CMI Shows Economy Weak, But Headed In Right Direction

The reports on the economy have been mildly encouraging at year's end and now everyone's attention is turned to 2010—the year that is supposed to provide the anticipated recovery. The December Credit Managers' Index (CMI) matched the mood of the economy as a whole-essentially flat, but showing some mild progress. The most important aspect of the report is that the index remained above the 50 mark that separates growth from contraction and even showed a slight gain as it moved from 52.3 to 52.9. "This is hardly the kind of advance that provokes celebration, but given the gloomy assessments made about the 2009 holiday season, the gain is certainly preferable to what had been anticipated," said Chris Kuehl, economist for the National Association of Credit Management (NACM).

The indicators that showed the least movement included sales and new credit applications. "This is to be expected and is consistent with December readings in past years," said Kuehl. "This is the period in which most manufacturers are in semi-hibernation unless the retail community is frantically trying to bolster inventory. That was not the strategy employed by retail this year; stores held the line on inventory and shoppers eventually caved and bought what was available." The retail numbers thus far showed a gain of around 4.5% over last year, but these are still preliminary. What did show up as more positive was an increase in dollar collections and an expansion of credit extended. Both of these data points bode well for the coming year, and the fact that there is still evidence of companies seeking to catch up on their debt is making it a bit easier to advance credit. As has been stated many times and from a variety of sources, the key to the economy's healthy recovery is the rebound in the credit markets. Thus far that recovery has been slow, but there continues to be a willingness to extend new credit and there is some sense that more will become available in the coming year.

Other elements showing promise include the modest improvement in unfavorable factors—disputes, rejection of credit applications and the like are still showing declines. But one unfavorable factor—filings for bankruptcies—has deteriorated significantly. "There have been more bankruptcies and that poses some long-term problems. The growth of bankruptcy activity is not unexpected at this point in a recession, but until these are worked through, there will be hesitation in the market to extend credit to any but the most healthy companies," Kuehl said. "As the economy rebounds, the companies that have been struggling to survive will start to encounter more aggressive competition, which is often the straw that breaks the back of these weakened companies."

The overall conclusion from this month's data is that the economy remains weak, but headed in the right direction. The slow thaw in the credit markets is still taking place and there are signs of expansion in both the manufacturing and service sectors. There has been no sign of explosive growth thus far, but that is consistent with most of the other assessments on the economy. The improvement in 2010 looks more feasible, but there are still no fireworks in the immediate future.

The full CMI report, including graphs, can be found here.



Twas the Night Before the Recession

Season's Greetings from the NACM Staff! Enjoy this timely submission to this year's Credit Words Contest:

Twas the Night Before the Recession
By Tom Muter, CCE

It was the night before the recession and all through the country,
Not a vendor, banker or customer was stirring, all were quite "comfy."
Mortgages were processing, financing easy and no unemployment to bear,
There were hopes that prosperity would always be there.

Credit managers, bankers and brokers were all "smug" in their beds,
While visions of more profits danced in their heads.
The farmers were dancing on ethanol dreams,
The price of corn would surely keep climbing it seems.

While out on Wall Street, there arose such a clatter,
And then Main Street suddenly joined in the chatter.
I hung to the radio, watched the TV; away to the Internet I flew like a flash,
Oh no! Oh no! My IRA and 401K had taken a crash.

Now something was abreast, and not just new fallen snow,
Is it the luster of mid-day...No! The market is really low!
When what to my wondering eyes should appear?
The Recession has come, it is definitely here!

But what were the drivers that brought it so quick?
This is not the work of "W" or his Vice President Dick.
More rapid than eagles its courses they came,
There was no whistling or shouting when they called them by name.

Now Freddie and Fannie, now Chrysler and AIG,
Now Merrill Lynch and GMC, and maybe G.E!
To the bottom the interest rates they did fall,
Now crash away! Crash away! Crash away all!

Mortgages were falling like lead balloons fly.
And more ARMs are going to reset and die.
So up to the Central Bank all our hopes flew.
Please, Please Mr. Bernanke what can you do!

