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1. Administration Says It Has "Now Taken All Prudent and Legal Actions To Avoid Hitting National Debt Limit"
Treasury Secretary John Snow said in a letter to Congress that the administration has now taken "all prudent and legal actions," including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit.

Snow urged lawmakers to pass a new debt ceiling immediately to avoid the first-ever U.S. default on its obligations. Treasury officials said that the government will run out of maneuvering room to keep from exceeding the current limit sometime during the week of March 20, in a briefing to Congress. In his letter, Snow stated that the Treasury would begin tapping the Civil Service Retirement and Disability Fund, which Treasury officials said would provide a "few billion" dollars in extra borrowing ability. Treasury officials also announced that they had used the $15 billion in the Exchange Stabilization Fund, a reserve that the Treasury secretary has at its disposal, that is normally used to smooth out volatile movements in the value of the dollar in currency markets. Treasury has also been taking investments out of a $65.3 billion government pension fund known as the G-fund. Officials have said that once the debt limit is raised, the investments taken out of the pension funds would be replaced and any lost interest payments would be made up. The formal title for the G-fund is the Government Securities Investment Fund of the Federal Employees Retirement System.

Democrats deride raising the debt limit to highlight what they see as the failings of the administration's economic program with its emphasis on sweeping tax cuts.
Source: The Washington Post

Congresswoman Tubbs Jones Comments On Economic Data
Congresswoman Stephanie Tubbs Jones (D-OH) commented on recently released economic data, stating, "the state of the economy overall has worsened in the five years since the administration took office… overall inflation has gone from 3.4 percent to 3.5 percent; gas prices have risen from $1.40 a gallon to $2.30 a gallon; median income has fallen from $46,058 in 2001 to $44,389 today; we have witnessed a budget surplus of $128 billion deteriorate into a deficit of -$319 billion." How is the economy actually measured and analyzed? The Credit Manager's Index (CMI) is one such tool used by economic analysts to determine the rate of growth or slowness in both the service and manufacturing sectors of our national economy. Participants spend a few minutes each month responding to questions regarding extension of credit and receivables. Your participation is both welcome and appreciated. Click here to sign up!

2. Oxley, Baker Say SEC Can Offer Sarbanes-Oxley Relief
In an indication that many U.S. companies are growing increasingly critical of some of the requirements created by the legislation that bears his name, House Financial Services Chairman Oxley has signaled to the SEC that some changes could and should be made to the Sarbanes-Oxley Corporate Governance laws (SOX). Oxley, along with Congressman Richard Baker, Chairman of the House Financial Services Capital Markets Subcommittee, have sent a letter to the SEC that stresses the regulatory authority the agency has to provide appropriate relief to American businesses if the underlying premise of the SOX is preserved.

American industrial and business leaders have complained to Congress that SOX may have gone overboard in an effort to bring greater accountability to U.S. shareholders and investors. Many groups have urged Congress to ease some of the regulatory burdens of the law – an initiative that is unlikely in an election year. However, this letter by Congressmen Oxley and Baker sends a signal to the SEC that the concerns articulated by the business interests are legitimate and that there is encouragement from Capitol Hill to address these issues.

Of particular concern to businesses is Section 404 of the SOX – which currently is undergoing review by an SEC advisory panel. This section requires companies to establish and maintain internal controls and financial reporting procedures, which also must be signed off by an outside accounting firm. Last week, the advisory panel recommended an exemption from the provision for most small public companies from that provision. As a result of this recommendation several consumer groups have expressed opposition to the panel’s move. The Oxley-Baker letter may well be an indication of support to the move by the panel and an instrument to blunt the criticism from the consumer groups. Final panel recommendations to the SEC commissioners are expected in April.

However, the Oxley-Baker letter was carefully drafted to suggest that the letter was not intended to comment on the panel's recommendation, but instead on the SEC's authority to make changes. "Given the fact that legislation to amend the internal control requirements of the Sarbanes-Oxley Act will not be considered during this session of Congress, it is important that the commission proceed as it deems appropriate," the letter states.
Source: Jim Wise, NACM's Legislative Representative

'The Perfect Resume'
More and more services provide tools for job-seekers such as the art of writing standout cover letters and resumes specifically designed with particular professions in mind. They become a kind of indispensable insider's guide as to what specific types of employers are looking for in an applicant. The resources offer solutions to all resume-related problems by providing a realistic and comprehensible look at the way hiring works in the particular profession and then explains the proper way to apply this knowledge to an application. And as job-seekers become better able to sell themselves through these kinds of tools, employers face the need to replace experienced and qualified candidates with people that can hit-the-ground-running. Where do you go to find exceptional applicants having all the skills you need, and NACM designations? Why, NACM's Career Center, of course. Click here to post your job or seek applicants now.

