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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

After Becoming a Bankruptcy Creditor, Stay Engaged In the Process

In This Issue

Ava Schoen, Attorney, Tonkon Torp LLP A Notice of Chapter 11 Bankruptcy Case arrives in your mail. A business that owes your company money has filed for Chapter 11 bankruptcy protection. What can you do to protect your company’s interests when a business relationship becomes a debtor-creditor relationship? Here are the most important things to know: Don’t violate the automatic stay

Bankruptcy Creditor .................... 1 Chair’s Message . ........................ 2 President’s Message . .................. 2 Western Regional Credit Conference ................................................. 4

Avoid the urge to use the notice of a debtor’s bankruptcy filing as an opportunity to make a last-ditch effort to get paid. As soon as the bankruptcy case is filed, an automatic stay goes into place that prohibits creditors from commencing and pursuing lawsuits against the debtor, enforcing judgments or lien rights against the debtor, or otherwise trying to collect the debt. While there are exceptions to the automatic stay and ways to get relief from the stay, they are limited and must be handled properly. Be sure to get good advice if you want to pursue any such alternative, because violation of the automatic stay is generally punishable by contempt, which can mean a fine or even criminal sanctions.

Key to Success ........................... 5

Stay informed

Credit Ambassador Award............ 10

The debtor is required to share some, but not all, court filings with its creditors. If you really want to stay informed, file a request with the bankruptcy court to receive copies of all filings. Just be prepared to receive a lot of paper. If you decide to retain a bankruptcy lawyer to protect your company’s interests, he or she will have access to the bankruptcy court’s electronic database of all filings. Consider attending the 341 meeting of creditors

NOF Scholarships ....................... 7 New Designee’s .......................... 7 Education & Events .................... 8 Credit Learning Center................. 9

International Corner.................... 11 Experian/Moody’s Analytics.......... 12 Consumer Credit Education.......... 14 Contacts..................................... 19

Not long after a bankruptcy is filed, a lawyer for the Office of the U.S. Trustee (UST) will conduct a meeting with the debtor, and creditors can attend. This meeting is a good chance to obtain general information about the bankruptcy process and the debtor’s case, and to have your questions answered. ...continue on page 18

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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NACM Oregon Business Credit Journal

2013 September | October

A bi-monthly newsletter published by NACM Oregon

Message from the Chairman

Message from the President

Hope you have all had a wonderful summer and are ready for an even more exciting Fall Season.

Lots of Fall activities at NACM . . . be sure to take a look at the calendar included in this issue.

While I was unable to attend, my sources have informed me that our first “Meet and Greet” was well-attended and lots of fun. There will be another one in October and your Board of Directors will be in attendance. I hope to see all of you there.

On October 1, we will begin an eleven-week class, 33-hour class, Financial Analysis for the Trade Creditor. My approach is to provide an overview of the tools and techniques necessary for the trade credit manager approving credit lines. We’ll review accounting structure and process, the common audit report, analytical tools and indicators, and we will flesh out how financial statements can be helpful in getting to a decision where there are substantial volumes and/or high risk. I try to make this an interesting, yet challenging class. The prerequisite of an accounting class makes it easier but isn’t a necessity if you’re willing to bear down and do the work. If you are seeking a national designation, this class meets the Financial Analysis I requirements. And, the NACM Oregon Foundation has scholarship funds available for reimbursement. I hope you will think about joining us.

Financial Statement Analysis I starts on October 1, if you are trying for your CBA, this is one of those “must have” classes. Please get enrolled right away. There may be scholarship money available; please check with the Foundation. At this point, I have attended over half of the local industry trade groups and been able to meet a lot of you. These visits have reinforced my view of the importance of these groups to our profession. They are a great opportunity to meet others in credit and gives all of us resources for those “how do you handle” questions that come up. Those questions can be anything from personnel problems to issues like construction liens or selling internationally. One of the important benefits of belonging to NACM is just that, the ability to meet other people who work in credit. Whether they are in your industry or not, each meeting is an opportunity to learn, grow, and benefit from someone else’s knowledge. Not to mention that credit people are just plain fun. I encourage each of you to take advantage of those opportunities to meet your peers. There will be more “Meet and Greets”, CFDD meetings, industry trade groups, and of course, conferences and classes to attend. Please consider attending and meeting some of those other people who work in credit and share a little knowledge, tell a few stories, and make a connection. Marsha Johnson, CCE TEC Equipment, Inc. mjohnson@tectrucks.com

Best wishes for an enjoyable Oregon Fall!