And then in a twinkling, the election was on,
We need change! We need change! Was the cry of the throngs.
As I drew in my breath, and was turning around,
Washington was all a bustle: Obama's in town.

He was dressed as casual as casual could be,
He promised he was no different than you and me.
Many believed America would once again have an advantage,
What we need is an Economic Stimulus Package!

A bundle of changes he flung on our backs,
One of the promises...troops out of Iraq.
His eyes how they twinkled; his campaign was so merry,
A 1.4 trillion-dollar budget, oh, how scary, how scary.

How much credit to extend, it's so hard to know,
Which way, which way? Will the economy grow?
Sales are down wherever you go,
The season is coming when it will snow, snow and snow.

Credit managers everywhere are grinding their teeth,
Bankruptcies are up, it looks like more grief.
Profits are slipping 'cause revenues are down,
Should we be more liberal or shut the marginal accounts down?

The sales manager is griping; "Inventories are too low,"
I laughed when I saw him within myself.
Twas the night before the recession, the CFO arrived at my desk,
"What receipts are coming? Give me your best guess."

I cranked out the numbers with all I was worth,
While he sulked at his desk, then turned with a jerk.
"I'm drawing on the credit line to make cash flow,
But what will we do when it begins to snow?"

"Don't worry," he said. "Everything will be all right,
We'll hunker down with all of our might."
He sprang from the chair and let out a cry,
He leaned over close and looked me in the eye.

"The recession is here," he quietly whispered,
"We'll have to work harder, be smarter and be crisper!
And I heard him exclaim, ‘ere he walked out of sight,
"Merry Christmas to you...Have a good night."

In these uncertain times, it is extremely important to get with management, owners and directors to determine if the goals and strategies of the company have been or need to be restated. The goals and strategies are the most important part of the puzzle. They are the most determining factor on setting credit policy and procedures of the company in any economy, but especially in this economic climate.
If the goals and strategies of the company have not changed in this recession, then it is important to continue with the basic "tried and true" credit principles that have lasted over the years in all business climates and cycles:

  • Investigate
  • Process information
  • Analyze the information carefully
  • Monitor the accounts closely
  • Communicate often with customers internally and externally
  • React to changes

The second most important piece of the puzzle in these unstable economic times is to document, document and document. With the many pressures on the credit professional today, from sales, owners, management and customers, it is easy to get pulled into a bad credit decision. Make the correct credit decision based on solid credit management principles and the facts you have from your investigation, then remember to document your position in case others override your decision.
Revisit strategies and goals at regular intervals predetermined by owners and management.

Happy Christmas to all and to all a good night. Have a safe and happy holiday.

Dealing With a Troubled Company: No Need to Cry the Blues

"We're in a time of economic uncertainty," said Bruce Nathan, Esq. "The recession is over, the economy is projected to grow, but there's still a lot of uncertainty as to whether or not we'll have a double dip."

Figures from the Department of Commerce have signaled the official end to what has been referred to as the "Great Recession," but, as Nathan noted, business conditions and lending have remained so stubborn that a second dip into economic trouble doesn't seem out of the question for many companies. "The commercial real estate market may fall," he added. "Bank lending has dropped 28% in the third quarter of 2009 alone and that just continues the credit crunch that started in the fall of 2008."

In addition to tightened lending, bankruptcies have also experienced meteoric increases, with Chapter 11 filings rising 68% over the last year.

This being the case, companies have had to take even greater care to protect themselves in the increasingly likely incident of a customer's bankruptcy. In his most recent NACM-sponsored teleconference, entitled "Dealing With a Troubled Company: No Need to Cry the Blues!," Nathan offered a wealth of legal defenses and practices to help creditors stay safe when their customers become risky.

One of the more important things to remember in a bankruptcy proceeding is where each type of creditor falls in the pecking order. "Your claims are segmented based on a hierarchical distribution in the Bankruptcy Code," said Nathan. "The secured creditors are on top, whether they're the lender or secured lenders of a purchase money security interest, or creditors with state law lien rights, etc."

