eNews April 13, 2010

April 13, 2010

News Briefs

  1. Get Inspired At Credit Congress!
  2. Long-term Change Unlikely Amid Emerging Events in Greece, Russia
  3. Legal Issues and Credit
  4. Small Businesses Believe They Have Access to Capital, Wells Fargo Leading in Commercial Real Estate Lending
  5. Treasury Delays Currency Report, Irking Lawmakers
  6. Banks Jumping on Protection, "Clarity" Bandwagon

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Get Inspired At Credit Congress!

This year's two featured speakers at Credit Congress offer attendees the chance to hear a rejuvenating outlook on their life and work, in addition to world-class management tips from two of the most renowned names in the business.

The 2010 General Session speaker at Credit Congress will be Chester Elton, a sought-after presenter and recognition consultant, as well as senior vice president of the Carrot Culture Group with the O.C. Tanner Recognition Company. He has been called the "apostle of appreciation" by the Globe and Mail, Canada's largest newspaper, and "creative and refreshing" by the New York Times.

As a motivation expert, Elton has been featured in the Wall Street Journal, Washington Post, Fast Company magazine and the New York Times. He has also been a guest on CNN, Bloomberg Television, ABC, Money Matters, MSNBC and on National Public Radio. Elton is also the co-author of several successful leadership books, most notably The Carrot Principle, which has been a New York Times and Wall Street Journal bestseller, and The 24-Carrot Manager which CNN's Larry King called a "must read for modern-day managers." He has spoken to delighted audiences around the world, and now he's coming to Credit Congress to make his mark on the B2B credit profession.

This year's Super Session speaker, presented by NACM with the kind support of Experian, is Keith McFarland, author of Bounce: How Everyday Companies Become Extraordinary Performers. Based on his five-year study, McFarland will debunk popular myths about what it takes to drive sustained growth and profitability and pinpoint how everyday companies become extraordinary, illustrating that luck is a negligible factor. Breakthrough success turns out to be associated with a clearly identifiable set of strategies and skills that anyone in any business can emulate—from small startup to industry leader, he argues.

McFarland, in addition to being one of the nation's leading business consultants, is also a regular columnist for BusinessWeek. He formerly served as CEO of technology firms Nivo International and Collectech Systems and as dean of the Pepperdine University School of Business. In addition to debuting at number one on the Wall Street Journal's bestseller list, his previous book, The Breakthrough Company, topped the national bestseller lists of the New York Times, BusinessWeek, the Los Angeles Times and USA Today.

Be sure to join NACM at Credit Congress to get the most out of these two exciting, inspirational speakers. Additionally, Elton's The Carrot Principle and McFarland's Bounce are currently available in NACM's Bookstore and will also be available on-site at Credit Congress.

To learn more about NACM's Credit Congress, or to register, click here.

Jacob Barron, NACM staff writer

Play Your Best at the Best at Credit Congress

The Legacy Golf Club in Las Vegas has been named as one of the "Top Ten Courses You Can Play" by Golf Digest. Join the NACM Scholarship Foundation for its annual golf outing on this spectacular course. Proceeds from this event provide future financial assistance to credit professionals through educational opportunities.

The course features tee boxes in the shape of each playing card suit—the heart, diamond, club and spade—multi-tiered fairways, large greens and exciting challenges. Ready yourself, get your foursome together and register for the conference and golf outing today or use the add-on form to add it to your registration.

See you there!

Long-term Change Unlikely Amid Emerging Events in Greece, Russia

With an inevitable bailout for Greece and unrest in and around Russia coming to fruition, both have dominated international news of late. Still, experts don't expect these developments to move the needle much within the international business credit game.

After a lengthy, feet-dragging display, Greece finally received an aid program from other European Union nations to the tune of $40 billion (USD). The package will come in the form of a three-year loan at a rate of 5%, which Moody's Analytics Associate Economist Andrea Appeddu personally believes is far from "gift" terms.

