Virginia Commission Makes No Recommendation on Credit Reporting Bill, Urges Parties to Work Together on Legislation

At its meeting on Wednesday, the Virginia Small Business Commission made no recommendation about whether to support or oppose House Bill 2198, which would affect commercial credit reports in the commonwealth. It did, however, urge both parties in favor of and against the bill to work together to find common ground to address a perceived problem regarding the rights of the subject of a commercial credit report.

NACM has opposed HB 2198 since its introduction and was on hand at the meeting to make the case against the bill's identification provision. This measure would require commercial credit reporting agencies to make the source of a certain piece of information on a commercial credit report known to the subject of that report, if the information was considered "negative," a term the bill fails to define.

Virginia Delegate Michael Watson (R), who originally introduced HB 2198, was on hand at the meeting to make his case in favor of the bill, supported by a number of his colleagues from the House of Delegates. Specifically, Watson framed the bill as fundamentally pro-business and drew comparisons to the rights of consumers as they pertain to accessing and amending their credit reports, arguing that Virginia businesses should have the same rights.

NACM's contingent, comprised of representatives from NACM's membership, affiliate management and national staff, was accompanied by other representatives from the commercial credit reporting community. All of them noted that the bill fails to address what initially drove its introduction: a rash of aggressive and misleading marketing tactics used by a credit monitoring service to scare Virginia businesses into believing they had to pay for a subscription service to fix their company's credit report.

Instead, the bill aims to institute reforms that could threaten the availability of credit information on Virginia businesses, as companies that contribute trade lines and payment data to the commercial credit reporting agencies might stop reporting rather than face identification, and possible retaliation, by their customers. Testimony about this risk provided by NACM South Atlantic COO Anton Goddard and Richmond-area NACM member and Credit Manager Doug Strobel was of particular note to the members of the Commission. They appeared receptive to this concern and it seemed to partially drive their decision to neither endorse nor reject the bill.

Work to find a compromise among all parties concerned will begin immediately, and any resulting new legislation will be considered by the Small Business Commission in the fall. Should the parties be unable to reach an agreement, the Commission will consider HB 2198 again, and either make a recommendation to reject the bill or support its inclusion in the agenda for the commonwealth's next legislative session.

NACM will be monitoring the bill in all its forms throughout and opposing any legislation that could restrict the free and open exchange of credit information. If you have any questions or comments about HB 2198, please contact Jacob Barron, CICP at

- Jacob Barron, CICP, NACM staff writer

Growth Continues in June CMI

The June Credit Managers’ Index (CMI) from the National Association of Credit Management contained more good news this month, building on the positive growth of May's banner figures. 

The June combined CMI numbers continued to trend in the right direction, with the reading now as high as it has been since the recession started to drag the whole economy down. The index of favorable factors dipped a little from the reading last month, but still remained in the 60+ category, which is still higher than it has been any month other than May. This bodes very well for the future, as does the sales category, which remained well above 60 despite slipping slightly.

Amount of credit extended experienced a minor drop, but continued to be perhaps the steadiest of the favorable categories, as the range has been pretty narrow over the last year; every month has seen readings in the 60s.

"The credit industry is one of those harbinger sectors," said NACM Economist Chris Kuehl, PhD in the report. "Movement in the economy is heralded by movement in credit—positively and negatively. In the early days of the recession, the collapse in credit signaled what was to come as the CMI was plunging into the 40s and 30s before the rest of the economy really knew what had hit it. Now there is solid multi-month evidence of a resurging credit sector and that will likely lead to more overall economic progress."

Other improvements in this month's CMI came in the unfavorable factors, particularly in rejections of credit applications and a 21-month high water mark for accounts placed for collection.

A full copy of this month's report can be found here.


Stockton Considers Tax Hike to Help City through Bankruptcy

Officials in Stockton, CA put forth a tax plan last week that would aim to help improve city life and also buoy the city through its Chapter 9 bankruptcy filing.

When Stockton filed nearly a year ago, it was the largest municipal filing in United States history. That title has since been usurped by Jefferson County, AL, but Stockton still remains an example of a cash-strapped California city trying to make its way back to solvency.

Doing so won't be easy and it seems the Stockton City Council is taking an only slightly less populist approach to reorganizing its debt than Detroit's Emergency Manager Kevyn Orr. Orr's plan, which is still being negotiated, aims to usher Detroit back to the black on the backs of bondholders without asking too much of residents. The lynchpin in Stockton's plan, however, is a sales tax hike to 9% from 8.25%, the proceeds of which would be used to hire 120 police officers, fund other safety programs and, more generally, help Stockton exit bankruptcy with a reorganization plan that can win court approval.

Stockton isn't asking only its residents to help with its debt woes, however. The City Council's budget plan also includes $12 billion in debt payment defaults. So far while the city hasn't missed its obligations to the California Public Employees' Retirement System (CALPERS), the state pension fund, it has missed $12 million in debt payments.

- Jacob Barron, CICP, NACM staff writer

WSJ Follows Up on NACM Response to Commercial Credit Article, Virginia Credit Reporting Bill

NACM was used as a source in a recent Wall Street Journal article, focusing on allegations of aggressive sales tactics from Dun & Bradstreet Credibility Corp. (DBCC). These allegations were what spurred Virginia Delegate Michael Watson to introduce HB 2198, a bill that NACM is currently hoping to defeat.