Unsecured creditors tend to be on the bottom, a position that carries many potential risks, despite the fact that Chapter 11 debtors will often attempt to rely on these creditors to see them through the proceedings and further extend credit. "Any of you being asked to extend credit in the Chapter 11 are told ‘don't worry, you have an administrative priority claim,'" said Nathan, noting that to get the trade credit, debtors will assure their suppliers that any credit given to them will eventually be repaid. "The problem is there are other categories of administrative claims and there is a risk that after the secured creditors are paid in full there may not be enough to pay the admin claims." Citing the bankruptcy of Ames Department Stores, Inc. earlier in the decade, Nathan noted that there aren't necessarily any guarantees despite what a debtor might promise. "The Ames Case still hasn't paid their administrative claims after something like 8 years," he said.

Nathan went on to discuss how to use specific defenses and other security devices to greatly increase a company's chance of payment on its claims.

To learn more about NACM's teleconference series, or to register, click here. A replay of this teleconference is available from Tracey Flaesch at (410)740-5560 or traceyf@nacm.org.

Jacob Barron, NACM staff writer

Bills Introduced to Aid Small Business Lending, Exporting

A trio of bills recently introduced in the Senate would aim to enhance small business participation in international trade and increase the sector's access to working capital.

The Small Business Trade Representation Act (S. 2861) would permanently establish an assistant U.S. trade representative for small businesses, in order to give the sector a more pronounced voice in trade policy considerations, and the Small Business Export Enhancement and International Trade Act (S. 2862) would establish an associate administrator at the Small Business Administration (SBA) for international trade, increase the number of SBA export finance specialists and raise the maximum amount of an international trade loan or export working capital program loan from $2 million to $5 million.
On the domestic side, the Small Business Job Creation and Access to Capital Act of 2009 (S. 2869) would increase the small business loan limit to as high as $5.5 million and extend the fee eliminations and increased guarantee set to expire under the Recovery Act for another year.

All three bills were jointly introduced by Senate Committee on Small Business and Entrepreneurship leaders Mary Landrieu (D-LA) and Olympia Snowe (R-ME).

"Our nation's small businesses have created 64% of all new jobs in the last fifteen years, yet in the last year nearly 85% of the jobs lost have come from small businesses. Now that we have stabilized Wall Street, it is time to jump-start Main Street, and that begins with implementing the vital provisions within this bill," said Landrieu, referring to the Small Business Job Creation and Access to Capital Act. "The loan limit increase could boost SBA lending by $5 billion next year alone, while the refinancing component of the bill could help save 60,000 jobs. To ensure small businesses are able to grow and continue being the job creators they have historically been, we must make these needed changes." The refinancing component mentioned by Landrieu is a provision in the bill that would allow businesses to refinance short-term commercial real estate debt into long-term fixed rate loans through the SBA's 504 loan program, its second most-popular, behind the 7(a) program.

As exports and international trade have been a fairly consistent bright spot in an otherwise grim economy, Landrieu and Snowe have been eager to get smaller firms involved in the global market, and aim to do so with both the trade representation and export enhancement acts. "Small businesses face particular challenges in exporting, and the bills that Chair Landrieu and I have introduced will take great strides toward ensuring their greater participation in international trade," said Snowe. "By improving and bolstering critical Small Business Administration (SBA) lending and assistance programs, we will be giving our nation's entrepreneurs a helping hand in surviving, diversifying and competing effectively in the international marketplace.

The more domestically-oriented of the three bills, S. 2869, has already garnered a uniformly-democratic group of 12 cosponsors in addition to Landrieu and Snowe.

Jacob Barron, NACM staff writer

Trade Finance in Crisis

While the causes of the global credit crisis have been pinpointed and stimulus actions taken by countries all over the world, credit, lending and especially trade finance have remained tight. Banks and insurers are still leery of financing business transactions, both domestically and internationally, and those that have the taste for it often require onerous fees to stem their potential exposure.

"Banks are requiring collateral now, the fees are much higher, especially if you're not rated, or noninvestment grade," said David Gustin, managing partner at Global Business Intelligence Corp. Gustin recently led an FCIB teleconference, entitled "Trade Finance In Crisis," in which he illuminated the current state of the global financing market for a rapt group of attendees who hailed from 12 different countries around the globe.

