Business Credit Journal April 2014
The Pebble Leads to an Avalanche A Comment regarding "The Pebble Leads to an Avalanche:"
We publish this article because of a concern that our members, many of which are small to medium-sized businesses may have been contacted by Dun & Bradstreet Credibility Corporation in the attempt to sell services designed to improve business credit standing or credit score. While the jury is still out on the efficacy of these services, there have been complaints and lawsuits claiming the services did not deliver as promised. NACM Oregon encourages every company to monitor its credit report, just as individuals should do. And, we encourage every member to contribute its file of customer credit experiences monthly to the national NACM database. This rewards those customers who provide timely payment and makes more visible those customers who do not meet their obligations in a timely fashion. This conflict between Dun & Bradstreet, the “Grand Old Lady of the Credit World” as our staff writer refers to the company, and Dun & Bradstreet Credibility Corporation is unresolved. We will monitor news reports and legal filings and report to you until this is brought to a conclusion. Rod Wheeland, President, NACM Oregon
In December of 2012, Orin and Robyn Kolaitis, husband and wife, owners of O&R Construction, filed a lawsuit alleging Dun & Bradstreet (D&B) and Dun & Bradstreet Credibility Corp (DBCC) orchestrated “a scheme to falsify credit reports in order to defame and cause significant harm to small businesses.” It had been a long, frustrating year for the boutique construction company in Oak Harbor, Washington. Founded in 2004, O&R has kept afloat through some trying economic times. As their business grew they carefully selected skilled carpenters and subcontractors. In 2012, O&R discovered their credit limit at Home Depot had been lowered by $8,000. As many small business owners know, credit lines - even small ones - can be vital. The care O&R takes in managing their business made the discovery even more distressing. Court filing allege the reduction was prompted by a poor credit report from D&B. Ms. Kolaitis claims this report was incorrect. Initially, to help facilitate these corrections, in May of 2012, Ms. Kolaitis purchased $1,046 for a year’s worth of DBCC services. According to the lawsuit, purchasing the DBCC service didn’t improve their ratings or scores. The most
In This Issue
recent reports on the lawsuit state that Home Depot still hasn’t restored O&R’s credit line to its original level.
The Pebble Leads to an Avalanche.............................. 1
Though a ruling in May of 2013 nearly saw the lawsuit dismissed, a new dismissal motion by D&B was thrown out in January 2014.
International Corner................ 2
Reporters (Joann Lublin and Angus Loten at the Wall Street Journal have been diligently following the case) and industry insiders like NACM’s, Brian Shappell, are keeping a close eye on the outcome. O&R’s situation does appear to be an isolated case. Some businesses - the Wall Street Journal claims to have talked to “more than a dozen” - are pitched DBCC products aggressively. One small business owner was told there were indications of a poor credit rating - despite an established $100,000 credit line that had never been paid late. After purchasing a year of DBCC’s CreditBuilder services, their credit rating recovered. Like O&R, other small business owners are reporting a similar script is being used when they call DBCC to inquire about negative credit activity. They are pitched a DBCC solution but, like O&R, don’t always find their credit rating improving. Even with paid access to their profile, some can’t even identify a cause.
Chair’s Message...................... 3 President’s Message................ 3 Legal Corner .......................... 6 Education .............................. 8 NOF Scholarships.................... 9 Congratulations CBA & CBF...... 11 NACM National News............... 15 Credit Learning Center............ 16 Trade-Based Money Laundering Red Flags .............................. 17 Contacts................................. 18
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Business Credit Journal April 2014
International Corner by Alice Knight, RGCP I recently attended the Credit Research Foundation Conference in New Orleans. One of the presentations, by a very experienced panel, focused on deduction/dispute resolution practices. Although the emphasis was primarily domestic retail sales many of the points apply to international sales.
the requirements these should be communicated to the customer before the sale. Items to consider include:
Does your company have clear, well-communicated policies concerning deductions and disputes? Before you develop a new policy or rework an existing policy it is important to identify existing problem areas. I have grouped possible problems into four general areas: pricing/product specifications, quality claims, logistics/ service, and customer delay. Pricing/Product Specifications We are a trading company. We have no set prices or SKU numbers. Each sale is a separate specific sale negotiated by our traders. We must rely on our traders and CSRs to ensure a match between our PO to our vendor, our sales acknowledgement to our customer, and our customer’s PO to us. Since international trading works 24/7 we often start from a phone call, fax, or email before actual PO’s arrive. Known potential problems include pricing, terms, delivery dates, and measurements (inches versus mms and short tons versus metric tonnes).
•
Amount – Is the claim restricted to the sale price of the goods? Does it include customs, duties, and inland freight? Does it include other damages such as extra labor, etc?
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Usage – If a problem is identified are they to stop using or converting the product until you are notified?
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Submitting the claim – What is the minimum acceptable information – order number, invoice number, roll or pallet number, roll label information, a complete description of the problem, pictures, waste value, if any?
Logistics/Service
Quality claims include damaged product, defective product, and product that does not perform as expected.
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Timeframe – The claim must be submitted within the set days or months of receipt of the goods determined by the seller.
Very large claims might require technical assistance from the mill. Ongoing, timely communication is key to resolving quality problems.
