January 26, 2010
Senate efforts to increase small business participation in global trade recently experienced another boost, this time from a report by the U.S. International Trade Commission (USITC).
In the report, plainly titled "Small and Medium Sized Enterprises: Overview of Participation in U.S. Exports," the USITC's research showed that only a third of all exports came from small businesses, despite the fact that 97% of the nation's exporters are small firms.
"This report confirms what I have heard from small business owners time and time again, that they are getting hit hard by unfair costs and regulations and that the programs meant to help them are not working adequately," said Senator Mary Landrieu (D-LA), chair of the Senate Committee on Small Business and Entrepreneurship. "Improving these programs is especially important now, as small businesses find their domestic marketplace increasingly tapped out because of the recession."
The report found that the gap between exports made by small businesses and small business exporters was caused by a fundamental lack of resources on the part of small firms, a problem addressed specifically by legislation introduced last December by Landrieu and her committee's ranking member, Olympia Snowe (R-ME). "Today's report underscores the necessity of getting more small- and medium-sized businesses involved in exporting to create jobs and ignite a recovery," said Snowe. "These firms are critical to the health of the American economy, and legislation I have introduced with Chair Landrieu and that the Small Business Committee unanimously approved in December will help boost the number of small firms realizing the numerous benefits of international trade."
The legislation in question, the Small Business Export Enhancement and International Trade Act, would improve access to loans and counseling programs for small exporters, and aim to enhance awareness of and inter-agency coordination on existing programs.
Jacob Barron, NACM staff writer
Unclaimed Property Compliance
Escheatment isn't a word people throw around all that often, but it's something that can play an extremely important role for credit professionals and their companies when dealing with inventory and their struggling customers. To find out more about escheatment, unclaimed property rules and what they mean for creditors, join the faculty of Thomson Reuters tomorrow, Wednesday, January 27th at 3:00pm EST, for their first in a three-part NACM teleconference series titled "Unclaimed Property Compliance." Attendees will learn how unclaimed property rules affect them, how they can get the most for their company, how to improve their own company's processes and much more.
To learn more about this presentation, or to register, click here.
Senate Democrats are seeking another increase in the U.S. statutory debt ceiling, this time for a record-setting $1.9 trillion.
The current debt limit stands at $12.4 trillion, after a short-term $290 billion increase was passed just last month. The U.S. Treasury expects to exceed the current limit within the next few weeks, as the government continues to devote resources to combating the now-easing recession.
Passage of the record-high $1.9 trillion increase would raise the limit to $14.3 trillion, just slightly more than the current total of the U.S. gross domestic product (GDP).
Democrats have portrayed debt increases as necessary evils. "To state the question is to answer it. We simply must do so," said Senator Max Baucus (D-MT), chairman of the Senate Finance Committee. "If Congress does not enact this legislation, then the government would fail to pay benefits to a portion of Social Security recipients. The government would fail to pay benefits to a portion of the beneficiaries of all other federal programs," he added. "That would plainly be unacceptable. Plainly, we must enact this legislation."
Republicans have balked at the proposed increase, emboldened by Scott Brown's recent acquisition of the Massachusetts Senate seat formerly held by the late Ted Kennedy (D). Brown, a Republican, takes away the Democrats' former 60-40 supermajority in the Senate and gives the GOP greater leverage to obstruct democratic initiatives.
"Today we'll have a chance to show we've gotten the message when we take up legislation that would raise the national debt limit," said Minority Leader Mitch McConnell (R-KY). "The reason we're being asked to raise the limit on the national credit card is clear: it's because the majority has spent the past year spending money we don't have on stimulus bills that don't stimulate the economy, on budgets that double the debt in five years and triple it in ten."
"We need to move in a new direction," he added.
Baucus countered, however, that reducing the need to borrow doesn't start by statutorily preventing the Treasury from getting the money it needs. "The Treasury has no legal authority to prioritize spending and pay only the most important bills," he said. "Some of these bills would be interest payments on previouslyâborrowed money. If the Treasury does not pay these interest payments, then the Federal Government would default on its financial obligations."
"If that were to happen, financial entities would be afraid to loan the Treasury money. They would charge astronomically higher interest rates," Baucus added. "This would only worsen our already high budget deficits."
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 19 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
February 4 & 5, 2010 at 8am-11am
Thursday, February 4, 2010 - Oklahoma City
1725 NW 1st Street, OKC, OK 73016
Friday, February 5, 2010 - Catoosa, OK
Hard Rock CasinoâWild Potato Restaurant (Private Room)
Call 216-212-6020 to register.
While their inclusion in company budgets may be an infrequent occurrence in a recession, Susan Delloiacono, CCE, NACM's resident expert on customer visits, recently led an NACM teleconference that showed attendees the value of customer visits, and how companies and credit professionals can, and should, make the most of them.