Contrary to just tightened credit policies, Gustin noted that regulation had taken its toll on the banking sector and its willingness to lend. "Banks are not lending because of Basel II capital issues and because they've tightened their credit policies," he noted. "Basel II sucks out what capital is available to support trade and creates a capacity issue." The Basel II regulations dictate how much capital banks need to set aside to protect themselves against various types of risk. Money kept for this purpose is geared toward safeguarding the institution from insolvency and meeting the Basel II requirements means banks have to use their capital for compliance rather than for lending.

The outlook for the future of trade finance is relatively bright, but the details of the current situation don't necessarily show any major form of relief coming in the near-term. "While the outlook for the credit markets is showing some improvement, credit availability remains tight," said Gustin. "Companies have borrowed more from the bond market than from the banks and the focus has been to lock in cheap long-term funding." In addition to increased reliance on bonds, underwriting standards at banks have also risen across the board, and banks have found that they have very little incentive to lend to a sector now struggling with a lack of creditworthy members.

Creditors tired with the world's thrifty banks have turned both to the bond market and to the insurance market, which is also facing major constraints. Gustin noted that insurers' underwriting capacity for trade credit and political risk has been significantly limited, with a loss ratio exceeding 100% for multi-buyer insurance policies and 200% for the single risk structured trade credit market. Rate increases have also bedeviled policies with poor loss ratios, as Gustin noted that struggling policyholders can see their rates triple should their provider deem it necessary.

For more from David Gustin, look for his article in the January 2010 issue of Business Credit magazine. For more on FCIB and their educational programs, visit their website at www.fcibglobal.com.

Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National.

SBA’s Lender Oversight Deemed Inadequate

The U.S. Small Business Administration (SBA) is learning a lesson in sound credit management in the wake of a Government Accountability Office (GAO) report that illuminated the agency's inadequate lender oversight.

The lenders can be viewed as the SBA's customers; they receive guaranteed loan portfolios, which basically amount to money they can distribute in the form of loans to small businesses. While the report noted that the administration had made improvements to its lender oversight, the GAO's research showed that the SBA hadn't been following common industry standards when it came to validating its Loan and Lender Monitoring System (L/LMS). The SBA relies on the system to judge the health of the lenders, but without regular validation, the system is consistently behind economic and industry changes, making it a far more ineffective judge of lender worthiness.

Although the agency uses the system to focus their off-site monitoring of lenders, it does not use it to target risky lenders for on-site reviews or to determine the scope of those reviews, unlike fellow regulators like the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve bank. "SBA uses its risk rating system to monitor lenders and portfolio trends but does not rely on it to target the riskiest 7(a) and 504 lenders for on-site review," said the report. The 7(a) and 504 programs that it refers to are the agency's two largest small business loan programs.

"Instead, SBA focuses on what it thinks is the most important risk indicator-portfolio size-and targets for review those lenders with the largest SBA-guaranteed loan portfolios-that is, 7(a) lenders with at least $10 million in their guaranteed loan portfolio and 504 lenders with balances of at least $30 million," said the GAO. "Of the 477 reviews SBA conducted from 2005 through 2008, 380 (80%) were of large lenders that, based on its lender risk rating system, posed limited risk to SBA. The remaining 97 reviews (20%) were of lenders that posed significant risk to the agency."

As a result of the SBA's decision to rely on portfolio size, rather than risk, 97% of established high-risk lenders did not receive on-site reviews, putting a great deal of the SBA's potential credit at risk. Furthermore, the reviews conducted were not scaled according to potential risk, nor did they even include an assessment of the lenders' credit decisions.

"Just as it is important to ensure small businesses have access to capital, we must ensure that lender oversight promotes proper underwriting, establishes effective standards and safeguards for SBA loans while maintaining reasonable and proportional fees assessed to the lenders for this oversight," said Senator Mary Landrieu (D-LA), chair of the Senate Committee on Small Business and Entrepreneurship. "Ultimately, robust oversight of the SBA loan programs will enhance the ability of the SBA to complete their mission of supporting our nation's small businesses."

