measures which could support growth by inducing more private sector investment. We think bolder actions will be required to ensure the economy regains its momentum."
- Brian Shappell, CBA, CICP, NACM staff writer
For NACM's breakdown of Manufacturing PMI conditions in nearly two dozen countries, visit NACMs blog.
To view past eNews issues or to visit the NACM Archives, click here.