Rod Wheeland, CCE, CAE Direct: 971.230.1158 rwheeland@nacmoregon.org

Testimonial I have been a member of NACM Oregon for more than four years. As part of the Legal Services Industry Group, I find the presentations to be quite informative and the camaraderie and support from the members of the group itself invaluable. Debra A. Ezell – Credit Manager Cosgrave Vergeer & Kester LLP

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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NACM Oregon Business Credit Journal

2013 September | October

A bi-monthly newsletter published by NACM Oregon

CRF News The Second Quarter 2013 Edition of the CRF News is now available. This edition includes articles on selling into Venezuela, the use of Smart Devices by credit professionals, Unclaimed Property Law strategies for credit departments, and an economic view on the end of quantitative easing by the Federal Reserve provided by renowned economist, Mark Zandi. Now available in Flipbook format. The Flipbook version may be viewed on all Internet devices, including smart phones and tablets. For those who can’t view Flash on their computers, a PDF version of the CRF News is available.

National Summary of Domestic Trade Receivables Results 2nd Quarter 2013 We have received the results of the National Summary of

Domestic Trade Receivables (DSO) for the second quarter of 2013. The Credit Research Foundations (CRF) has been producing this valuable quarterly report for more than 50 years. DSO slightly decreased from the prior quarter to 39.79 from 40.10. A year ago the measure was 39.85. Best Possible DSO decreased to 31.10, as compared to 32.60 last quarter and 31.90 a year ago. Average Days Delinquency decreased to 4.40 from 4367, as compared to 4.80 a year ago. The percent reported over 90 days past due increased to 0.50 as compared to last quarter at 0.35, as compared to 0.50 a year ago.

Please contact Customer Service or your Account Executive for a copy. Now that you’ve done the NSDTR, if you really want to see how you’re doing, you’ll want to participate in CRF’s comprehensive Benchmarking survey. You can do that at: http://www.crfonline.org/surveys/benchmarking/benchmarking.asp. To those of you that provided data we thank you again for your participation.

Medians for 30 different industries are included in this summary. If any SIC code has less than three responses, it will not appear in the report. So to get more participation in your industry, please mention the survey to your colleagues, and in October when we survey the 3rd quarter of 2013, pass along the link for them to participate.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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Western Regional Credit Conference OCTOBER 16-18, 2013

CONFERENCE SCHEDULE

Discover your “Credit” particle at the 2013 NACM Western Region Credit Conference (WRCC).

Wednesday, October 16, 2013

This three-day conference offers credit professionals all levels of core skills training. Those new to credit can select Neutron level training sessions. Proton level sessions focus on enhanced credit skills. Electron level training sessions help managers elevate their skills.

9 a.m. to 3 p.m.

Orbiting around the Credit Core training sessions are networking opportunities, keynote presentations, and a Sponsor EXPO.

3:45 - 6:30 p.m.

The Host Hotel

Thursday, October 17, 2013

The Golden Nugget Las Vegas

8 a.m. to 9 p.m.

129 East Fremont Street Las Vegas, Nevada 89101 Room rates for Wednesday and Thursday are: $62 plus tax (Carson Tower) $82 plus tax (Gold Tower) $92 plus tax (Rush Tower King) $112 plus tax (Gold Club King $182 plus tax (Gold Tower Parlor Suite) Reservation procedure: Call 800.634.3454 Mention group: Western Region Credit Conference. The cut-off date for the room block is September 16, 2013. Rates cannot be guaranteed after this date.

Two Optional Pre-Conference Sessions (fee required)

• •

Credit 101 Training for New Credit Professionals Advanced California Construction Law

Credit Core Conference Begins • Opening Session: Re-Engergize Your Atoms: Finding Meaning and Fulfillment at Work, Dr. Christopher Bray

• • •

12 Breakout Sessions Networking Luncheon Dancing with the Credit Stars Dinner Event

Friday, October 18, 2013 8 a.m. to 3 p.m. • 9 Breakout Sessions • Networking Luncheon • Closing Session: The Big Bang! featuring Bob Shultz

Discover your “Credit” particle. The particle from which all great credit decisions are created.

Get all the details at: http://www.nacmwrcc.com. Register today!


2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Key to Success by Jake Faris Since joining Roofline Supply in June of this year, Doug Jacobson, CCE, has been re-acquainting himself with lien laws, bond claims, and all that comes with managing credit in the building industry. Jacobson studied Business Administration at Lewis & Clark College in Portland. After graduation he eventually landed a job at Familian Northwest, a plumbing supply company, where he rose from Credit Manager to Corporate Credit Manager over his seventeen-year tenure. At Familian, Jacobson encountered NACM Oregon when he started attending several industry-working groups and taking part in several educational programs. He was elected to the NACM Oregon Board of Directors in May 1997 and in 1998 was the chair of the Plumbing/Waterworks Industry Group. In 2004, a couple of years after Familian merged with Ferguson, Jacobson joined xpedx, a national paper and industrial supply distribution company, as a regional credit manager. The extreme workload Jacobson had grown accustomed to at Familian—especially during the company’s rapid growth through the 1990s—lightened to a more sustainable level at xpedx. With a travel schedule at xpedx, Jacobson was able to reinvest more

time and resources into NACM. During his tenure as the Chairman of NACM Oregon’s Board, Jacobson knew it was time to get serious about certification. “Once I left Familian, work slowed down enough that I decided at that point to get certified,” he says. With many of his peers holding Corporate Credit Executive (CCE) certifications, Jacobson had a goal. But he was concerned with how much time and effort would be needed to go the traditional route: first passing the Credit Business Associate (CBA) and

then the Credit Business Fellow (CBF) certification. An NACM colleague pointed out that by that time in his career, Jacobson had already completed a four-year degree, had over 10 years of experience, and had accumulated enough “Roadmap Points” through his involvement with NACM that all he needed was to take a self-study course and he would qualify to sit for the exam. Jacobson breathed a sigh of relief—he received his CCE in November of 2005. ...continue on page 6