Landrieu, along with committee ranking member Olympia Snowe (R-ME), originally asked the GAO to conduct the report in June 2008, following an Inspector General's report that revealed the SBA's oversight of merely four lenders had created a loss of $329 million for the agency's 7(a) loan program, which is its largest. Snowe noted that she would re-introduce legislation, cosponsored by Landrieu, aimed at improving SBA lender oversight.

A full copy of the GAO's report can be found here.

Jacob Barron, NACM staff writer

House Passes Financial Reform Bill, SOX Exemption Included

The House of Representatives recently approved sweeping financial legislation that would exempt small businesses from having to comply with a controversial portion of the Sarbanes-Oxley Act (SOX), in addition to addressing a strikingly broad array of financial regulatory issues.

H.R. 4173, dubbed the Wall Street Reform and Consumer Protection Act of 2009, passed strictly along party lines by 223-202, with no republicans voting for the bill and 27 democrats voting against. The bill's most controversial provisions create a new agency, the Consumer Financial Protection Agency (CFPA), that will regulate consumer bank transactions. The legislation also increases oversight on the nation's largest banks, including imposing stricter capital requirements, and authorizes the government to dismantle firms that present a larger systemic risk to the nation's economy, combating the existence of firms that are "too big to fail."

Tucked in the legislation was language that exempts small businesses from compliance with SOX Section 404. The amendment faced a late challenge by prominent democrats, but was ultimately included in the final version of the approved legislation.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) said that firms with a market capitalization below $75 million would have to comply with Section 404's auditor attestation requirement starting in June 2010. Specifically, SOX 404 requires an independent third party audit of a company's internal controls over financial reporting and already applies to firms larger than $75 million.

The amendment was originally introduced by New Jersey representatives Scott Garrett (R) and John Adler (D). Other provisions address oversight in the nation's derivatives market and increase transparency in the credit rating industry.

The bill now heads to the Senate where action isn't expected until after the New Year.

Jacob Barron, NACM staff writer

Getting Paid on Your Delinquent Account

While many companies are facing a recessionary shortage of demand for their products and services, their employees are simultaneously weathering higher demands for better performance from their superiors.

Customers may be absent and payment may be harder to collect than it ever has been before, but companies still continue to ask much of their salespeople and credit professionals. And more than just trying to maintain, many employees are working to improve their company and their department's performance, even as they face one of history's toughest business environments. "What we're saying is ‘how can we in the credit department improve the quality of the accounts receivable (A/R)?'" asked Scott Blakeley, Esq. of Blakeley & Blakeley LLP. "Their responsibility in this recession is to find a way to improve the quality or collectability of their A/R on the one hand, yet on the other hand they have customers pushing invoices past what the credit professional originally evaluated."

"We find then that the role of the credit professional instead is a relationship builder at the highest level," he added.

As customer payment has become ever more elusive and infrequent due to tightened credit nationwide, delinquencies have kept pace and creditors have been forced to grasp to keep the customers they have, let alone find new ones. "We don't have the customer base that we did two years ago where we could hold the order and call on other companies," said Blakeley. Maintaining a relationship with customers who have failed to live up to their expectations can be a difficult process however, and Blakeley, in a recent NACM-sponsored teleconference entitled "Getting Paid on Your Delinquent Account," illuminated the many in-court and out-of-court options available to creditors and debtors looking to work out payment and keep their trade relationship intact.

The first step for creditors is to determine whether or not their account is actually delinquent. The simplest way to do this is to look at the original invoice. "The easiest measure is the terms that we established at the evaluation stage," said Blakeley. However, a less quantitative measure can often more firmly establish a customer as delinquent or not. "Where the rub can be is the customers' efforts to extend out those terms through excuses," he added.