Quality Claims
The first step in developing an effective policy for quality claims is to analyze the requirements from your vendors. Most vendors have very specific requirements for reporting quality claims. Once you have a general overview of
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Juggling timing from producer or warehouse to customer can be extremely challenging. Throw in erratic shipping schedules, extreme weather, and customs or Port slowdowns and shipments are always in flux. Close communication between the manufacturer or warehouse and our traffic department and CSRs is vital. Ocean freight companies have been charging consignees for “container damage” or “container cleaning” fees. One way to mitigate this risk is to have the loading mill or warehouse take pictures of the container before it is loaded. If the stain on the floor is there
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before loading the customer should not be charged when it is unloaded. You must be willing to aggressively pushback on these unfair charges. Demurrage/ detention is another growing area. Every Port has its own “free days” and these vary widely. If a Port has three free days and the customer can only take two containers a day it makes no sense to ship 15 containers at a time. Someone is going to be charged for the extra time. Customer Delay This usually happens on open account shipments. The terms are N60 Bill of Lading date. On the 75th day they are contacted for status of payment. ”Oh, didn’t you know we have a claim?” is the response. If they have a potential claim for $500 on a $65,000 invoice do you have them short pay while the claim is being resolved? If they do at least you have $64,500 in hand. The downside is it is often extremely difficult to get small short pays actually paid. Identify these customers. Have someone contact them well before the due date to confirm that the product was received and that there are no problems or concerns. Your policies must be tailored to your specific company. One size does not fit all. These are suggestions for some areas to consider in the context of your specific needs and goals. Alice Knight is Vice President of Finance & Administration for Paper Products Marketing, Inc. Ms. Knight has more than 48 year's of experience in International Finance and is an active member of ICTF and NACM. She has served as Co-chair, Panel Member, and Presenter at Annual Global Conferences, and as President of ICTF Forest Products Group.
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Business Credit Journal April 2014
Message from the Chairman
Message from the President
NACM Oregon had nine people taking certification tests last month and all nine passed!
Busy, busy times at NACM Oregon . . . the Annual Meeting of the Membership April 24, a Meet & Greet reception May 8, followed by International Business Day on the 9, and the annual Credit Congress in June. Please take a look at the calendar included in this issue and register for those events of interest today!
A big congratulation to our new CBA’s Karen Coles, Melanie Etzel, Bill Heintz, Clara Nemeth, Dave Newman, Mark Teeter, and Eve Weinbrecht, and our two new CBF’s, Jeffrey Butterfield and Bonnie Dunham. Great job all of you. NACM Oregon has lots coming up in the next couple of months. If you are working on your CBF, and have not already done so, Credit Law is required and the class is staring on April 22. Be sure and register if you have not already done so. Our Annual Meeting is a breakfast this year. Breakfast starts at 7:30 a.m. and the always entertaining, Chris Kuehl, will be speaking. The meeting is at Crowne Plaza in Lake Oswego. We would love to see you all there. Our next Meet and Greet is scheduled for May 8, 2014, at the DoubleTree Portland and Paul Beretz will be speaking at the CFDD Portland Chapter. Please watch for details and come join us for some munchies and beverages and stay for the CFDD chapter meeting presentation and Board installation. There will be no charge for this meeting.
To the seven individuals who recently were awarded the Credit Business Associate designation and the two individuals recognized as Credit Business Fellows – Congratulations! There’s more information in this issue about these individuals. Our friends at NACM Business Credit Services in Seattle have joined the CMS network, which produces the NACM Trade Credit Report. As you may know, NACM Business Credit Services and NACM Oregon have the largest numbers of full-file contributors in the entire US network. This addition will substantially increase the experience reported on NTCRs and your industry credit group reports. Thank you for your continued support of NACM Oregon programs, products, and services!
Credit Congress is in Orlando this year. If you have not had the opportunity to attend in the past, please consider attending this year. NACM National has a great program planned for us and it is always a great opportunity to meet other credit professionals. You and your company will benefit greatly. The dates are June 8 through June 11. I look forward to seeing many of you there.
The Excel class series taught by Steve Amiel has been so popular, we are talking about offering it again in the Fall. If this is something you are interested in seeing more of, please let anyone at NACM know or contact any of your Board members.
Rod Wheeland, CCE, CAE
Direct: 971.230.1158 rwheeland@nacmoregon.org
Your Board serves on your behalf. If you have a class or activity suggestion, please let us know. I am always eager and happy to assist members. Thank you, Marsha Johnson, CCE TEC Equipment, Inc. 503.247.4614 mjohnson@tectrucks.com 7931 NE Halsey, Suite 103
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Business Credit Journal April 2014
The Pebble Leads to an Avalanche continued from cover
Most small businesses alarmed by DBCC’s sales practices have complained through the usual channels. The FTC which regulates the consumer credit reporting industry - has received 120 complaints against D&B or DBCC since June 2013.
D&B’s Paydex score is often used by businesses to determine whether to extend credit and on what terms.
Yet it was O&R, the “mom and pop” contractor from Whidbey Island, that threw the first pebble of the avalanche. Their lawyers have filed for class action status and so far their claim has remained upheld. One of the biggest questions O&R’s lawsuit hinges on, is how closely connected are the two corporations providing credit reporting data? The ‘Grand Old Lady of the Credit World’
What began as a very tight partnership between the two companies seemed to unravel just as lawsuits against the two companies gained momentum.
The Mercantile Agency used the most advanced forms of communication and technology of the time to expand their network of credit reporters - a new and respected profession. In 1859,Tappan’s agency was handed over to Robert Graham Dunn who renamed it R.G. Dunn & Company. Meanwhile a rival agency was founded in 1849 by John Bradstreet in Cincinnati, Ohio. Bradstreet’s contribution to the industry was the first publication of commercial ratings. The two companies continued to fiercely compete into the 20th century.