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Key to Success, continued from page 5 Many of the duties at xpedx were familiar to Jacobson. Like Familian, he oversaw three credit managers and encouraged them to attend industry group meetings and NACM functions. “I saw a lot of financial statements at xpedx,” says Jacobson, and he seems to appreciate the emphasis the CCE exam placed on financial analysis. Five years after Jacobson started at xpedx the company made the decision to outsource their credit management services. He was integral in training and managing a call center in Guatemala. At the beginning of 2013, xpedx began a push to consolidate credit functions to their two main business hubs in Los Angeles, California, and Loveland, Ohio. Looking to stay in the Portland area, where he has been a longtime resident, Jacobson contacted Joe Lucas, the Vice President of Credit at SRS Distribution, Roofline’s parent company. Since its inception in 2008, SRS has been acquiring roofing and building supply companies across the United States. According to Jacobson, for each of their acquisitions they leave as much of the management team in place as possible. The strategy seems to be successful. They’ve acquired roughly twenty distribution companies and opened nearly two dozen

greenfield locations. Applying for Roofline’s, Northwest Regional Credit Manager position, Jacobson again found himself appreciating his NACM certification. “I found that the CCE helped a lot for this,” says Jacobson, about getting hired on in June. “It’s what got my foot in the door.” It turns out SRS is very involved with NACM affiliates across the country, and that piqued Jacobson’s interest in them. “I’ve had experience with companies that weren’t involved with NACM that have taken a huge hit because they weren’t involved,” he says. “Being involved with NACM is a huge bonus. Their best service is loss prevention.”

P

2014 C redit C ongress & E xposition

T A i m r c

Join us next year 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.

1 D E 2 D E 3 n 4 5

A n b b n N

In fact, Jacobson is planning a trip with a colleague to attend the Western Region Credit Conference in Las Vegas in October.

Jake Faris is a business technology consultant and sometimes-freelance writer who lives in the Portland area with his wife, Charity, and their two children, Harper and Xavier.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

NACM-Oregon Foundation Scholarships The NACM-Oregon Foundation grants scholarships to credit professionals for

continuing education, professional designations, and conference expenses.

To apply for scholarship funds, or for more information, contact Lourdes (Lou) Rice, NOF Scholarship Committee Chair, Pacific Metal Company at 503.454.1051 or lrice@pacificmetal.com. The Foundation manages two scholarship funds: the NACM-Oregon Scholarship Fund and the Phylliss Clark Memorial Fund. The Foundation offers scholarship to the following events: • All NACM Oregon educational courses

• National Credit Congress and Exposition • NACM National schools such as Credit Management Leadership Institute, Mid-Career School, and the Graduate School of Credit and Financial Management

Congratulations to Wes who successfully completed the CBA exam.

Susan N. Brunelle Hasbro, Inc.

• Self-study courses in preparation for professional designation

• CFDD National Conference

Wes Friesen Portland General Electric

Lifetime Certified Credit Executive

• Portland Community College courses within the Credit Administration and Advanced Credit Administration Programs in preparation for professional designation

• Registration and exams fees for the National NACM Professional Designation Program

CBA

Submit applications to: 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 e: lrice@pacificmetal.com

Congratulations to Susan in becoming a Lifetime Certified Credit Executive. Those of us who hold the CCE designation recognize the significant effort in time and funding that is required to retain certification. NACM Oregon applauds both of their successes.

If taking a course or pursuing your certification seems like an expensive proposition, think again. These scholarship funds are a benefit to you as a member, so please take advantage by applying for next year.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

NACM Oregon Upcoming Education & Events Financial Statement Analysis I— October 1 - December 3, 2013 1 - 4:30 p.m. NACM Oregon Classroom 7931 NE Halsey, Ste. 201, Portland Course Objective: An introductory course in financial analysis, this class provides the student with an overview of the basic financial statements, quality issues in using these reports, and analysis of these statements for the purpose of making trade credit decisions. Outcomes: Upon successful completion of this course, the student will understand audit process, basic financial statements, audit letters and footnotes, various techniques used in analysis of the financial statements, including common-sizing, ratios addressing liquidity, operational performance, leverage, cash flow analysis, and the use of these techniques in credit decisioning. Instructors: Rod Wheeland, CCE, CAE, President, NACM Oregon Text: Lyn M. Fraser and Aileen Ormiston, Understanding Financial Statements, 9th Edition, Prentice-Hall Publishing Company, 2010 Fee: $295—members, does not include text. $495—nonmembers, does not include text. Text book fee: $89 plus S & H Scholarships: May be available through the NACM-Oregon Foundation or your CFDD chapter.