Once an account is considered delinquent, many creditors can wind up with legal exposure if they become too accommodating of the customer's new, later payment schedule. "We need to be mindful that accommodating that customer's cash flow may result in a dispute with the customer of course of dealings," said Blakeley. "If we're committed 45 day terms but routinely accept payment outside of those, the customer may say that course of dealings controls the sale." Under the Uniform Commercial Code (UCC), a debtor can cite the course of dealings defense to keep from paying a creditor what's owed.

Blakeley also discussed a number of other pitfalls for creditors to avoid, as well as different ways to ensure a customer's payment before things wind up heading south.

A replay of this teleconference is available by contacting Tracey Flaesch at (410)740-5560 or traceyf@nacm.org. For more information on NACM's teleconference series, or to register, click here.

Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National




SOX Proponents Raise Concerns Ahead of Congressional, Judicial Challenges

The Center for Audit Quality (CAQ) recently came out in defense of the Sarbanes-Oxley Act (SOX), urging Congress not to exempt the nation's small businesses from the Act's controversial reporting requirements.

In a letter to the Senate Banking Committee, the CAQ urged lawmakers not to exclude smaller firms from SOX's reach, noting that doing so would undermine much-needed investor confidence. "If, as proposed by some members of the House of Representatives, Congress agrees to a permanent waiver for small companies, there may be little independent scrutiny of financial reporting safeguards at an estimated 6,000 small companies," said CAQ Executive Director Cindy Fornelli. "Reporting under Section 404 provides investors with meaningful information regarding a company's internal control over financial reporting (ICFR)."

A bill recently passed by the House included an amendment that would permanently exempt small businesses from SOX Section 404, which already applies to larger companies and requires an external auditor to certify that a business' internal controls are in place and effective. Without an exemption, or yet another delay, small businesses would be forced to comply with the provision starting in June 2010.

The CAQ also noted that, should an exemption be granted, financial statement revisions could increase drastically in a small business sector that already accounts for more than half of all financial restatements. "Recent research noted that restatement rates for companies that disclosed to investors that their ICFR was effective was 46% higher for smaller companies that did not have an independent audit of ICFR as compared to companies that were required to have an independent audit of ICFR," Fornelli added.

Supporters of the amendment, namely author Scott Garrett (R-NJ), argue that small businesses are already facing tremendous financial difficulties and that now isn't the time to further burden them with what some consider SOX's onerous reporting requirements.

In addition to the congressional challenges facing SOX, the Supreme Court hears arguments today regarding the legislation's constitutionality. The ruling in Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board (PCAOB) will decide whether the SOX-created and Securities and Exchange Commission-monitored PCAOB violates the separation of powers and appointments clauses of the constitution.

Stay tuned to NACM's Credit Real-Time Blog for updates.

Jacob Barron, NACM staff writer


Surviving Conflict

The day-to-day business of a credit professional, especially in today's economic environment, can present a number of potential conflicts.

Yet, when it comes to dealing with them, many people are lost, giving the concept of conflict management far too little thought and, subsequently, making the situation worse before making it better. Others choose to ignore the conflict altogether, acting as though they can will it away by not recognizing it. "The word conflict brings chills down the spine of many people. We do everything we can to avoid it but it's something that's a part of life," said Toni Drake, CCE. "It's nothing to be afraid of and it isn't always a bad thing."

Drake, in a recent NACM-sponsored teleconference entitled "How to Manage Conflict...And Survive it!," offered her uniquely credit-centric look at how to handle conflicts both outside of and within an organization. "When you have conflict, you're thinking about conflict with your customer or your debtor, maybe with the sales department" said Drake, who drew on her own experience as a credit professional to help attendees. "If you've got conflicts with this other department, you can cease to trust them if the conflict isn't handled correctly and that can create secrets."

Poorly managed conflict, Drake noted, can have an altogether negative effect on in-company interactions and ultimately sack a company's overall goal. "We may withhold information and this breaks down the communication," she said.

On the other hand, well managed conflict can be extremely productive and create a far more collegial, successful work environment. "Conflict can bring about new ways to problem solve, it helps us to think outside the box and it helps us to be creative," she said. "A lot of us have pat answers in what we do, but a lot of times we don't think beyond that or create new ways to solve problems. Conflict gives us an incentive for growth."