Under J. Wilson Newman, Whiteside’s successor, Dun & Bradstreet invested in new technology with impressive results. D&B introduced the Data Universal Numbering System - or DUNS number - to help identify businesses by a single number. This new system not only helped the company computerize their vast library of information, the DUNS number became the default identification system now used by companies and governments all over the world.
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In 2010, as part of its new strategic plan, D&B sold their Self Awareness Solutions - also known as North American Credit-on-Self division - to Dun & Bradstreet Credibility Corp., in Malibu, California. DBCC bought the division’s related assets and the two agreed to a “perpetual license” of the D&B brand and exclusive rights to sell licensed products. Family Feud
Shortly after the Panic of 1937, a man named Lewis Tappan - who also created The Journal of Commerce - founded the Mercantile Agency in New York City. In light of the recession and questionable lending practices of some businesses, it was the goal of this new agency to “provide reliable, consistent, and objective credit information.”
The Great Depression was a challenging time for companies everywhere. But Arthur Whiteside, R.G. Dunn’s CEO, saw an opportunity. He engineered a merger between the two competitors that guaranteed their survival. Whiteside also influenced Dun & Bradstreet’s shift in focus from “products” to services.
At around the turn of the 21st century, after decades of growth and acquisitions, D&B began spinning business units off into separate companies. Some of it’s “children” - like A.C. Nielsen, Cognizant, Reuben H. Donnelley, and Moody's Corporation - are household names.
With backing from “two of the world’s largest private equity firms and an additional strategic partner,” DBCC attempted to buy it’s former parent company’s stock for a cash premium in September of 2013. D&B “flatly rejected the proposal.” Then D&B hired a new CEO, Robert Carrigan. Carrigan made it known that the relationship was going to change. According to the lawsuit filed by DBCC in New York, he “informed DBCC’s Chief Executive Officer and a DBCC Board member that … the agreement that D&B had struck prior to his arrival … were “the dumbest f---ing deal I have ever seen in my career…” Since then, according to the lawsuit, D&B has conducted a royalties audit with the purpose of getting out of the “perpetual” license agreement. Results Uncertain With both lawsuits pending, all parties involved are keeping tight lipped and letting their legal claims do their talking. For the Kolaitis’ at O&R and industry insiders it is now a waiting game.
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Business Credit Journal National Summary of Domestic Trade Receivables (DSO) Results Summary
April 2014
National Summary of Domestic
The Credit Research Foundation conducts surveys by(DSO) industry Results which detail Trade Receivables Summary relevant statistical information concerning domestic accounts receivable performance.
The CreditofResearch Foundation conducts surveys industry which Below is a summary the latest information which wouldbybe detailed by detail relevant statistical information concerning domestic accounts receivable performance. Below is a summary of the industry segment in the full quarterly report.
latest information which would be detailed by industry segment in the full quarterly report. The
The full report is available FREE of charge to CRF members and any full report is available FREE of charge to CRF members and any companies that submit data for companies that submit data for the survey. the survey. If you would like to receive a FREE full report, which includes the information below at a SIC level - submit data to the next NSDTR If survey, which starts April 1, a2014, andfull runs through April includes 30, 2014. the information you would like toonreceive FREE report, which
below at an SIC level - submit data to the next NSDTR survey, which starts on April 1, 2014 and runs through April 30, 2014.
To access the NSDTR (DSO) Survey please CLICK HERE.
To access the NSDTR (DSO) Survey please CLICK HERE. Fourth Quarter 2013 Independent Median Calculations show:
This Quarter
Last Quarter
Year Ago
Collection Effectiveness Index
87.50
87.40
87.60
Best Possible DSO
30.00
31.00
32.10
Days Sales Outstanding
Average Days Delinquent
38.00
4.50
Percent Current
Percent Over 91 Days Past Due
87.14 0.25
39.78
4.60
88.25 0.40
39.94
4.30
87.11
0.41
Š New York Collection, Peter C. Vey. All Rights Reserved.
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Business Credit Journal April 2014
Legal Corner
The Antitrust Laws as a Vendor’s Response to a Customer’s Terms Pushback Strategy By Scott Blakeley, Esq., Blakeley & Blakeley, LLP
When assessing a customer’s ability to pay on terms, the credit team relies on a number of sources, including a complex scoring model, financial, bank and trade references, internet searches, and social media. Despite the increasingly thorough and detailed credit evaluation process, since the credit crunch of 2008, vendors across the country have seen their customers disregard the credit team’s evaluation and unilaterally extend these terms to better fit their working capital and cash flow needs. According to Sageworks’ 2013 Private Company Report, private U.S. companies reported a 7.4 day increase in their average accounts receivable days (37.9 days to 45.3 days) in the last year alone. With this term pushback strategy (TPS) being employed by financially sound and financially strained customers alike, the “new normal” for the credit team appears to be customers dictating credit terms to vendors. While pushing back on terms presents customers a less-expensive financing option and improves their working capital (as well as a best practice according to the customer’s finance team), the TPS negatively affects a vendor’s DSO and cash flow. How can vendors keep the customers within terms in the face of a customer’s TPS? Can the federal antitrust law, the Robinson-Patman Act (RPA), be used as leverage against a TPS? The RPA amended Section 2 of the Clayton Act and, among other things, makes it illegal for vendors to extend more favorable prices and/or terms to one customer without extending comparable prices and terms to all similarly situated customers. The RPA has historically been applied to small vendors who grant discriminatory prices and terms to customers in hopes of receiving orders over larger competitors. The RPA bars discriminatory pricing and extended terms (as well as vendor concessions such as credits, rebates, promotional allowances, and early pay discounts) amongst like, competing customers. If two customers meet the following factors, they may fall under the purview of the RPA’s like-customer evaluation: 1. The customer’s functional level (Wholesaler? Retailer?); 2. The type of product the customer purchases (i.e., grade and quality);