The euro zone loan program/temporary credit facility should help the Greek government stabilize its massive budgetary and international business borrowing problems significantly in the short-term. However, Greece has dug itself into such a large economic hole that $40 billion in loans will unlikely generate any real long-term financial stability for the perennially free-spending nation. It is expected Greece will receive assistance from the International Monetary Fund (IMF) in the coming weeks to bolster a recovery that is far from guaranteed.

"The effect on the back-end of the yield curve will be less sharp than on the front-end," said Appeddu. "Long-term, the euro zone and potential IMF back-up gives a very limited relief of Greece. Its fiscal adjustment is on Greek taxpayers' shoulders. It was so on Friday; it is today as well."

Some analysts went farther publicly, predicting the $40 billion will only help Greece avoid insolvency and default through the end of 2010, but not far beyond.

And though it's no guarantee that the euro zone assistance to Greece will inspire moral hazard on the part of other struggling nations like Portugal or Ireland, Gordon Miller, general credit manager for ISP Technologies Inc., said he worries about a "snowball effect."

"Bailing out Greece is really not a whole lot of money to nations like Germany and France," said Miller. "But, perhaps one of the other big nations comes back and says, 'We want the same thing.'" He added that all of this could significantly weaken the Euro.

Meanwhile, to the East, safety and security issues in Russia have again surged to the forefront of international news in the wake of a recent reprisal of terrorist attacks there. After relative calm for a couple of years, activity from radical Islamic militants from the Northern Caucasus provinces (Chechnya, Dagestan, etc.) has returned in the form of subway bombings that killed 40 and injured more than 100 others in Moscow as well as a series of suicide bombings aimed at police in the provinces, which are located in the southeastern portion of Russia. While tragic and unsettling, growing unrest in Russia is unlikely to put a dent in the flow of business credit in any significant way.

"Anybody who is in business in Russia had to expect this and, if they didn't, shame on them," said Miller. "It's not a consistent place to do business. There will be a short time where the business environment will be good and, all of the sudden, it's gone. People doing business there know who they're playing with and know it's a constant thing."

Still, Russia, in its relative infancy of post-Soviet Union consumerism, represents "big economic potential" for international businesses.

"There have been a lot more market capabilities and money there than they've had in the past, and I think the Russian population is looking for foreign goods," said Miller.

Brian Shappell, NACM staff writer

Things Are Looking Up, But Don't Let Up in Getting Paid

Collect your past-due accounts, large or small, as quickly as possible through NACM Affiliate collection services. Our departments are firm, but fair, with your customers. The primary objective is to collect your money.

Our Affiliate collection departments have tried and true steps in notifying your debtor and making immediate demands for full payment. If direct personal contact is appropriate, we have many resources, including the ability to draw on all of our other Affiliates nationwide. When necessary, we will forward an account to one of the bonded attorneys in our legal network. We exhaust all collection possibilities before recommending litigation to you. All funds collected are placed in separate trust accounts.

NACM Affiliate collection services include:

• Letter Services
• 10-day Demand Service
• Action and Litigation
• Litigation Service
• Status Reports

Click here to learn more about NACM Affiliate Collection Services.

Legal Issues and Credit

More than a company's many other departments, the credit department has a unique connection to the legal world due to its various duties pertaining to everything from debt collection to bankruptcy. Many have noted that, in some instances, a company's general counsel seeking an answer to a debt- or bankruptcy-related question will consult the credit professional for help as the two are frequently intertwined in a way that not many other company divisions are.

Additionally, with bankruptcy filings continually recovering to levels seen before the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the need for credit professionals with a legal background is greater than ever.

According to the American Bankruptcy Institute (ABI), a total of 149,268 consumer petitions were filed in March 2010, marking a 34% increase from the February filing total of 111,693 and a 23% uptick from the March 2009 total of 121,413. The Administrative Office of the U.S. Courts also reported that the grand total for the month, including business filings, was over 158,000, which was a slightly-higher 35% increase from February.