Vantiv/UTA Presentation Presented by Brad McNeice, Vantiv and Rudet Fountain, UTA October 3  8 - 10 a.m. NACM Oregon Classroom 7931 NE Halsey, Ste. 201, Portland

Membership Breakfast Presenter: John Mitchell October 15  7:30 - 10 a.m. DoubleTree Lloyd Center 1000 NE Multnomah St, Portland

Brad McNeice will cover the changing laws and the difference between surcharges and convenience fees and giving us the information needed to make the correct decision for our companies when it comes to credit card transactions.

we have not yet regained pre-recession employment levels. Heading into the fall of 2013 monetary policy is changing with a looming wind down of bond purchases as well as a new cast of characters. Fiscal policy once again faces a debt ceiling, and medical system changes are in full swing. Oregon continues to experience rising employment and income as do nearly all other states. Prospects and challenges for the nation and state will be covered.

Rudet Fountain, specializing in B2B payment processes will cover EFT, ACH, and Check Guarantee service. This free session for members includes continental breakfast. (Please make a reservation so we can plan for adequate food and seating.) Certification Roadmap Introduction October 10  11:30 a.m. - 1 p.m. NACM Oregon Classroom 7931 NE Halsey, Ste. 201, Portland It’s back-to-school season! Join us for lunch and a complimentary Roadmap session! Marilyn Rea, CCE, will help you navigate this path to career development. With the personal knowledge and experience of acquiring her certification, she’ll share with you what it takes to make your educational goals a reality. Whether you’re just starting out or trying to earn a higher certification, learn how your past and present experience can affect your future.

The upturn is well into its fifth year, but

Price: $45 members; $75 nonmembers All credit designation holders may attend free-of-charge.

To register or for questions, contact Shawna Kelly at 971.230.1202 or skelly@nacmoregon.org. To register online go to http://www. nacmoregon.org/education/calendar. html

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Credit Learning Center The NACM Credit Learning Center

(CLC) is an online learning venue, created to bring 24/7 access to educational sessions for today’s busy business credit professional. What is the NACM Credit Learning Center? The Credit Learning Center brings targeted, quality education to your desktop from the name and brand you’ve trusted for more than a century - NACM. Carefully selected, expert instructors present 60-minute audio/visual presentations on a wide array of topics. You choose what learning module you want to take, and when, and view it on your computer at your convenience. You may also work toward completion of a course or specialty certificate. The Learning Center will continue to expand as more modules are created and added. How Do I Make a Purchase? The purchaser and the learner should be the same person - modules are purchased by, and sold to, individuals. The purchaser’s name must correspond to the user’s name. Companies wishing to purchase modules on behalf of multiple users should coordinate its purchase through the NACM Education Department. You can purchase a module today, and view it at any time – as your schedule permits.

To learn more about the Credit Learning Center please visit http://www.nacm.org/creditlearning-center.html and click on the links.

Don’t forget to take advantage of your two complimentary webinars which are included in your Full Membership Package. Those with Premium or Corporate memberships have unlimited NACM webinars/ teleconferences. To view the Event Calendar go to http://www.nacm.org/eventcalendar.html.

NACM Event Calendar Webinar: Bankruptcy for Beginners Day 1 September 9  12 - 1 pm.. PST Webinar: Bankruptcy for Beginners Day 2 September 11  12 - 1 p.m. PST Teleconference: Post Audit Trends— Understanding Your Exposure to New Claim Categories September 23  12 - 1 p.m. PST Teleconference: The Credit Department’s Role and Responsibilities to Ensure Unclaimed Property Policy Compliance September 25  12 - 1 p.m. PST

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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NACM Oregon Business Credit Journal

2013 September | October

A bi-monthly newsletter published by NACM Oregon

Honors & Awards Congratulations to Bruce Nathan, Lowenstein Sandler LLP. Bruce is the first recipient of the “Credit Ambassador” Award. Mr. Nathan is an active member of the National Association of Credit Management (NACM) and the American Bankruptcy Institute (ABI). Mr. Nathan speaks frequently at NACM Oregon functions; writes for NACM’s Business Credit magazine; Credit Today; and other credit-oriented periodicals.

(R) Brett Hanft, CBA, Amercian International Forest Products LLC, presents the Credit Ambassador Award to first-time recepient (L) Bruce Nathan.

Brett Hanft, CBA, emphasized the uniqueness of the Credit Ambassador Award and Bruce’s many years of professional support to the business credit profession.