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3. The quantity of that product the customer purchases; and 4. The geographic region in which the customer does business (the respective customer’s sales territories must overlap). However, if two customers do not directly compete, then the vendor does not violate RPA by offering a customer more favorable pricing and terms. How may the vendor use the RPA so they themselves push back from the customer’s TPS? If another customer occupies the same like-class of RPA factors above, the vendor may use the RPA to push back on the customer’s TPS. The credit team may respond to the customer’s TPS with: “We would like to accommodate extended terms, but the RPA prevents us. You are classed with customers who are granted normal terms.” The credit team’s response to the customer’s TPS attempts to bridge the gap of the customer’s strategy to improve its cash flow to the detriment of the vendor’s DSO. The vendor may underscore to the customer that, under the RPA, allowing a customer to set extended terms (or other vendor concessions) is no different than the vendor setting extended terms as to compliance with the like-class rule. The vendor does not have a catchall defense to the RPA that the customer is dictating the terms of sale, and therefore should be excluded from compliance with the like-class rule. Rather, the focus of compliance with the RPA’s like-customer rule is whether the customer received discriminatory pricing or terms; the rule applies regardless of which party set the terms or prices. The extended terms are still the terms of the trade relationship, and if they differ from the terms extended to another similarly situated customer, the vendor has discriminated in favor of the customer setting terms. It should be noted that RPA restrictions may not be invoked by all vendors in the face of a TPS. The RPA only covers commodities—not services. For the purposes of RPA, the following are not considered commodities: real property, brokerage services, newspaper advertising, cable television, and long distance and cellular telephone service. Likewise, the RPA only covers actual purchases; it does not cover price quotes or offers to sell. The sales in question must cross state lines in order to fall under the purview of RPA. Export sales are also outside the scope of the RPA.
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Business Credit Journal April 2014
The Antitrust Laws as a Vendor’s Response to a Customer’s Terms Pushback Strategy continued from page 6
Consider a different setting with evaluating RPA’s like-customer rule and TPS: the customer requests extended terms based on the vendor’s competitor offering more favorable terms. The customer is attempting to use the vendor’s competitor’s extended terms offer to force the vendor to concede like terms, or lose the business. In this setting, the vendor may have no choice but to concede the extended terms if it wishes to keep that customer’s business. The drafters of the RPA crafted the meet-the-competition concession because vendors often offer favorable terms in response to a customer’s threat to change vendors in an effort to obtain more favorable pricing or terms (as set forth above). Thus, discriminatory prices and terms are lawful provided the vendor is acting to meet the lower price or extended terms of its competitor. According to the Supreme Court, the meeting-the-competition exception balances the protectionist aspects of the RPA with the pro-competitive purposes of antitrust laws. If the customer pushes back on price or terms in response to one of the vendor’s competitors offering lower prices or extended terms, the customer may nullify the vendor’s RPA-based argument against extended terms. Having said that, the vendor is under no legal obligation to meet
the competition, and can decline to provide extended terms, but risk losing the customer to a competitor. The credit team’s best practice when faced with a customer’s meet-the-competition demand is to have the customer pledge that they have received more favorable terms or pricing from a competitor. The customer’s pledge should disclose the competitor’s product(s) being purchased and the terms being offered. If the customer has a better offer from a competitor, then the customer should be willing to make the competition pledge. If the customer refuses to do so, it may be a red flag that the customer does not, in fact, have a competitor’s better offer. If so, the vendor may then use the like-customer rule and advise that the RPA does not permit discriminatory pricing or terms. The RPA provides that the vendor meet a good faith requirement to justify meeting the competition. If the customer is unwilling to make the competition pledge, yet still insists the vendor make price and terms concessions, then it may be questioned whether the vendor meets the good faith requirement of meeting the competition concession. If, on the other hand, the customer does make the competition pledge and the vendor decides to meet its competitor’s terms, then the credit team keeps the pledge in its credit file to support the newly extended terms.
Scott Blakeley is a principal with Blakeley & Blakeley LLP, where he practices creditors’ rights and bankruptcy. His email is seb@blakeleyllp.com.
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Business Credit Journal April 2014
In-House Class Schedule
Mark your calendars for these exciting events! International Business Series April 10 - October 16, 2014 (Thursdays) 8 - 10 a.m. NACM Oregon Classroom 7931 NE Halsey, Suite 201, Portland, Oregon 97213 Instructors: Brenda Barnes; Dana Shannon; Jean Boudreau; Ken Carraro; Raeann Binau ICCE, RGCP; Scott Smithhisler
International Business Day May 9, 2014 8 a.m. - 4 p.m.
Cost: Members - $45 each; Nonmembers - $75 each
Cost: Members - $225 each; $175 per additional registrant from the same company; Nonmembers - $325 each
Doubletree Hotel Portland 1000 NE Multnomah, Portland, Oregon Speakers: Courtney Seelinger, Dr. Christopher Kuehl, Paul Beretz, Romelio Hernandez & more
Credit Law for Trade Creditors April 22 - June 24, 2014 1 - 4:30 p.m. Basic Accounting NACM Oregon Classroom September 10 - November 21, 2014 (Wednesdays) 7931 NE Halsey, Suite 201, Portland, Oregon 97213 1 - 4:30 p.m. Instructor: Rod Wheeland, CCE, CAE, President, NACM Oregon NACM Oregon Classroom Cost: Members - $345 each; Nonmembers - $545 each 7931 NE Halsey, Suite 201, Portland, Oregon Instructor: TBA Cost: Members - $345 each; Nonmembers - $545 each
Registration Visit www.nacmoregon.org/events to register online. If you have any questions regarding these classes, please call Shawna Kelly at 971.230.1202 or email skelly@nacmoregon.org.