Drake also discussed other benefits of properly managed conflicts, as well as some tips of her own for how to effectively reach a compromise with other parties in a disagreement.
For a replay of this teleconference, contact Tracey Flaesch at NACM at (410)740-5560 or at traceyf@nacm.org. To learn more about NACM's teleconference series, click here.

Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National.


First Business Credit of 2010 Offers Look Ahead, New Opportunities

NACM's Business Credit magazine is kicking off the new decade with a host of articles to help credit professionals prepare for the coming year, as well as a look at the association itself and its newest chairman, Phyllis Truitt, CCE, who takes the helm next month.

Truitt is a familiar face at NACM events, both local and national, and her lengthy experience as a credit executive and NACM board member has given her a unique vision for the association and its members. Get to know Phyllis by reading her profile in the January 2010 issue!

As for the features, the January edition of Business Credit includes a thorough and insightful wrap-up of the November 2009 survey question, offered monthly at www.nacm.org. The November question asked participants what their greatest concern for 2010 was, and while the economy is still quite clearly weighing on the minds of the B2B credit sector, several other concerns have moved to the forefront. Check the issue's domestic feature for a full summary, complete with participant comments and unique analysis.

Internationally, the January 2010 feature focuses on the many export opportunities offered to small businesses in the currently convalescing economy. Many governmental entities have sprung into action to try to get the nation's struggling smaller firms into international markets and there's no better place for new business than overseas, where demand is still booming in many developing markets. This article discusses how agencies have torn down the barriers keeping small businesses from exporting and how struggling companies can make the most of their money by looking outside the U.S.

Other articles in the upcoming issue deal with new legal decisions out of the Delaware courts, contracting trends on Capitol Hill and a wealth of other relevant and timely topics.

Not a subscriber? Click here to get started today!

Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National.



Growth in Sales and Other Favorable Factors Nudge November CMI Further Into Expansion

Black Friday has come and gone and the results are mixed. On the one hand there was much more traffic in the stores than last year, but the average consumer has been spending a bit less and more cautiously. The same pattern seems to have emerged in the business community, as indicated by the shifts in the Credit Managers' Index (CMI). For the first time in some months, the reports suggest that sales are rising at a pretty rapid clip. The index noted a jump from 51.1 to 55. Given that last year's number was at 34.4, this is pretty encouraging news heading into the depths of the holiday season. There was also some positive movement in terms of new credit applications and dollar collections. The new applications number went from 52.7 to 55.4, much improved from the 45.2 notched in November 2008. Dollar collections had been pretty steady for the past several months, ranging from 50 in November 2008 to 53.4 in September this year. For two months in a row that level has improved more dramatically-54.7 in October and 55.8 in November. All of these improvements in the positive factors are encouraging.

In general there was improvement in the non-favorable category as well, but the pace has slowed from what it was in October and September. There have been fewer disputes and fewer rejections of credit applications and a marked reduction of accounts placed for collection. The data suggest that creditors are still working to get their financial affairs in order in anticipation of better times ahead. The pattern in the past has shown that creditors start to work toward catching up a few months before they anticipate getting back into higher levels of production. To accomplish this, they need to more readily engage their suppliers.

November marks the second month in a row that the CMI crested 50, mirroring the trends identified in the Purchasing Managers' Index. The growth in credit availability remains a major concern in the business community as a whole and there are still some strong headwinds as far as the financial sector is concerned, but there is some renewed activity going into the Christmas season and that is a good sign.

NACM's economist, Dr. Chris Kuehl, indicated that this latest set of survey results reinforces some of the assessments that have been made about the future. "As sales increase and credit applications are granted, there is a sense that more business is optimistic about the coming year than not. It was revealed in a recent KPMG survey that business confidence is improving and the CMI provides a clue as to why. Access to credit remains a limiting factor for many businesses, but there is evidence of the logjam loosening. In conversations with credit managers and through the comments sent along with the survey, there is a sense that there are growing opportunities for the best customers and a willingness to get engaged with those showing a plan and some progress."

A full report can be found here.