Thank you to all who attended our Bankruptcy Seminar on July 18, 2013. A big thank you goes to our speaker, Bruce Nathan, for his time and expertise on the subject.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

International Corner, by Alice Knight, RGCP We often take communication for granted and sometimes things go awry. Communication, both verbal and written, depends on so many different factors including language, social customs, voice inflection, and body language. In the U.S. we feel fortunate to speak and write a common language—English. Now concentrate if it’s called English why do they use a different word in England? We are owned by an Australian Parent. For years, I have diligently translated Corporate polices and procedures into “American.” The conversation usually starts with “please translate/explain what you are saying here.” We generally come to a mutual understanding after an amicable discussion. This involves language, normal work procedures, and various government regulations. Local law always trumps corporate worldwide policies particularly in the area of personnel law. They have finally included the caveat “unless prohibited by local law” at the end of most of the policies. The World of International Trade is a magnet for communication challenges. Base language, cultural norms, government policies and different time zones are just a few major areas. Misunderstandings, that are really very minor, can become major when we cease to communicate effectively. We recently had a vivid example of this. We purchased product from our parent in Australia on a door-delivered basis to our customer’s customer in Guatemala. At this point we had four major players in four different countries and time zones speaking four different languages. We were informed by our customer, second hand from their customer, that they had been billed by the steamship company’s office in Guatemala for detention and demurrage. This was a door move that should have been the steamship

company’s problem not the end customer. The claim was referred to our parent in Australia who had negotiated and booked the delivery. The steamship company in Australia told them that the customer had to provide copies of the invoices, etc., since they could not get them from Guatemala even though they were the same company! After weeks of back and forth and a very unhappy customer, one of our Latin American Spanish-speaking Traders finally called the shipping company in Guatemala directly. After some investigation we found that the Australian office and the Guatemalan office were not responding to each other because they did not speak or read the other’s language. We were receiving the “facts,” second or even third-hand and the confusion as to why we would be billed for detention and demurrage on a door move was completely unwarranted. The containers in question had been pulled for a random Narcotics inspection and were legitimately for the end user in Guatemala. Language barriers, time zone differences, and vague assumptions all played a part in this situation. Once direct same language communication was established the problem was easily resolved. One of our employees often speaks in pronouns rather than nouns. There have been some serious misunderstanding because “she” meant one person and the “hearers” thought she meant someone else. This type of miscommunication can occur even when speaking the same base language. Every industry develops its own slang, shorthand, and abbreviations. CIA might mean Central Intelligence Agency to some and Cash in Advance to others. This type of communication is not readily transferable across language or cultural gaps. As a trading company dealing all over

the world we value direct communication skills. We have employees who speak, read, and write seven different languages in house. We also try to restrict routine written communications to our overseas offices or customers to in-house people who speak the same language. Although an email or fax is usually in English they are aware of wording that is mutually understood and are able to clarify questions as they arise. Communication, both internally and externally, is vitally important. Strive to communicate in a clear understandable manner, preferably in a common language.

Alice Knight is Vice President of Finance & Administration for Paper Products Marketing, Inc. Ms. Knight has more than 48 years' 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.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Credit quality continued to improve in Q2 lifting index to highest point on record Small-business credit conditions strengthened in Q2 2013, lifting the Experian/Moody’s Analytics Small Business Credit Index 2.8 points to 111.7. Fiscal drag has been less severe than expected; consumer spending growth is modest but relatively steady despite heavier tax burdens; and sequestration is not yet noticeable affecting jobs recovery. Consumer confidence is perched at multiyear highs, a reassuring signal that consumer spending is unlikely to backtrack in the near term. Much of this stems from the long-awaited housing market recovery and, to a lesser extent, stock prices that are significantly higher than they were a year ago. Drilling down into regional data reveals an uneven small-business recovery. As has been the case since the recession ended, small companies west of the Mississippi are faring noticeable better than their Eastern counterparts. Weakness in Europe has subdued exports, and a dearth of new factory orders has crimped manufacturing output and job growth along the Eastern Seaboard. Some of this weakness spilled into services, holding back broader job gains, thereby hampering consumer recovery. The Eurozone is once again growing, but it will take time for an upswing in manufacturing to ripple through to small businesses in the East. Housing also has been a major player in the relative weakness of small-business balance sheets in the East.

exports to Canada, Mexico, and Asia. This has created high-paying jobs in many industries, ranging from manufacturing and mining to downstream industries, including business and professional services. The associated income growth is fueling consumer spending, bolstering small businesses’ bottom lines. Job growth in skilled professions is leading to robust population expansion, particularly in the Mountain West, which in turn is strengthening real-estate markets in many major western metros and suppporting services growth. The slowdown in economic growth in Asia and a weaker yen due to easier monetary policy have weighed on exports from the western United States lately, but this will be short-lived. Growth in Asia, particulary

China, will pick up again as the U.S. and European recoveries strengthen. Notwithstanding the relatively upbeat Q2 2013 report, small firms still will face some headwinds during the latter half of 2013. Yes, the consumer confidence index is trending at the upper bound of its recovery range. However, consumer sentiment still is consistent with year-over-year real consumer spending growth of a little more than 2 percent— well below the average of more than 3 percent from 2002 to 2007. Further improvements in small-business credit quality will continue in coming quarters but at a modest pace until in 2014. To receive the full report click here.