We hope to see you at one or more of the following meetings. NACM Annual Meeting April 24, 2014 7:30 - 9:15 a.m. Crowne Plaza Portland-Lake Oswego 14811 Kruse Oaks Blvd, Lake Oswego, Oregon Speaker: Chris Kuehl, Armada Intelligence and the NACM economist Seminar Following: "Securing Your Right to Payment & Available Collections Options" 9:30 - 11 a.m. Speaker: William Fig, attorney, Sussman Shank, LLP Cost: Annual Meeting & Breakfast $35 (members only) Seminar - $75/members; $155/nonmembers Register for both $95 (members only)
International Meet & Greet May 8, 2014 5 - 6:15 p.m. The Multnomah Grille Doubletree Hotel Portland 1000 NE Multnomah St. Portland, Oregon
Membership Breakfast October 14, 2014 7:30 - 9 a.m. Location: TBA Speaker: John Mitchell Watch your mail for more details!
Please join us for hors d'oevres wine & beer. The Meet & Greet is free to the members. Free parking is available. Meet & Greet - Eugene May 22, 2014 Location: TBA Meet & Greet - Salem June 17, 2014 Location: TBA
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Business Credit Journal April 2014
NACM-Oregon Foundation Scholarships The NACM-Oregon Foundation (NOF) is an independent, public benefit, nonprofit organization that provides scholarship opportunities to credit professionals to assist them in the pursuit of education and training, to achieve professional designation, and to attend national and regional programs and conferences. In the spirit of sharing the wealth of scholarships, the NOF is providing financial assistance to eligible applicants. These scholarships are only available to NACM Oregon members. Nonmembers are not eligible for these or any other scholarships offered by the NOF.
NOF has established the following eligibility requirements and cooperates with other organizations (NACM National, CFDD National, and the CFDD Portland and Salem/Albany Chapters) to avoid double awards. The NOF is offering the following scholarships in 2014:
• NACM National Credit Congress June 8-11, 2014, Orlando, Florida Two (2), $500 scholarships Deadline: April 30, 2014 • Western Regional Conference October 15-17, 2014, Las Vegas, Nevada One (1), $500 scholarship
• Professional Certification Fees $2,000 for certifications fees. Application must include an acknowledgement letter from NACM National.
News from NACM National The NACM Scholarship Foundation is pleased to announce that two of your members recently received scholarships. Please help us congratulate the following scholarship recipients: Karen Coles, CBA, NACM National Online Course registration (Electrolux, Inc., Charlotte, North Carolina) Jacqueline Bloom, CBA, 2014 Credit Congress & Expo registration (Wright Business Form, Portland, Oregon) We applaud the effort of these recipients and wish them the best as they pursue their educational goals.
$2,000 for certification classes fees. Applicant must include letter of completion and grade from the respective instructor and cost of the class. No funds available for texts.
Deadline: August 31, 2014 • CFDD National Conference September 18-19, 2014, DoubleTree Bloomington Minneapolis South, Minneapolis (Bloomington), Minnesota Two (2), $500 scholarships
• NACM Oregon International Seminars
Submit applications to:
$2,000 to support NACM Oregon International seminars. Request can be for the International Day Seminar, May 9, 2014; International Credit individual sessions.
Lourdes (Lou) A. Rice NOF Scholarship Chair Pacific Metal Co. 10700 SW Manhasset Dr. Tualatin, Oregon 97062 p: 503.454.1051 f: 503.454.1065
Deadline: August 31, 2014
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Business Credit Journal April 2014
Just a Demand Letter Brenda Terreault Creditors often ask a collection agency or a law firm to send just a demand or breach letter. The thought is that getting such a letter will spur the debtor into paying. The tactic sometimes works and has been utilized by many creditors for decades. However, the tactic of hiring a third party to just send a demand letter can turn the first-party creditor into a third-party debt collector for purposes of the Fair Debt Collection Practices Act (FDCPA). In Vincent v. The Money Store, 736 F.3d 88 (2d Cir. 2013), the creditor hired a law firm to send out a demand letter to a past-due debtor. The creditor authorized only the preparation and mailing of those letters, which stated that the law firm had been retained to collect the debt. Except for those letters, the law firm had no other role in collecting the debt. The trial court granted summary judgment to the creditor. The debtor appealed. However, the Court of Appeals found that the creditor was a "debt collector" under the FDCPA because the creditor used "a name other than its own which would indicate that a third party is collecting or attempting to collect" (15 USC sec 1692a(6)). The creditor had hired the law firm intending that the debtor believe that the law firm represented the creditor in collecting this account. However, the law firm was not authorized to make actual efforts to collect the
debt. Therefore, the Court found that the law firm acted only a conduit for a collection process that the creditor actually controlled. Therefore, the creditor acted as a debt collector in a capacity subjecting it to FDCPA. While the facts of this case do not include the use of a third-party collection agency, the analysis would remain the same. Many creditors desire a continuing level of control over the collection process regardless of the collection agency or law firm hired. They only want the agency to send a demand letter, and then stop the process. Or they may authorize the agency to send the claim to an attorney for a demand letter knowing that they will never authorize filing a lawsuit. In both those instances, the creditor remains in control of that portion of the process. The Vincent case provides additional insight as to how a creditor may qualify as a third party and violate the FDCPA. What has been a regular practice in the collection process should be reviewed by all creditors, law firms and agencies.