3. E-mails And Instant Messages Count As Records Too
Companies that can't retrieve appropriate e-mails and instant messages could be subject to a big fine. Appropriate policies for records retention, which includes e-mails and instant messages, are essential for many companies, says Marie Patterson, VP of Marketing Strategy for AXS-One, Inc., a company that supplies computer archiving and retrieval solutions. She noted that a majority of companies still fail to retain instant messages, which could be subject to discovery procedures in a civil action. "While organizations have been very quick to embrace the Internet… they haven't applied policies regarding the communications and retaining records of those communications," Patterson said.

Patterson pointed to such cases as the one that happened to Morgan Stanley last year. In that case, the company couldn't guarantee that it had turned over every message related to a pending suit and promptly got hit with a multi-billion dollar fine. She pointed out that companies must do two things regarding their electronic communications. First, they must design appropriate records retention policies to fit their appropriate industry type: each industry is subject to specific records retention regulations. And secondly, she said companies should have a system in place that can easily identify and retrieve records that have been archived.

Once formal policies on electronic archiving are in place, Patterson said they must be enforced consistently—across the board. She recounted an example of a 2004 civil suit involving alleged gender discrimination in a termination of employment. When the plaintiff's attorney requested specific electronic communications the plaintiff knew were there, they could not be found because an employee had destroyed them, against the company's policy. That misstep by a company employee, in violation of company policy regarding electronic document retention, caused it to lose the civil suit and also have discovery costs levied against it. "The courts are coming down hard on organizations for not adhering to their own policies," Patterson said.

Each type of company, depending upon the industry it is in, and the various regulations it is subjected to, must design appropriate electronic records retention policies, Patterson said. "You need to decide what constitutes a record, and what you should be retaining, and for how long." She cautioned against relying just on backups of server files, noting that, "they're just a snapshot… backups were not meant as an archive." She said trying to sift through backup files instead of properly archived files, in order to find files you need, can be very costly: "The numbers are absolutely huge." The retrieval of a file from a backup may cost an average of $2.20 per page, versus about 25 cents per page from a properly designed archive," she said.

Once a record is recorded on a computer or server hard drive, it is harder to dispose of than many people may realize. Also, disposing of files against company policies may be detected by using the proper techniques. Phillip Rodokanakis, Managing Partner of U.S. Data Forensics, LLC said, "The operating system maintains a database of the times and dates documents were deleted." As for the deleted files themselves, Rodokanakis said, "We find information that is stored on temporary file folders that has been there for months and even years."

It is important that company officials know what electronic records they must keep and for how long, and design policies that implement the proper archiving of them. Failing to do so could be a costly mistake, as some companies have already discovered.
Source: NACM

Bank Of America Global Treasury Services Builds Supplier Relationships
Bank of America introduced a Trade Payables Discounting Program, allowing Bank of America clients to significantly reduce working capital requirements and finance costs throughout their supply chains, strengthen operating margins, improve cash conversion cycles and develop stronger supplier relationships. There are many aspects to relationship-building in the business world, and the focus of their Trade Payables Discounting Program is just one example. To examine further how relationships affect every aspect of how your company operates and ultimately, its profitability, don't miss the April issue of Business Credit magazine. If you're not already a subscriber, click here to get your subscription started now.

4. Foreign Trade Zones Pack Big Economic Punch To U.S. Economy
Report Details Impact on Annual Volume, Dollar Value of Exports and Jobs
The combined value of shipments entering U.S. foreign-trade zones (both general-purpose zones and subzones) totaled $298 billion in 2004. This volume of activity represents a 22 percent increase over the $245 billion in zone receipts reported by the Foreign-Trade Zones Board in 2003, according to an economic impact study just released by the National Association of Foreign-Trade Zones (NAFTZ). Sixty-five percent of goods entering zones are from the U.S.

Foreign-Trade Zones (FTZs) were created in the United States to provide special customs procedures to U.S. plants engaged in international trade-related activities. These procedures were aimed to offset customs advantages available to overseas producers who compete with domestic industry. The FTZ program requires that zone activities result in a significant public benefit and a net positive economic effect.