By contrast, Western states have benefited from technology and energy

© New Yorker Collection. 1994 Richard Cline. All Rights Reserved.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Three Key Credit Fraud Threats and Preventive Steps A 2013 fraud study conducted in conjunction with LexisNexis and Javelin Strategy & Research reported that the “true cost of fraud” to victim merchants is rising, as are the types and sophisticated nature of the scams. The study noted that the true cost to a business in 2012 exceeded $2.70 for every $1 of fraud, which is up 40 cents from the previous year. Within that framework, fraud prevention should continue to be of paramount concern to credit departments. The following are among helpful steps to prevent getting burned for a big-dollar loss: International Dangers Selling internationally is becoming more of a necessity as domestic demand is no longer enough to sustain many industries. However, LexisNexis and Javelin Strategy & Research noted that companies conducting international business are targeted five times more often than those that stay domestic. The success rate is four times higher as well. The FBI notes that external fraud attempts often come in the form of individuals posing as

a potential customers or investors as a means to gain access to technical information that could compromise a company, and warns that weak online security is tantamount to “an invitation to hackers.” Making a commitment to better online security is helpful and necessary, as is being generally more cautious with international contacts. Also of note is that the majority of fraudulent attempts originate from several areas of the world, led by West Africa and former members of the Soviet Union in Eastern Europe. Evolution Fraud schemes constantly evolve and are often much more complex than the email from a Nigerian prince pleading to transfer money into your account, which he would then share with you. In reality, many fraudsters have gotten significantly more proficient at avoiding prior red flags like poor language syntax in correspondence for attempts originating outside U.S. borders. Additionally, many have moved away from using email addresses unrelated to specific

businesses (i.e., @hotmail. com or @att.net) because of increased awareness that they are red flags. Newer schemes involve the shipment of orders. Fraudsters use addresses that are hard to confirm as legitimate, such as near expansive government complexes, or where there is the possibility for more confusion or low security, such as college campuses where it’s easy to intercept a package “mistakenly” delivered to the wrong department. One key combat strategy, aside from the usual need to be diligent, is ensuring the credit and sales staff is educated and trained on a recurring basis so they are up to date on the trends, and therefore more likely to detect a scheme. Don’t Be Fooled by a Good Website If investigating an order from a company that is changing activity drastically, or becoming active after a long dormant period, don’t be convinced by a professional-looking website. Source code copying is becoming increasingly prevalent. Present-day

fraudsters readily copy legitimate business’ website coding and use it to set up a visually identical website to give the appearance of legitimacy. One telltale difference might be in the URL, which may use “.us” instead of “.com.” In addition, checking out the security and encryption software a site uses, as well as the incorporation date of the customer, are helpful ways to establish whether the customer’s website really is legit. Republished with permission from NACM National.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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NACM Oregon Business Credit Journal

2013 September | October

A bi-monthly newsletter published by NACM Oregon

Consumer Credit Education Consumer Information Acceptable Use Guidelines for Intelliscore Plus and Business Owner Profile (BOP) Acceptable uses

Definitions of key words – referenced above.

 To  To  To

review an existing account  Partnership – 2 or more individuals that run a business. collect on an existing account Each partner is liable for debts of the partnership up to extend credit for a commercial transaction when the the amount of their personal assets tied into the owner is: business.  A partner in a general partnership  Limited Partnership – Limited partners in a partnership  A sole proprietor contribute only assets and are liable only up to the  An individual who has signed a personal guaranty amount they contribute. A limited partnership consists  An individual who has provided a written of 1 or more general partners and 1 or more limited authorization approving your review of their partners. personal credit history  Sole Proprietor – This classification is used for anyone who does business without creating a formal business Unacceptable uses entity. The owner reports business income on their  To review the personal credit history of: personal income tax statement.  Principals of corporations  Corporation – A legal entity recognized by a state or  Note - identifiers of corporations include: the federal government. The owners and shareholders Corp., Inc., LLC, LTD, LLP are separate from the legal entity.  Employees of a company you are researching  Yourself, your co-workers, friends, family members, names in the news, celebrities, government ** Merely signing a credit application does not constitute officials, or any other individuals with whom you written authorization. The principal whose information you are have no commercial credit relationship accessing must give specific written permission.