We would like to say a big thank you to Marilyn & Charlene for taking the time to mentor the individuals who took their CBA exam this last month. The study sessions they held to help prepare them for the tests was invaluable.
Marilyn Rea, CCE, Controller for Pacific Architectural Wood Products, was first introduced to the world of credit through her job at JC Penney in the Credit & Layaway Department. She became the Credit Manager of Northwest Pump and Equipment in 1983, and attributes being active in the Petroleum Industry Trade Group and attending NACM classes and seminars for providing skills and knowledge that defined the company’s credit policy and procedures during her 18-year tenure.
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Charlene Gothard, CBA, Senior Customer Financial Services Team Member, Purina Animal Nutrition, LLC, has had many years of involvement with the CFDD Portland Chapter serving on and leading numerous committees, and Board positions including President and Chairman. She received the Portland Chapter DMA in 2005, CFDD National DMA in 2008, and the unique “Viv� Award in 2009. Charlene is currently serving on the CFDD National Board as Area Director for Oregon and is the Vice Chairman of the NACM-Oregon Foundation.
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Business Credit Journal
Please join us in congratulating these individuals on receiving their CBA & CBF Certifications Bonnie Dunham, CBF, CICP, graduated April 2014
Jeff Butterfield, CBF, is a Branch Credit & Collections Manager for Pacific Seafood Co., with more than 20 years of experience in B2B collections. This June he will be attending year two of NACM’s GSCFM at Dartmouth College and sitting for the CCE exam.
CBF
from Idaho State University with a degree in Finance. Bonnie has more than seven years in credit experience. She earned her CBA designation in 2012 & CICP and CBF in 2014.
Credit Business Fellow
Karen Coles, CBA, has more than nine years of commercial credit and collection management experience. She is currently Credit Manager for Electrolux Major Appliances, North America, and is based in Charlotte, North Carolina. Throughout her career, her credit management skills have stretched across construction, manufacturing, and procurement/supplier industries. Karen strives to continue her path of learning by next obtaining the CBF and then ultimately, the CCE designation. She holds a Bachelor of Science degree in Management with an emphasis in International Business from Clemson University and a Masters of Business Administration with a concentration in Organizational Leadership and Change from Pfeiffer University.
, Bill Heintz, CBA, is a credit specialist with a focus in trade credit for the past eight years. His most notable achievement in the credit field has been obtaining his CBA. Outside of his career he can often be found with a fishing pole in hand or a backpack full of camping gear on his back unless the Oregon Ducks, his alma mater, are playing.
Clara Nemeth, CBA, joined NACM Oregon in March 2011 as an Account Executive. She earned her Marketing Degree in 1990 and her Accounting Degree in 2000. Prior to joining NACM Oregon she was an Accountant for Manheim Portland Auto Auction and a Key Business Consultant for D&B. She received the Dale Carnegie Certificate in 2009 and the Certified Group Administrator Certificate (CGA) in August 2011.
Mark Teeter, CBA, CICP, joined ESCO two years ago as a Senior Credit Analyst. He is currently Credit Manager of ESCO’s Supply and Service division that supports large scale mining and oilsand operations throughout North America, as well as globally. Before joinging ESCO, Mark spent 17 years at Columbia Sportswear with roles as Regional Credit Manager and Financial Analyst. Mark and his wife, Tamara, enjoy cycling, kayaking, and volunteering in their spare time.
CBA
Credit Business Associate
7931 NE Halsey, Suite 103
Melanie Etzel, CBA, is the Credit/HR Manager at Cascade Nut & Bolt, Inc., and has been with the company since 2006. She is active in the Industrial Suppliers Industry Group and is seeking to achieve NACM's next level of certification. In her leisure time, Melanie enjoys horseback riding, traveling, and photography.
Portland, Oregon 97213
Dave Newman, CBA, is a native Oregonian with a business degree from Portland State University. He's worked in a number of different fields including Credit, Finance, Global Logistics, and Sustainability. He earned the CBA designation in March 2014 and hopes to achieve the CBF designation by the end of the year.
Eve Weinbrecht, CBA, is the Assistant Credit Manager at OrePac Building Products in Wilsonville, Oregon. After earning her A.A. from the University of New Mexico and B.S. in Business Management from Metropolitan State University in Denver, she moved to Santa Fe to work in SOX compliance for an investment banking firm. Shortly after a trip to Oregon, Eve became enamored and moved to the PNW to work in trade support for a technology-based trading firm. The last five years before joining OrePac, Eve traveled the western states for a New York-based firm training a national sales force. In addition to her committed membership to NACM, she also is an enthusiastic member of NACM’s professional development division—CFDD. Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Public Record Data is now available on the NATIONAL TRADE CREDIT REPORT
Business Credit Journal April 2014
You’ve told us that at the very core of every solid credit decision is a thorough review of fresh trade line/trade payment information and that complete, accurate public record data can sometimes help fill information gaps. To meet the need for public record data, the NACM National Trade Credit Report proudly provides you with an option to access and purchase additional third party public record data.
Here’s how to proceed: 1. Login as usual through your participating NACM Affiliate website. 2. Click the CREDIT REPORTS button to search for an NTCR.
