eNews August 28, 2014

August 28, 2014


News Briefs

  1. NACM Survey: Nearly Half of Credit Managers Don't Take Steps to Ensure Delivery of Important Email
  2. Small Business Credit Conditions Improve to Record High
  3. Pending US Trade Issues: Part Two
  4. Real Estate's Positive Turn Already Tempered
  5. Manufacturing Deficit Increases


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NACM Survey: Nearly Half of Credit Managers Don't Take Steps to Ensure Delivery of Important Email

NACM's August survey indicated that almost half of credit professionals and their departments aren't taking steps to keep their email communication to customers and other external business contacts out of recipient "spam" or "junk" boxes.

When asked, "Do you or does your credit department take a proactive approach to ensure that important email communications aren’t caught/lost in customers' spam folders/detectors?" 41% of respondents said "yes," while 49% said "no" and the remaining 10% answered "I don't know."

Many of those who said they didn't take a proactive approach commented that they either didn’t know how to do so, since it is hard to track whether their outbound communications end up in spam folders, or they had to rely on others, such as the IT or sales department or a third party, to help solve the problem. The survey did illustrate an increased paranoia about fraud and overzealous marketing that has pushed many companies to increase their efforts to block such communications, which often has the unintended consequence of blocking important emails from creditors, customers, trade associations and others. As noted in eNews on July 31, words like "collections," "credit" and "past due" in the subject line or email body are especially prone to triggering protections that send these messages to areas not often or never checked by the target recipient.

Most NACM member comments noted that they reach out to a customer only if payment is past due, especially if it’s the first occurrence in the business relationship. "We email invoices and, many times, we get the 'it never got to us' speech," said one survey respondent.

That reactive approach obviously doesn't sit well with some credit people who want prompt payment, but they've yet to find a realistic solution. "Many of our smaller mom-and-pop operations just aren't the most computer savvy," said one respondent. "Many times we just have to end up faxing their invoices or even sending them through the mail." Another participant from a larger firm said, "With 40,000 active customers, it is too labor intensive to verify in-bound receipt of documents."

Those who do take an active approach responded by providing advice that has been helpful for them:

  • "We generally require a read receipt for important emails to customers so we are aware that they have been received and read by the customer."
  • "We let them know up front that they need to make sure they approve our domain name so it doesn’t go into the spam folder. I send them a test email to verify they receive it OK."
  • "For our paperless billing, we send detailed instructions on how to add our email as safe to Outlook."
  • "If we do not get a response from a new customer, I follow up with a phone call."

- Brian Shappell, CBA, CICP, NACM staff writer

NACM's 2015 Credit Congress Call for Speaking Proposals

NACM's annual Credit Congress & Exposition features impressive keynote speakers, informative sessions and immeasurable opportunities to build relationships.

Share your knowledge and insight with our delegates and invite your knowledgeable and expert peers to do the same by speaking at this venerable event.

Proposals are due by September 20. Please carefully read all information on the Call for Proposals form carefully before submitting your proposal by clicking here.

Small Business Credit Conditions Improve to Record High

The weather-related retreat in small business credit quality earlier this year is firmly in the rearview mirror, according to newly released quarterly statistics. Most concerns going forward actually have little to do with disruptions in weather patterns, job growth, GDP gains and confidence.

The Experian/Moody's Analytics Small Business Credit Index, which tracks credit conditions at firms with fewer than 100 staffers, increased by 2.4 points to 112.2 for the second quarter of 2014. Outstanding credit balances saw a 4.8% quarterly uptick, and delinquency rates fell to 9.3% (previously 9.7%), said Experian/Moody's analysts. Those credit delinquency declines were found in all four (30-, 60-, 90- and 99-plus days) "buckets" as well. The picture going forward also appears to be brighter than would have been thought even weeks ago, as tensions in the Middle East and Eastern Europe mounted.

"Risks to the outlook have shifted to events overseas and have become less threatening," the index’s executive summary noted. "The positives outweigh the negatives, and the blossoming economic recovery will benefit small business' finances and, hence, credit quality in the second half of 2014 and beyond."