Exceptions:  You

may obtain a report on:  Principals of corporations who have signed a guaranty of the business obligations (often referred to as a personal guaranty)  Principals of a corporation who have given written authorization for access of their personal credit history**

For more detailed information regarding the Fair Credit Reporting Act go to: http://www.ftc.gov/os/statues/031224fcra.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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NACM Oregon Business Credit Journal

2013 September | October

A bi-monthly newsletter published by NACM Oregon

Consumer Credit Education, continued

How Long To Keep Consumer Credit Applications Did you know The Fair Credit Reporting Act (FCRA) gives companies the authority (permissible purpose) to pull consumer credit reports if the consumer provides written authorization. Q: How long should my company keep signed consumer credit applications/authorizations? A: Per the Fair Credit Reporting Act and credit bureau regulations, all businesses must maintain copies of all written authorizations for consumer credit reports for a minimum of five (5) years from the date of inquiry. Q: If my company denied credit to the applicant, do we still need to keep the application/authorization? A: Businesses are required to maintain a copy of the consumer credit authorization for five (5) years regardless of the decision to extend credit or not. Q: What are some examples of why I would need the consumer credit application/authorization in the future? A:

Credit bureaus audit all credit reseller accounts (including OneCreditSource.com) on a regular basis and can request to see copies of the signed authorizations to ensure that all businesses are following proper procedures. Also, if a consumer disputes an inquiry on their consumer credit report, the business that requested the report is required to show proof of authorization.

Q: Where can I find more information about FCRA requirements? A: The FCRA text can be found here: http://www.ftc.gov/os/statutes/031224fcra.

This material is for informational/educational purposes only and is not intended to replace legal counsel.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

BusinessIQ Premier Profile The most robust of all Experian business credit reports, this report provides a comprehensive view of a business’s financial obligations as well as fraud screening, credit limit recommendation, more background information on the business and more data elements than any other report.

BusinessIQ Premier ProfileSM is a comprehensive business report that facilitates better decision making by supplying you with critical information needed for accessing credit risk and performing background checks. It provides “quick glimpse” views and comprehensive details related to business payment performance, public record history and company background so you can quickly and precisely determine the creditworthiness of a business. Bring an entirely new level of accuracy and confidence to your business decision with BusinessIQ Premier Profile.

Quick glimpse views BusinessIQ Premier Profile presents quick glimpse views designed to visually direct your focus to key information needed for business decisions: •

Risk dashboard highlighting possible indicators of risk

Fraud and Office of Foreign Assets Control screen

• Credit risk score with quarterly score trend •

Credit limit recommendation

Days beyond terms to indicate how timely a business pays its bills

Monthly/Quarterly trending

Deeper understanding BusinessIQ Premier Profile report draws from an integrated source of business intelligence to enhance your business and credit decisions: •

Intelliscore PlusSM credit risk score

Corporate Linkage

Comprehensive data—trade, public record, collection, and company background

Extensive background on large businesses and corporate financial statements for publicly traded companies

A comprehensive business analysis from a single source BusinessIQ Premier Profile combines credit risk, fraud checks, and company background into a single report to ensure a thorough business review. The report returns data from BizSource,SM Experian’s industry-leading commercial database. The data is third-party-verified so you can accurately assess risk and perform important due-diligence checks. Gain the decisive competitive advantage with BusinessIQ Premier Profile. Premier Profile Sample For more information on the BusinessIQ Premier Profile Report, contact your account executive today!

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Better Debtor Negotiations Strong negotiation skills are essential for collectors and credit managers. Being able to negotiate successfully with delinquent debtors requires that you understand some of the basic concepts of negotiation. Creditor - debtor negotiation can be viewed and described in many different ways including: • Competitive • Combative • Frightening • A zero sum game • Anything but a game • A fight for dominance • A collaborative process • A process focused on meeting the needs of the parties • Winning or losing • Getting what you want • Searching for a win-win outcome • A process involving bargaining, and/ or • The ability to convince debtor to do the right thing One of the most important steps necessary to successfully negotiate with a debtor involves the ability to reach agreement. This requires the ability to: • Control your emotions • Communicate clearly • Listen carefully • State your position and • Follow through on your commitments as well as your threats Here are a number of common negotiating errors made by when working with delinquent debtors:

• They fail to prepare for the interaction with the debtor emotionally, mentally, and factually (referring to gather relevant information) • They don’t have current information about the debtor, and about the status of the debt • Thinking of payment negotiations in absolute terms—meaning All or Nothing—and by doing so they limit or even eliminate options that might have been mutually beneficial (such as a debtor proposed extended payment plan) • They fail to consider the possibility they may need to consider making or make certain concessions to the delinquent customer • Collectors are over-confident or too aggressive in their collection efforts • They are confrontational rather than persuasive in their discussions with delinquent debtors • Collectors take a refusal to pay personally • Assuming that similar situations even with the same delinquent debtor will have the same outcome each time • Assuming you know as a collector how the debtor will reply or react or respond to your call and questions In B2B debt collection, there are hard and soft negotiations. Soft bargainers often hint at, or actually reveal their bottom line to the debtor. They might say something like this: “I really need a payment by the end of the month” or “I need at least half

the past-due balance paid this month.” Soft bargainers trust that the debtor will act in good faith, but if the debtor is a hard bargainer, he or she will see a collector’s bargaining position as a weakness to be exploited. Hard bargainers are more focused. They are more results-oriented. They are almost always more effective negotiators because they are willing to accept that their function can at times become difficult or even adversarial. Hard bargainers recognize that this is sometimes an inevitable part of the negotiation process necessary to collect delinquent debts sooner rather than later. The role and the goal of collectors is to negotiate for faster payment. It is the credit manager’s responsibility to make certain that every collector is negotiating for the best payment commitment the debtor can offer using some or all of the tools described above. ©