3. Many NACMs already populate the NTCR with regional information about bankruptcies, liens, judgments, UCC filings, and corporate data. Check the NACM NTCR for this regional information before purchasing nationwide public record data from our third party provider. Carefully reviewing the Search Results screen, checking the three columns on the right: the number of tradelines available on the report is displayed in the column marked, TL; the number of Financial lines is noted in the FL column and additional data is noted in the Info column. In the Info column, B stands for Bankruptcy data, P stands for Public Record data, C stands for Corporate Officer data, U stands for UCC data, and A stands for issued Alerts. Select the NTCR you wish to purchase.
4. Once you’ve purchased the NTCR, you’ll have the option of purchasing additional public record data from NACM’s third-party provider by clicking on the PURCHASE ADDITIONAL DATA button. Be sure to contact your NACM Affiliate to discuss public record data pricing as it may vary from Affiliate to Affiliate.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Once you’ve clicked the PURCHASE ADDITIONAL DATA button, you can discontinue your expanded search for public record data by clicking on CANCEL. If you cancel, no additional charges will apply.
Business Credit Journal April 2014
If you click on CONTINUE SEARCH, additional charges will apply. The only circumstance under which no additional charges will apply is if no results are found.
After clicking on CONTINUE SEARCH, all possible matches to your search will be returned in the set. “Uncheck” any results that you determine are unrelated or that you may wish to disregard to refine and more narrowly focus your results. Relevance is calculated by comparing the business subject name and address against each business entity in the result set. Business entities with the highest matching relevance are listed at the top of the results set. The Public Data columns (on the right) list the number of unique data lines for each category. Hover over the B, L, J, U, and O columns or the numeric values for a full description of each. All columns can be sorted.
Corporate entity icon
NACM National Trade Credit Report 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Click on Apply Results to include the additional third-party public record data on your NTCR. The data will be displayed on the online (HTML) version or you may select PRINT PDF for a printable version of the report.
Business Credit Journal April 2014
NACM National Trade Credit Report 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Business Credit Journal April 2014
NACM National
News
2014 C redit C ongress & E xposition Join us at the Rosen Shingle Creek Resort June 8-11, 2014, Orlando, Florida, for the year’s largest gathering of business credit professionals in the country. For more information go to http://creditcongress.nacm.org/.
June 16-26, 2014
June 16-20, 2014
& June 22-July 2, 2015 GSCFM International delves into complex global issues facing credit and financial management executives throughout the world. Participants have the unique chance to network with students in the GSCFM program running concurrently with the GSCFMI.
GSCFM is an intensive program providing a foundation in disciplines, such as financial analysis, valuation, business economics, business law, corporate strategy, ethics and treasury management. Click here to learn more about GSCFM.
Click here to learn more about
Survey Dates
Credit Manager’s Index The CMI is created from a monthly survey of U.S. credit and collections professionals. The survey asks participants to rate whether factors in their monthly business cycle—such as sales, new credit applications, accounts placed for collections, dollar amount beyond terms—are higher than, lower than, or same as the previous month. The results reflect the entire cycle of commercial business transactions, providing an accurate, predictive benchmarking tool.
2014 CMI Timeline
Survey Opens
Survey Closes
April
Mon,April 21
Fri, April 25 (noon)
May
Mon, May 19
Fri, May 23
June
Mon, June 16
Fri, June 20
July
Mon, July 21
Fri, July 25
August
Mon, August 18
Fri, August 22
September
Mon, September 22 Fri, September 26 (noon)
CMI reports are released to the media the last business day of each month.
October
Mon, October 20
Fri, October 26
November
Mon, November 17
Fri, November 21 (noon)
All credit and collections professionals are invited to take the survey each month. NACM membership is not required.
December
Mon, December 15
Fri, December 19
To sign up to receive monthly email reminders to take the survey click here.
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Business Credit Journal April 2014
Credit Learning Center
Don’t forget to take advantage of your two, complimentary webinars which are included in your Full, Premium, or Corporate Membership Package. To view the Event Calendar go to http://www.nacm.org/event-calendar.html.
Teleconference: Emerging Trends for Small/MidMarket Credit Departments: Credit Description coming soon May 5, 12 - 1 p.m. PST
NACM Event Calendar Webinar: Troubled Suppliers in Bankruptcy and Financial Distress Although less common, businesses may encounter issues with their suppliers. The unique issues with trouble from suppliers includes operational issues relating to supply-chain management. April 14, 12 - 1 p.m. PST
Webinar: Liens and Bonds—Taking Advantage of Your Rights to Avoid Write-offs and Sell More Description coming soon May 7, 12 - 1 p.m. PST
Teleconference: The Credit Manager’s Guide in Supporting Proactive Due Diligence Prior to Unclaimed Property Reporting Deadlines
Teleconference: Preference Defense Toolkit Description coming soon May 21, 12 - 1:30 p.m. PST
In that each state has its own due diligence requirements, performing effective due diligence which adheres to all the states' various requirements can be challenging. This teleconference will include an overview of state due diligence requirements, tips on performing effective due diligence and methods by which you can reduce the number of unclaimed items requiring due diligence. April 16, 12 - 1 p.m. PST
Webinar: Bankruptcy for Beginners (Day 1) Description coming soon July 14, 12 - 1:00 p.m PST Webinar: Bankruptcy for Beginners (Day 2) Description coming soon July 16, 12 - 1:00 p.m PST
Webinar: Alter Ego and Single Business Enterprise Theories: Understand Who You Are Really Dealing With and How to Find Assets and Secure Payment Description coming soon April 23, 12 - 1 p.m. PST Webinar: Legal Roundtable: Answering Your Questions This webinar is the first of its kind by NACM and provides a taste of what attendees at the upcoming Credit Congress in Orlando will experience at the Executive Exchange Sessions on June 9. This is your opportunity to control the content of the program by asking questions on any legal and collection subject of interest to you.