Before leaving the office for a customer's headquarters, credit professionals should ask themselves one simple, albeit important, question: "Why are you visiting?" asked Delloiacono, noting that each visit should be conducted with a concrete goal in mind, and that this goal will change depending on the customer's situation. "The 'stay-well' visit is our sweet spot in credit," she added, referring to a customer visit conducted when the customer is having no real payment problems. "But to get our salespeople and management to get in while things are going well is a challenge. For most of us it's a 'get-well' visit or we're putting out a fire and it requires face-to-face communication."
Conducting visits only when there's an issue, however, can make for sometimes tense confrontations between creditors and their customers. "Your tensions are getting fired up, and it's a 'we're right they're wrong' kind of thing," said Delloiacono. "If you have that 'stay-well' visit under your belt before the problem, you can fix it without having to visit." Thinking ahead and visiting when nothing in particular is problematic can often make future crises much more manageable.
For Delloiacono, an effective customer visit doesn't merely end when credit professionals leave the customer's campus. Even on the ride back home, care should be taken when it comes to immediately discussing what happened during the visit. "Don't talk about it in a restaurant and don't talk about it on an airplane, especially if there's something sensitive," she said. "Talking about it in the car is the best place because you know you're alone." Additionally, after returning to the office, what was agreed on during the customer visit should be placed as a top priority on the company's to-do list if possible. "The worst thing you can do is go out, visit a customer, have a to-do list and do nothing with it," said Delloiacono. "Even if you don't own the action, you are now the cheerleader to get all of those actions done."
In the end, customer visits, when conducted properly, can result in real bottom-line benefits for companies and their credit departments, as well as the customer.
Jacob Barron, NACM staff writer
Between a Rock and a Hard Place
In these challenging economic times, many suppliers of goods and services that are parties to agreements containing credit terms with a financially distressed customer find themselves between a rock and a hard place in deciding whether to continue to extend credit terms. Vendors are confronted on the one hand with litigation threats if they switch to cash in advance terms, particularly after the customer's bankruptcy filing and, on the other hand, with the likelihood of increased financial losses if they continue to extend the credit terms contained in their contracts. Join Wanda Borges, Esq. and Bruce Nathan, Esq. on February 1st at 3:00pm EST for their latest NACM "Added Advantage" teleconference, "Understanding Your Rights and Obligations in Extending Trade Credit Under a Supply or Services Agreement to a Financially Distressed Buyer." This 90-minute program will give creditors the tools they need to protect their company both prior to and during a customer's bankruptcy.
To learn more, or to register, click here.
President Barack Obama recently announced a crackdown on federal contractors that are delinquent on their taxes, directing agencies to block delinquent businesses from receiving future contracts.
"By issuing this directive, all of us in Washington will be required to be more responsible stewards of your tax dollars. All across this country, there are people who meet their obligations each and every day. You do your jobs. You support your families. You pay the taxes you oweâbecause it's a fundamental responsibility of citizenship," said Obama. "The steps I'm directing today and the steps I'm calling on Congress to take are just basic common sense."
The president also encouraged Congress to enact legislation that would empower the Internal Revenue Service (IRS) to more effectively regulate corporate tax cheats and to share information with contracting officials at other agencies to ensure that any contracting loopholes are closed to tax evading businesses.
Obama also left the door open for future regulations geared toward cutting back on wasteful federal contracting. "Going forward, we'll also have to do more to hold contractors more accountable not just for paying taxes, but for following other laws as well," he said.
The crackdown drew cheers from Senator Chuck Grassley (R-IA), ranking member on the Senate Finance Committee, whose jurisdiction includes tax enforcement. "This crackdown is the right thing to do," said Grassley. "It's a matter of fairness, and it's especially offensive that contractors who make money from tax dollars are delinquent in paying their own taxes."
A report released last December showed that federal workers collectively owed more than $3 billion in taxes from 2008. Recent estimates from the Government Accountability Office (GAO) put the figure above $5 billion, with tens of thousands of companies receiving federal contracts despite owing unpaid taxes.
The president also directed the IRS to conduct a review of the overall accuracy of companies' claims about tax delinquency, "to be sure that when a company says it's paying its taxes, it is telling the truth."
Jacob Barron, NACM staff writer
Credit Words Contest Winners
Did you miss last week's 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!
Given our tumultuous economic times, it's no surprise that debt collection-related issues are making their own splash in various ways. Two of the more recent newsworthy developments are noted below.
Record Number of FDCPA Lawsuits Filed in 2009
According to WebRecon LLC, during 2009, petitioners filed 8,287 lawsuits alleging Fair Debt Collection Practices Act (FDCPA) violations, cresting well above the then-record 5,188 suits filed in 2008. WebRecon, a research firm located in Grand Rapids, MI, based its conclusions on data drawn from the U.S. District Court complaint dockets.
ACA International, an association representing collection agencies throughout the United States, was quick to point out that a number of factors likely affected the rise in litigation, including both the increase in consumer debt as well as a more visible online presence for attorneys who represent consumers in such matters. ACA also noted that the statistics do not break out how many suits were dismissed and/or were deemed legitimate. Thus, a spike in litigation does not necessarily reflect a spike in FDCPA violations, according to the organization.