Among the biggest positive changes in credit quality by industry, from the first quarter to the second, were construction and transportation. The latter still dubiously boasts the highest industry delinquency rate, but its quarterly improvement was considered notably strong and promising by Experian/Moody's.

Worth watching is the sometimes massive difference in credit quality between various US regions, as some areas reported major struggles. The Mountain West region, especially Utah, continues to lead other parts of the country in categories like late balance payments. The worst performers in categories like delinquency have been Florida and the District of Columbia. Regional danger signs also loom over Chicago, where foreclosed home sale increases could limit demand for new residential construction, and the Northeast, which would be the most affected region if a considerable export demand weakening from Europe materializes because of the Ukraine-Russia standoff.

- Brian Shappell, CBA, CICP, NACM staff writer

Want to Separate Fact from Fiction? Join an NACM Industry Credit Group

Need information that's current and correct? 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.

Pending US Trade Issues: Part Two

Of the major trade policy concerns facing the United States today, there are four export-related issues that are especially significant:

  • U.S. Export-Import Bank Reauthorization (Ex-Im Bank)
  • Trade Promotion Authority (TPA)
  • Trans-Pacific Partnership (TPP)
  • Transatlantic Trade and Investment Partnership (TTIP)

In the August 21 issue of eNews, we reviewed current proposals for reauthorizing Ex-Im Bank. In this issue, we review the status of the TPA. As noted in the previous issue, each has a direct impact on US businesses and their ability to compete in the global marketplace, which comprises 95% of all consumers and 80% of the world’s purchasing power.

 The Trade Promotion Authority (TPA) is a strategic working relationship between the President and Congress for the negotiation and implementation of US trade agreements. This partnership consists of legislation that: (1) sets the parameters for the United States in various international trade negotiations; (2) establishes a framework for Congress and the Executive Branch to work together in pursuing trade agreements and enacting bills implementing such agreements into law; and (3) includes a set of legislative procedures that allows the president to submit to Congress bills implementing trade agreements for an up-or-down vote within a set period of time, without amendments.

History: Every president from the 1930s until 2007 has been granted the authority in one form or another to negotiate market-opening trade agreements in consultation with Congress. The most recent TPA was granted in 2002, but lapsed in 2007 without renewal. Since that time, negotiation and approval of US trade agreements has languished.

Benefits: Trade negotiations are of vital importance to the US economy. Nearly half of all US goods exports now go to the nation’s 20 free trade agreement (FTA) partners, which generated a roughly $58 billion manufactured goods trade surplus in 2012.

By renewing TPA with updated negotiating objectives, Congress can strategically address issues pertaining to current US trade negotiations, including the Trans Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the Trade in Services Agreement (TISA) and an updated Information Technology Agreement (ITA).

Status: On July 30, 2013, the current Administration requested that Congress reauthorize TPA. On Jan. 9, 2014, legislation to renew TPA—the Bipartisan Congressional Trade Priorities Act of 2014—was introduced in the House (H.R. 3830) and in the Senate (S. 1900). This legislation would reauthorize TPA for four years with the possibility of a three-year extension.

- Robert L. Brown, partner, Bingham Greenebaum Doll LLP

FCIB Now Surveying: Africa

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. The deadline to complete the survey is September 15.

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

Thank you for your participation!

Real Estate's Positive Turn Already Tempered

Few industries have been as boom-and-bust as residential construction over the last decade. This week's underwhelming data from S&P Dow Jones Indices and the Commerce Department issued a reminder of that harsh reality only days after the best string of housing-related statistics in quite some time.

The latest S&P Dow Jones 10- and 20-City Composite Indices showed 6.2% and 8.1% gains, respectively, in home prices over a 12-month period ending in late June. This represents a troubling slowing in the pace of the growth rate from earlier in the year. None of the top 20 markets reported improving or even a steady year-over-year growth rate, though no market showed contraction.