April 28, 12 - 1:30 p.m. PST 7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Business Credit Journal Trade-Based Money Laundering Red Flags
April 2014
Money laundering, which is a vehicle to fund terrorism and organized crime, is not only an issue for bankers and top-level finance people. Studies have shown that Trade-Based Money Laundering (TBML) is one of the three most common approaches, especially in attempts against companies or consumers in developed western economies. Particularly in the United States, trade-based money laundering is under the microscope because of two events in the last dozen years: the September 11, 2001 terrorist attacks and the banking scandals and collapses that contributed to the sharp economic downturn that started in 2007 and 2008. TBML is crossing into the credit function more often, and credit professionals that ignore the warning signs run a major risk of exposing their companies to inadvertent wrongdoing, which carries ever-escalating fines for those involved, even if accidentally. The following are some of the more prominent TBML red flags that credit professionals could see: •
There is reluctance or refusal on the part of the customer to give information, such as where the product is going.
•
The products requested do not fit with the company’s consistent line of business.
•
The potential customer is unfamiliar with intended use of the product your company is selling.
•
The product is incompatible with the purported shipping destination.
•
The shipping route is abnormal.
•
The final destination for the product is a freight-forwarding business.
•
Customer prefers to pay cash even if they qualify for open credit terms.
•
The customer’s suggested payment method is inconsistent with the risk characteristics of the transaction.
•
The transaction involves payment by cash, check, wire transfer, postal money orders, etc. from a third party with no obvious connection with the transaction.
•
Letters of credit are frequently amended.
•
Significant discrepancies in description, value, quality or quantity of goods are apparent on official documents (invoices, bills of lading, etc.).
•
Numerous sole proprietorships or private limited companies are controlled by the same group of people.
Source: NACM-National
Through a special arrangement with the Credit Research Foundation, NACM Oregon is making available for the benefit of its members the opportunity to participate in the quarterly National Summary of Domestic Trade Receivable survey and the annual Bad Debt survey conducted by CRF. As a participant you will receive the results free of charge as soon as they are compiled. The quarterly survey, which has been conducted by CRF since 1960, will provide you with median performance measure results, such as DSO, Best Possible DSO, Average Day’s Delinquent, Collection Effectiveness Index, Percent Current, and Percent over 91 Days, from other businesses within your industry. It serves as a basis of comparison to see how your department stacks up in relation to businesses similar to yours. The annual bad debt survey will compare your actual write-offs to others within your industry as well as providing an average bad debt reserve figure by industry. To participate click http://www.crfonline.org/surveys/dso/nsdtrpage.asp and fill out this simple 5 minute survey by April 30, 2014
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Tel 503.257.0802
Fax 503.257.0247
www.nacmoregon.org
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Business Credit Journal April 2014
Contacts
Board of Directors Chairman Marsha Johnson, CCE TEC Equipment, Inc. mjohnson@tectrucks.com Secretary - Treasurer Linda Bishop, CCE, ICCE Tektronix, Inc. linda.j.bishop@tek.com Counselor John Hardy Emerson Hardwood Co. jhardy@emersonhardwood.com President Rod Wheeland NACM Oregon rwheeland@nacmoregon.org
Directors Steve Amiel Tektronix, Inc. steven.amiel@tektronix.com Raeann Binau, ICCE, RGCP Columbia Machine, Inc. raebin@colmac.com Jacqueline Bloom, CBA Wright Business Graphics jbloom@wrightbg.com Will Campbell Standard Supply Co. willc@standardsupplyco.com Tony Ceniga Industrial Finishes & Systems t.ceniga@industrialfinishes.com Lori Jones, CCE ljdangermouse@gmail.com
NACM Oregon Customer Service/ Credit Reporting 971.230.1220 services@nacmoregon.org
Industry Groups Richard Browning, CGA 971.230.1188 rbrowning@nacmoregon.org
Data Contribution Shannon Abnal, CGA 971.230.1166 sabnal@nacmoregon.org
Kristen McBride, CGA 971.230.1176 kmcbride@nacmoregon.org
Member Services Kathy Linscott, CGA 971.230.1164 klinscott@nacmoregon.org Member Services Account Executives Clara Nemeth, CGA, CBA 971.230.1144 cnemeth@nacmoregon.org
Isaac Miller Food Services of America isaac_miller@fsafood.com
Kendall Sun 971.230.1178 ksun@nacmoregon.org
Dave Newman, CBA Orepac dnewman@orepac.com
National Account Executive Caroline Anderson, CGA 971.230.1168 canderson@nacmoregon.org
Scott Smithhisler US Bank Global Trade Service scott.smithhisler@usbank.com NACM National Director Rick Weisman, CCE Graybar Electric Co., Inc. rick.weisman@graybar.com
7931 NE Halsey, Suite 103
Portland, Oregon 97213
Education Shawna Kelly 971.230.1202 skelly@nacmoregon.org
Tel 503.257.0802
Fax 503.257.0247
Collection Services Dennis Corey 971.230.1204 dcorey@nacmoregon.org Marc Comstock 971.230.1206 mcomstock@nacmoregon.org Billing Marmie Carpenter 971.230.1146 mcarpenter@nacmoregon.org Meeting Room Rental Shawna Kelly 971.230.1202 skelly@nacmoregon.org Newsletter Editor Amanda Garrick 971.230.1172 agarrick@nacmoregon.org Building Suites Lisa Rogstad 971.230.1160 lrogstad@nacmoregon.org
www.nacmoregon.org
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