The new report illustrates that exports from U.S. foreign-trade zones to foreign countries totaled $19 billion in 2004. These export figures show a slight decline from the $20 billion in zone exports reported in 2003. It should be noted that the structure of the Foreign-Trade Zones program makes it easier to import into zones than it is to export from zones.

In 2004, the jobs of 329,800 persons were directly associated with zone activities. While the 2004 figure is slightly less (1 percent) than jobs reported in 2003, it must be noted that zone related employment is becoming increasingly capital intensive. The data in this report do not include indirect or secondary employment resulting from zone activities.

In addition to the role of assembly of duty-free and U.S. components and maintaining U.S. jobs, the value of FTZs to U.S. export growth is impressive. Export from FTZs totaled $19 billion in 2004. Exports of FTZ-manufactured merchandise are actually greater than this because some zone merchandise enters the U.S., is further manipulated and then exported to a foreign jurisdiction. These exports are not included in the $19 billion.
Source: National Association of Foreign-Trade Zones

Improved Image Analysis For Demand Drafts
Demand Drafts are the latest challenge posed by the increased availability of online banking. "Large and small Financial Institutions alike will face the challenge of tracking down demand (aka Pre-authorized) draft fraud," states Angela Bardowell, industry consultant and former SVP of Risk at Bank of America. "Fraudsters are creating complex schemes with these Demand Drafts which can only be effectively detected using image-based fraud detection."

New Software developed by Mitek helps to automatically catch modifications to payee name information on payroll and other business checks, as well as automatically detecting fraud or modifications on demand (Pre-authorized) drafts. What can you do beyond installing software, to catch fraudsters who remain one-step ahead? Become a member of NACM's Asset Protection Group, and receive news, alerts and education to help you protect your company's assets. Click here to find out more.

5. "We Do Not Love Customers," Admit A Majority Of Executives
Global study indicates customer strategies are executed ineffectively by companies due to their misunderstanding of the basic economics of relationships.

The majority of companies fail to grasp financial aspects of their customer relationships and therefore fail to execute customer strategies effectively, indicates a new global study released by Strativity Group. The annual global Customer Experience Management 2005 study indicates a decline in commitment to customers and a continuing poor understanding of the value of customers, and therefore the reasons to invest in customer relationships. "These results indicate companies' ignorance to the potential financial value in delivering delightful customer experiences and nurturing customer relationships," stated Lior Arussy, company founder and author of Passionate & Profitable (Wiley, 2005).

• 54 percent of senior executives claim they do not deserve their customers' loyalty
• 87 percent do not know the average annual customer value
• 67 percent agree that their executives do not meet frequently with customers
• 33 percent affirm that they have the tools and authority to serve their customers

Strategy to Execution Gap Continues
According to the study, 73 percent of the companies indicated that customer strategies are more important than three years ago. Yet, basic execution parameters such as frequent visit to customers (only 33 percent of respondents agreed that their executives visit customers frequently) and providing tools and authority to employees to deliver great customer experiences (only 33.3 percent of respondents agreed that they have the tools and authority to service customers) receive little attention by executives.

Failing to Capture the Financial Potential
Overall, the study indicates a growth in ignorance regarding the economics of relationships. Over 90 percent of the respondents did not know the cost of a new customer or the cost of a customer complaint. 73 percent of the respondents did not know the annual retention rate. In the absence of the financial drivers, companies fail to see both the downside of poorly designed and executed customer strategies as well as the missed opportunities associated with delivering amazing customer experiences. "I find it odd that companies which manage their operation using scientific measurements methods fail to measure and operate by the economics of their customer relationship," said Arussy. "It is this ignorance of the potential financial impact that leads executives to under-invest in customer strategies."

A Trend of Diminishing Commitment to Customers and Employees
The majority of the respondents (55 percent) agreed that their companies are not truly committed to customers, but rather treat customers as a mean to a goal. Only 42 percent of the respondents agreed that their company conducts a true dialogue with customers. And only 22.4 percent of the respondents indicated that their compensation plan emphasizes quality of service and not just productivity.