Cleveland was, however, dangerously close to contraction between June 2013 and 2014 at 0.8% growth. Those following behind in poor annual gains were Charlotte (3.8%) and New York (4.3%). The latter reported positive news in the monthly National Index, however, posting the highest growth domestically between May and June 2014 (1.6%). Also trending up in monthly tracking was Las Vegas’ 1.4% growth, its largest gain since summer 2013. Chicago and Detroit equaled the 1.4% growth rate to tie for second best between May and June. S&P Dow Jones Indices officials predicted that conditions could worsen if the Federal Reserve continues to hint at, or actually raises federal funds rates—which will quickly affect mortgage rates—earlier in 2015 than is expected.
Earlier in the week, the Commerce Department's statistics on new single-family home sales tracked at 412,000 in July, representing a surprising 2.4% drop from June. Sales remained above July 2013's total by 12.3%, but the latest statistics paint a considerably less rosy picture of the pace of the housing recovery than other recent analyses. Hopes were higher mid-month because of several real estate data releases  from the National Association of Home Builders/Wells Fargo, Home Depot, the National Association of Realtors (on existing-home sales only) and other monthly government-tracked economic indicators that were obviously, and perhaps predictably, short-lived.  

- Brian Shappell, CBA, CICP, NACM staff writer

Read Business Credit on ANY Mobile Device or Tablet!

That’s right, NACM members can now read Business Credit magazine on the go—on any mobile device or tablet. Because Business Credit is a benefit of membership, you’ll need to log in before viewing and reading it, but doing so gets you the credit and financial news and information you need as a business credit professional.

For more information and to get started, click here.

Manufacturing Deficit Increases

The comeback in manufacturing has been complex and marked by as many setbacks as triumphs. National data has not been as promising lately as in the recent past. The latest export and import numbers show that the gap between exports and imports in manufacturing is widening again. There was a 3.3% increase in imports and only a 2.6% increase in exports and that takes the deficit to $371.59 billion in the first half of this year. Last year at this time the deficit was only $354.64 billion. The fact that the deficit has started to increase is an indication that some key situations have changed.

The advantages that now exist for US manufacturing are important, but they are just starting to manifest. One of the most often cited is that the US is becoming a source of cheaper energy and it is assumed that this will draw manufacturers from across the world as they seek to control the costs of energy consumption. Another major advantage for the US manufacturer is that they are closer to the US consumer and can react to the changing needs and desires of that consumer, but other manufacturers can compete in this arena with better distribution systems and marketing efforts. The US manufacturer is also facing some significant disadvantages and some of these will be very hard to address without help from government in some form.

One of the important issues right now is the economic recovery is far faster in the US than elsewhere. The US rebound is not exactly taking place at rocket speed, but 4% growth in the second quarter compares pretty favorably with the anemic growth in the euro zone where even Germany has fallen into negative territory with a 0.2% decline in the last quarter. China has shown some signs of getting back on track, but predictions are for growth of just 7.2% as opposed to the double-digit numbers recorded just a few years ago.

A second major issue is the lack of skilled workers. The US labor infrastructure is in very bad shape and as the bulk of that workforce enters retirement in the next five years, the crisis will only worsen.

The third issue is perhaps the most delicate. The majority of the world's manufacturers get some sort of help from their governments. The US has done a fair amount of supporting over the years as well—the bailout of GM and Chrysler comes to mind. The problem is that this support is uneven and tends to concentrate in the largest of the manufacturers, often to the detriment of the smaller companies. At the top of the list of complaints registered by small and medium-sized manufacturers is the regulatory burden—even more than taxation. The fact remains that other nations are not so reluctant to twist the rules and give their companies an advantage and that can cost the US directly.  

SOURCE Armada Corporate Intelligence

See What's Listed Right Now on NACM's Credit Career Center

Commercial Finance Credit Analyst at Toyota Financial Services in Torrance, CA
Credit Analyst at Under Armour, Inc. in Baltimore, MD
Stop Loss Collections Analyst at Ryder System, Inc. in Alpharetta, GA
National Credit Supervisor at Wirtz Beverage Group in Cicero, IL
Regional Credit Manager at ASR Group in Maryland

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