2012. Michael C. Dennis. All Rights Reserved.

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Bankruptcy Creditor, continued from page 1 Consider joining the unsecured creditors’ committee Soon after the bankruptcy case begins, the UST will form an official committee of unsecured creditors, if there is adequate interest. The UST will usually select representatives who are among the debtor’s 20 largest unsecured creditors to sit on the committee. If you are interested in playing an active role in the bankruptcy case, consider asking to join the committee. The committee can hire legal and financial advisers, paid for by the debtor’s bankruptcy estate, so participating in the committee can be very cost-effective. By contrast, if an individual creditor hires its own lawyer, that cost is generally the creditor’s responsibility. Keep in mind that the committee does not represent your company’s individual interests, but rather the interests of all unsecured creditors as a group. The committee must monitor the bankruptcy process, which may require substantial time and effort. Understand your claim rights Generally, unsecured creditors should file a proof of claim with the bankruptcy court, setting out the amount owed to that creditor. The bankruptcy court will provide all creditors with the deadline by which claims must be filed and a sample

proof of claim form to complete. Don’t miss the deadline! You may, however, file an amended proof of claim after the deadline. Keep in mind that your unsecured claim may have priority status—meaning you get paid before other general unsecured creditors—if you sold goods to the debtor in the ordinary course of the debtor’s business within 20 days before the bankruptcy was filed. Be aware of potential preference actions The Bankruptcy Code permits a debtor to sue creditors to recover payments made by the debtor to the creditor shortly before the bankruptcy was filed. The debtor’s right to do this often comes as an unwelcome surprise to creditors, who would be wise to consult with a bankruptcy lawyer. There are a number of defenses to such lawsuits, so don’t assume that the money must be repaid.

who voted against the plan—will be bound by the plan. It is never good news to learn that your company has become a creditor in a bankruptcy case. But bear in mind that bankruptcy proceedings are an orderly process by which debtors and their creditors can resolve a challenging financial relationship. Creditors should understand their rights and obligations, stay informed, and possibly get involved actively in order to optimize their position. The contents of this article are offered as general information only and are not intended for use as legal advice on specific matters. Ms. Schoen is a bankruptcy and creditor’s rights attorney at Tonkon Torp LLP. She can be contacted at 503.802.2143 or ava.schoen@tonkon.com. Reprinted with permission. Originally published in The Daily Journal of Commerce.

Understand the debtor’s plan Unsecured creditors generally have the right to vote on the debtor’s bankruptcy plan, which is essentially a new contract setting out how creditors will be paid. Be on the lookout for a copy of the debtor’s plan and a voting ballot, and be sure to vote within the time frame provided. If the debtor’s plan is confirmed by the bankruptcy court, all creditors—including those

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

Page 18


2013

NACM Oregon Business Credit Journal

September | October

A bi-monthly newsletter published by NACM Oregon

Contacts Board of Directors Chairman Marsha Johnson, CCE TEC Equipment, Inc. mjohnson@tectrucks.com Vice Chair Pat Swope, CCE, CICP Pacific Seafood Co., Inc. pswope@pacseafood.com Secretary/Treasurer Linda Bishop, CCE, ICCE Tektronix, Inc. linda.j.bishop@tek.com Counselor John Hardy Emerson Hardwood Co. jhardy@emersonhardwood.com

NACM Oregon

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 Paula Cooley, CBA American Steel Corp. pcooley@american-steel.com Lori Jones, CCE ljdangermouse@gmail.com 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 President Rod Wheeland, CCE, CAE NACM Oregon rwheeland@nacmoregon.org

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 971.230.1144 cnemeth@nacmoregon.org Kendall Sun 971.230.1178 ksun@nacmoregon.org National Account Executive Caroline Anderson, CGA 971.230.1168 canderson@nacmoregon.org Education Shawna Kelly 971.230.1202 skelly@nacmoregon.org

Collection Services Dennis Corey 971.230.1204 dcorey@nacmoregon.org Billing Marmie Carpenter 971.230.1146 mcarpenter@nacmoregon.org Meeting Room Rental Shawna Kelly 971.230.1202 skelly@nacmoregon.org Newsletter Editor Barbara Salazar 971.230.1182 bsalazar@nacmoregon.org Building Suites Lisa Rogstad 971.230.1160 lrogstad@nacmoregon.org

7931 NE Halsey, Suite 200 • Portland, Oregon 97213 • Tel 503.257.0802 • Fax 503.257.0247 • www.nacmoregon.org

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BCJ September-October 2013  
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