Overall, trends revealed by the results during the three years that the study has been conducted remain the same despite improvement in the economy. It appears that this economic upturn did not make companies more amenable to treating customers better, but rather made them take customers even more for granted. Companies continue to develop and implement superficial customer programs which are geared towards increasing short-term financial results at the expense of long-term customer loyalty and greater financial rewards. As indicated by the last three annual studies, the approach companies take toward customer strategies remain self-centered, transaction based and product focused. Customers are simply a means to a quarterly results end.
Source: Strativity Group

High Narcotic Use Among Headache Sufferers
A new analysis of nearly 6.2 million insured patients shows that migraine was under-diagnosed and often untreated; when patients were diagnosed with migraine and prescribed a medication, more than half received narcotics and opioid analgesics. The use of narcotics and opioid analgesics may lead to loss of productivity, carry a greater risk of medication-overuse headaches (also known as chronic daily headaches or rebound headaches), and have the potential for abuse and dependency. Migraines may be caused by a number of factors, depending on the individual, but among credit professionals it is typically related to stress and eye exhaustion from combing through stacks of books and volumes of papers to come up with information they simply can't put their hands on. There is an option that does not require use of heavy medication: NACM's Resource Library gives you the information you need at the click of your mouse. Save time, save energy, save your eyes—and avoid headaches. And now—if you purchase the new 97th edition of the Manual of Credit and Commercial Law, you can get also get a year-long Passport to the Resource Library for just $29. A truly well-rounded, homeopathic remedy for migraine sufferers! Click here to visit the NACM Bookstore and make your purchase now.

6. Continued Challenging Retail Environment; Potential Economic Inflection Point
The latest Deloitte Research Leading Index of Consumer Spending forecasts a continued challenging environment for retailers, but sees a potential economic inflection point if employment trends continue. "In early 2006 we've seen an even softer housing market, and mortgage rates edging up," says Carl Steidtmann, chief economist of Deloitte Research and author of the monthly index. "These factors could negatively affect consumer spending, particularly in durable goods and home furnishings.

"The warm winter weather has prompted retailers to bring out spring merchandise early, which could be beneficial to sales and margins," says Pat Conroy, vice chairman and national managing principal of Deloitte's Consumer Business practice.

Highlights of the index, which tracks consumer cash flow as an indicator of future consumer spending, include:

• Tax Burden: Personal income tax burden continues to rise slowly. Since the broad tax cuts of 2003, the share of consumer income going to taxes has increased more than 12 percent.

• The higher tax share has resulted in significant growth in Federal, state and local tax revenues.

• Real Wages: Real hourly wages continue to decline, albeit at a slower pace. In recent weeks, energy prices have come down as temperatures have remained well above long-run averages. If that pattern continues, lower energy prices could give a boost to consumer purchasing power this spring.

• Real Home Prices: The housing market continues to deteriorate, reducing consumer cash flow and one of the more significant factors in driving consumer spending. Real home prices are down slightly from a year ago and the pace of new and existing home sales has slowed sharply. Rising mortgage rates do not bode well for future strength in the housing market. The weakness in home prices is the biggest single factor in the slowdown in the Deloitte Research Index this year.
Source: Deloitte & Touche USA LLP

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7. Burdens On UK Businesses Now Top £50 Billion
The cost to business of major regulations introduced since 1998 has risen to over £50 billion, according to new figures released from the British Chambers of Commerce (BCC). The Burdens Barometer, the independent calculation of the costs to business based on the Government's own figures, reports that the total cost has risen from £39 billion in 2005 to over £50 billion in 2006. The report on regulation is independently compiled by experts from the London and Manchester Business Schools.

Commenting on the figures, BCC Director General David Frost said: "British businesses are fed up with paying for Government regulation. Businesses must be free to compete in the global economy. As well as the increasing cost, businesses regularly tell us they are having to divert valuable time from running their businesses to dealing with more and more paperwork. While we recognize the need for proportionate regulation, the government must ensure that new regulations are well targeted and excessive existing burdens are cut back. Unnecessary burdens are not a sustainable option for our firms."

The British Chambers of Commerce Burdens Barometer is extracted from the BCC's database of over 1,400 Regulatory Impact Assessments produced by Government departments that evaluate the risks, costs and benefits of any new regulatory proposal that has an impact on business. It tracks the cumulative cost of 69 major regulations introduced since 1998, which have annual costs to business of over £15m per year. Additional regulations introduced in 2004/5 have added to the burden from previous regulations, pushing the total increase in business costs this year up from a potential £47 billion to £50 billion.
Source: BusinessCredit News UK

8. Offshore Outsourcing A Part Of Every Major FAO Deal In 2005
Offshoring has become fundamental to finance & accounting outsourcing (FAO), with every multi-process FAO contract signed in 2004 and 2005 featuring an offshore component. To meet growing demand, FAO suppliers have been steadily expanding their offshore capabilities.