"These statistics are of concern to consumers and debt collectors alike. For this reason, ACA International members remain convinced consumers need an easy, user-friendly means to resolve their concerns and disputes. Debt collectors are in the business of resolving consumer debt issues. Those collectors who violate the law in fact are rogues and not representative of the vast majority of the 125,000 individuals serving this fine industry today," said Rozanne Andersen, ACA chief executive officer and general counsel.
In 2006, 3,220 FDCPA-related lawsuits were filed; 3,813 suits were filed in 2007. According to the Federal Trade Commission (FTC), more than 78,000 complaints about third-party debt collectors were tallied in 2008 (the most recent complete-year statistic available), and the FTC levied more than $1 million in fines against collection agencies.
Pending Mann Bracken Bankruptcy Scuttles Tens of Thousands of Cases
Mann Bracken LLP, a Maryland-based law firm that specializes in collections, is facing bankruptcy after its affiliate, Axiant LLC, went belly up in November 2009. Unable to sell its assets, Axiant is currently in liquidation, leaving Mann Bracken, its largest unsecured creditor, to face its own turmoil.
In better times, Axiant provided Mann Bracken with phone, computer, staffing and support services. Without Axiant, Mann Bracken has been unable to continue its litigation efforts. In light of the firm's inability to maintain day-to-day operations, Maryland District Court Chief Judge Ben Clyburn dismissed all pending Mann Bracken collection lawsuits, which number between 20,000 and 25,000.
Characterizing the law firm as "irresponsible," Judge Clyburn explained, "The bottom line is, we've taken action so that the citizens will not be inconvenienced, and we've taken action so that the judges are aware that some of these refilings may be barred by the statute of limitations."
Beyond its financial difficulties, Mann Bracken was also facing regulatory issues as 2009 closed. One of the firm's most important customers, the Encore Capital Group of San Diego and it subsidiaries (Midland Funding LLC, Midland Portfolio Services LLC and Midland Credit Management Inc.), drew the attention of the Maryland State Collection Agency Licensing Board for a broad swath of debt collection law violations. In September 2009, the board suspended Encore's collection agency license; by December, without directly answering the state's charges, Encore agreed to pay $1 million in civil penalties, seek proper licensing in Maryland and refine its adherence to all federal and state collection laws.
Separately, the Washington, DC office of the Better Business Bureau gave Mann Bracken its lowest rating, and the firm was facing a significant number of lawsuits outlining its reliance on illegal debt collection tactics.
Mann Bracken was originally formed in 2007 after the merger of three of the five largest collection firms in the United States, including Wolpoff & Abramson LLP. It was headquartered in Rockville, MD, with 24 offices throughout the country.
Laura Redcay, NACM staff writer
Industry Credit Groups
Credit groups are an effective management tool. They permit 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 as to the most recent payment practices. The purpose of exchanging information is to help group members segregate fiction from fact, so competent and realistic credit decisions about a customer can be made.
Managed and operated by NACM Affiliates nationwide, NACM-Canada and FCIB internationally, 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
Click here to learn more about NACM credit groups and find the group for your industry.
Email errors can range from simple typos all the way to career-affecting gaffes. Unfortunately, they are quite common in the workplace, according to a recent survey by Robert Half International. And they occur throughout a company's hierarchy. In fact, 78% of executives admitted they had inadvertently sent someone the wrong message or copied someone on an email without intending to.
We asked those polled to describe their worst email bloopers. Here are a few:
- "I once sent a job offer to the wrong person."
- "Confidential information about one client was sent to a different client. It was certainly embarrassing."
- "I once sent an internal memo about restroom etiquette to a prospective client by accident."
- "We sent an email to a client that was meant for a vendor. It made it difficult when the client had seen our costs."
Major message mishaps can obviously lead to awkwardness, friction and possibly even loss of business. The good news is that email gaffes are easily avoided if you simply take the proper precautions. Here are some suggestions:
Remember that haste makes waste. The more you rush or multitask, the more likely you are to make a mistake. Slow down when writing, and then proofread both the content and subject line of your email. Also, check that you have the correct individual in the "To" line, especially if you have multiple people in your address book with similar names.
Stay calm, cool and collected. Put simply, don't email when angry. Email rants sent in the heat of the moment have come back to haunt many otherwise composed professionals. Protect your reputation by stepping away from the computer until you've had time to collect your thoughts.
Choose the right recipients. Be cautious when using the "reply all" function, particularly when crafting sensitive or confidential messages. Include only those individuals who truly need to be in on the conversation.
Be wary of small screens. Handheld devices are great for quick back-and-forth communication, but miniature screens make it easy to read over spelling slips, grammatical goofs and wording errors. Run spell-check and send lengthy or critical messages from a computer with a full-size monitor and keyboard whenever possible.
To view past eNews issues or to visit the NACM Archives, click here.