"The sustained economic pressures of unemployment coupled with high pre-existing debt burdens are a formula for consumer filings to surpass 1.5 million filings," said ABI Executive Director Samuel J. Gerdano. "As consumers continue to look to bankruptcy for financial shelter, annual filings will likely equal those averaged in the years leading up to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005."

While Gerdano is referring to consumers, much of the same could be said for the nation's businesses: small, medium and large. Knowing how to handle a bankrupt customer using legal strategies will continue to be less of a luxury and more of a necessity as the filings continue.

To learn more about legal matters involving the credit department, be sure to join Wanda Borges, Esq. of Borges & Associates LLC on April 21st at 3:00pm EST for her teleconference, "Legal Issues and Credit." Borges, one of NACM's most acclaimed legal experts, will lead credit professionals of all backgrounds through the problems they may face in a courtroom and how to handle them in the best way possible for their company.

For more information, or to register, click here.

Jacob Barron, NACM staff writer

MLBS Offers Complete Lien and Bond Services and More

NACM's Mechanic's Lien and Bond Services (MLBS) brings best-in-class service options to today's construction credit professional.

MLBS' Lien Navigator is a web-based service that provides up-to-date information for all 50 states and Canada, including notice, lien, payment bond and suit timelines, procedures and other relevant information in a state-by-state/province-by-province format.

MLBS also offers two preliminary notice to owner (NTO) services, deadline tracking, a lien and bond filing program, and a suit against bond and foreclosure service. Both NTO services include, at no additional charge, a Next Action Notification Email. These reminders are sent automatically to ensure that your lien and suit deadlines are met during each step of the lien process.

For more information on NACM's MLBS, click here.

Small Businesses Believe They Have Access to Capital, Wells Fargo Leading in Commercial Real Estate Lending

A new study from Capital One suggests small businesses have more concerns and problems with the ability to garner new customers than actually gaining credit. Meanwhile, a second study indicates several large financial firms continue to make commercial real estate credit available despite concerns over the industry segment's potential risk in the coming year or two.

Capital One's Small Business Banking division unveiled a study last week showing that 78% of respondents said they have access to the credit and financing needed for their businesses. However, nearly just as many expressed little interest in expanding their workforce or committing to major financial investments. Moreover, about half of respondents said they planned for no additional investments/expenditures, such as increased marketing, for at least six months. A significant deterrent on those fronts stems from a perceived inability to gain new customers amid a still-sputtering economy. Capital One said 58% called it their respective business' greatest challenge, while about 37% said maintaining existing customers was their key hurdle.

Still, about half the small business respondents said they believe economic conditions have stabilized, while more than one-quarter see financial improvements already.

"The results of our survey suggest that we're starting to see a leveling-off effect," said Robert Kottler, Capital One executive vice president of Small Business Banking. "Financial conditions for many small businesses have remained relatively constant over the past year. The lack of further deterioration and a growing access to capital are reasons to be cautiously optimistic as we look ahead." The findings contradict the growingly negative outlook portrayed in the newly released March small business optimism study conducted by the National Federation of Independent Businesses.

Those businesses that are looking for credit, at least in the area of commercial real estate, may want to look toward Wells Fargo Bank. Wells Fargo topped nearly all areas of a Mortgage Bankers Association (MBA) study that tracked commercial real estate volume in 2009. The firm ranked first in originations (7,705) and total amount ($27 billion) overall as well as in the office building, retail, industrial and hotel individual categories. PNC Bank, Deutsche Bank, CBRE Capital Markets and HFF L.P. rounded out the top five in total origination value, each exceeding $5 billion. Among financial institutions with at least 250 origination transactions in 2009, Deutsche Bank carried the highest average, $29 million, said MBA.