According to a report by Everest Research Institute, direct cost savings captured through offshoring include lower labor costs, lower costs of real estate and overheads, and greater utilization of labor and infrastructure as a result of increased work hours and multi-shift operations. Chennai, Delhi and Kochi in India, and Manila in the Philippines, are the most popular offshore locations for outsourcing F&A.
Source: Everest Research Institute

9. GAO Report Reinforces Need To Enhance Small Business Efforts At Ex-Im Bank
U.S. House Small Business Committee Chairman Don Manzullo (R-IL) said a report released recently by the U.S. General Accounting Office (GAO) reinforces the need to enhance small business efforts at the Export-Import Bank to ensure America's small employers are getting the financing they need to compete internationally.

The GAO study, which Manzullo requested as part of a Small Business Committee hearing last year, questions the reliability of the Ex-Im Bank's small business data in determining whether Ex-Im is providing enough support to small exporters. As of 2002, Ex-Im is required to set aside at least 20 percent of its financing for small businesses. However, since then, it has failed to meet this mandate despite the growth in overall exports supported by Ex-Im. The Ex-Im Bank provides loan guarantees and insurance to commercial banks to make trade credits available to U.S. exporters. Of its clients, 86 percent are small employers.

While the GAO found that Ex-Im generally classified small business status correctly, there are inherent weaknesses in its data system and data that limits its ability to accurately determine its support for small business. The GAO discovered that for medium- and long-term loans and guarantees, for non bank-held insurance, and for working capital guarantees, the small business status of the exporter is known. However, for bank-held insurance and for credit guarantee facilities, the small business value is based on estimates that are sometimes inaccurate. The GAO report also pointed out that very few small business exporters participate in Ex-Im's medium- and long-term loan and guarantee programs, which forms Ex-Im's largest transactions in terms of dollar amount.

"The GAO report shows why Ex-Im Bank is not meeting its statutory obligation to help America's small business owners secure the financing and insurance they need to operate internationally," Manzullo said. "While I am pleased to see Ex-Im has committed to act on the GAO's recommendations, I believe this report reinforces the need to set up a small business office at Ex-Im and to enact programmatic changes to Ex-Im's medium term loan and guarantee program to make it more attractive to small exporters."

Manzullo, who is also a member of the House Financial Services Committee, sits on the subcommittee responsible for reauthorizing the Ex-Im Bank. That reauthorization process is underway, and Manzullo will work with the committee leadership to ensure the interests of America's small employers—the job creators of our economy—are upheld at the Ex-Im Bank.
Source: (R-IL) Rep. Dan Manzullo

10. Ways To Handle Difficult Interview Situations
With many credit departments now in recruiting mode again, you may be looking to expand your team, which means you'll be conducting more job applicant interviews. All job candidates want to make an excellent impression during these meetings, but some fall short of this goal even though they may be among the most qualified. In fact, chief financial officers surveyed by our company said that applicants make more mistakes at this stage of the hiring process than at any other. Priming yourself for various personality types during the interview process can help you prepare for difficult interview situations.

The following are examples of various candidate personas you may encounter and tips on how to how to deal with potential challenges associated with each:

The Clueless Candidate: Nearly all interviewers have sat across from individuals who knew nothing about the company, position or responsibilities for which they were applying. In situations like these, try to ask pointed questions about the applicant's experience to determine whether there's a fit with your requirements. That will help you decide if he or she may have potential worth pursuing.

The Nervous Candidate: If you're interviewing an applicant who keeps talking throughout the discussion and you're struggling to get a word in, realize that the person is probably just anxious. Try to put the individual at ease by being deliberate and calm when you speak. If appropriate, interject humor or a lighthearted comment. The candidate may take the cue from you and relax. Even though applicants may have a lot to say, if they do not demonstrate how their experience matches the job requirements, you may need to politely interrupt and ask pertinent questions. Offer positive feedback on responses if warranted.

The Arrogant Candidate: On the other hand, you may also run into individuals who are overconfident, appear impatient with the process and are certain they always have the right answer. They often have an immediate response prepared to your every question as though they have rehearsed the answers many times. Understand that these types are typically trying to showcase their knowledge and experience but unfortunately come across as arrogant. Try to learn more about them outside of their "talking points" by asking for examples of situations in which they may not have not been comfortable or found especially challenging.
Source: Robert Half Finance and Accounting and Accountemps