Still, the numbers remain well off the paces set before the recession ravaged the economy, especially the real estate sectors. Economist Christopher Cornell, of Moody's Economy.com, said the lower commercial real estate numbers are far from shocking because of the inventory-glut-inspired lack of demand for new offices and condominium buildings. He added, "Commercial real estate should lag about six to eight months behind the rebound of the rest of the economy."

Brian Shappell, NACM staff writer

Join the CFDD Network

CFDD exists, in part, to dynamically impact NACM's global vision by being the leader in educational programming and direction, thereby setting industry standards for professional excellence. To learn more about CFDD, click here.

Join CFDD at Credit Congress at its annual Awards and Installation Luncheon on Tuesday, May 18th! For more information, click here.

Treasury Delays Currency Report, Irking Lawmakers

The U.S. Treasury Department recently delayed the release of a hotly-anticipated currency report that was expected to label China a currency manipulator.

"I have decided to delay publication of the report to Congress on the international economic and exchange rate policies of our major trading partners due on April 15," said Treasury Secretary Timothy Geithner in a statement. "There are a series of very important high-level meetings over the next three months that will be critical to bringing about policies that will help create a stronger, more sustainable and more balanced global economy."

Geithner cited the G20 conference in Washington, D.C. later this month, the Strategic and Economic Dialogue (S&ED) with China in May and the G20 Finance Ministers and Leaders meeting in June among the reasons to delay the report. "Our objective is to use the opportunity presented by the G-20 and S&ED meetings with China to make material progress in the coming months," he added.

The move was sharply criticized by several members of Congress, most notably Senate Finance Committee Chair Max Baucus (D-MT). "For years, Treasury has given China's currency practices a free pass, but it's time to reevaluate," Baucus said. "For too long, the United States has pursued diplomacy at the expense of American jobs and exports. Further delay is not the answer. America's competitiveness is at stake, and we must ensure that our ranchers, farmers and workers get a fair shake when they export their first-class products around the world."

Baucus noted that economists have estimated China's currency is undervalued by approximately 40% against the dollar, which puts U.S. exporters at a competitive disadvantage by making their goods much more expensive than their Chinese counterparts.

"China's strong fiscal and monetary response to the crisis enabled it to achieve economic growth of nearly 9% in 2009, contributing to global recovery," said Geithner. "Now, however, China's continued maintenance of a currency peg has required increasingly large volumes of currency intervention. Additionally, China's inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate. A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing."

No new release date for the report has been set.

Jacob Barron, NACM staff writer

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Banks Jumping on Protection, "Clarity" Bandwagon

Bank of America (BOA) has expanded its "Clarity Commitment" credit card initiative to include small business customers as protection programs are starting to gain traction following the federal passage of credit card reform even though lawmakers' efforts were targeted toward consumers.

BOA's Clarity Commitment offers customers a one-page summary of their rates, fees and payment information. The financial institution had been offering the program to its mortgage borrowers since last year and opted last week to extend the Clarity Commitment to its estimated two million small business credit card account holders.

"We understand that small businesses have been especially hard hit in this economic environment, and our goal is to make it as simple and easy as possible for them to understand their lending products so they can use credit wisely and grow their businesses," said Susan Faulkner, a BOA deposit and card products executive.

The announcement follows BOA's announcement that it will notify small business cardholders of rate increases at least 45 days in advance, waive fees for going over a credit limit and cease any rate increases on existing credit balances. Changes to balance policy begin in May, while other changes go into effect in July, said BOA.

The changes are largely inspired by passage of the Credit Card Accountability, Reponsibility and Disclosure (CARD) Act. Though the law applies only to consumer credit cards, BOA, American Express and JP Morgan Chase are among financial institutions that have unveiled new small business protections on a voluntary basis since its passage. American Express said it will offer businesses some terms to opt out of rate increases within a 45-day window and give small business card holders advanced warnings about late payments, among a host of other policy changes.

Brian Shappell, NACM staff writer


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