The article was published on the heels of NACM's response to an Associated Press article about commercial credit reports and how they affect a company's ability to get financing.

Click here to view the article on the Wall Street Journal's website.


NACM Releases Commercial Credit Reporting Fact Sheet to SupportNational Small Business Week

In support of National Small Business Week, the National Association of Credit Management (NACM) released a fact sheet today offering the nation’s small businesses a quick reference document on commercial credit reporting. The free fact sheet, titled “Commercial Credit Reporting: What Every Company Needs to Know,” provides the smallest of the nation’s firms with the information they need to be able to manage their own company’s commercial credit profile.

A number of small companies only rely on the owner’s personal consumer credit to operate the business. They may not be aware of, or know enough about commercial credit and commercial credit reporting to establish and build a strong commercial credit profile, which can help these businesses acquire better bank financing and the crucial goods and services needed from other trade suppliers on an unsecured basis. “NACM hopes the fact sheet will help companies build their credit and support their financial practices,” said NACM President Robin Schauseil, CAE. “It is imperative to eliminate any misconceptions and educate companies about commercial credit and commercial credit reports, especially among small businesses, the drivers of the nation’s economy.”

NACM began to develop the fact sheet earlier this year in response to reports from its membership and certain state legislators that many small businesses were falling prey to aggressive sales tactics from commercial credit monitoring services. Salespeople from some of the companies that provide such services have called small- and micro-business owners and unwittingly fooled them into believing that they needed to pay for a product that would improve and address errors in their company’s commercial credit report.

“Much like in the consumer credit world, companies have the right to view and address discrepancies in their credit report for free,” said Schauseil. “More than that, they have the right to not be taken advantage of by unscrupulous salespeople trying to scare up business by making false claims.”

“Any company, no matter how small, will have the knowledge necessary to avoid getting snared by these offers if they are armed with the information included in the ‘Commercial Credit Reporting: What Every Company Needs to Know’ fact sheet. They will also have the knowledge to find and view their company’s commercial credit report and use that information to build their credit, along with their business,” she added.

“NACM was founded more than a century ago to protect the free and open exchange of credit information between businesses,” said NACM National Chairman Toni Drake, CCE. “Educating the nation’s businesses about the important things that differentiate consumer credit from commercial credit is one of the association’s chief priorities, and that tradition continues today with the ‘Commercial Credit Reporting’ fact sheet.”

“It’s so important in today’s economy for business owners to separate their own finances from their companies’. They also need to separate their credit histories to ensure that they don’t become personally liable for their business’ troubles,” she said.

The full fact sheet, in PDF format, can be downloaded for free here. For more resources on the importance of recognizing the differences between consumer and commercial credit, please contact NACM at 410-740-5560.

ABI Review Article Proposes Simplifying "Small Business Debtor" Definition in Bankruptcy

An article in the Summer 2013 edition of the American Bankruptcy Institute (ABI) Law Review argues that policymakers should simplify the definition of a "small business debtor" in bankruptcy.

In her article, "An Argument for Simplifying the Code's 'Small Business Debtor' Definition," Professor Anne Lawton of the Michigan State University College of Law recommends eliminating all but two criteria—formation of an official creditors' committee and size of a debtor's liabilities—from the current definition. "A complex and ambiguous definition, like the one adopted by Congress, increases the possibility of confusion and litigation, which delay debtor identification and increase costs," said Lawton.

Small businesses have historically performed poorly in Chapter 11, with cases languishing for months while administrative costs piled up and a debtor's chances for a successful exit dwindled. Congress enacted reforms in 1994 and again in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) that required increased reporting by and monitoring of small business debtors. These reforms also extended time requirements for plan proposal and confirmation.

Still, the Code's current definition of a small business debtor diverts time that could be spent on plan negotiation and debtor evaluation to threshold questions about the applicability of small business provisions. Lawton argues that the calculation of a debtor's liabilities to determine whether they exceed the current $2,490,925 cutoff should be amended to eliminate the requirement that "contingent," "unliquidated," "affiliate" and "insider debt" be deducted.

"Debtor liabilities predict plan success regardless of whether liability totals include or exclude contingent, unliquidated, affiliate and insider debt," said Lawton, noting that the simplified definition would better predict both plan confirmation and successful plan performance. "The modified definition not only simplifies the task of sorting small from non-small businesses, but it also makes the sorting process less reliant on judicial interpretation and more [reliant] on objectively verifiable facts."

- Jacob Barron, CICP, NACM staff writer

All Goes According to Plan, As Detroit Defaults on Debt

Detroit defaulted on a $39.7 million debt payment last Friday, but the move was all part of the city's restructuring plan, put forth last week by Emergency Manager Kevyn Orr.

In an effort to save cash, Orr's plan has the city set to miss payments on billions in unsecured municipal debt. Friday's default was only just the beginning. Should Orr's plan make its way, intact, through what are expected to be tough negotiations with creditors of all classes, unsecured creditors will end up taking a pro rata share of $2 billion worth of non-recourse participation notes, payable as the city's financial station improves. These would be issued by Detroit to replace $11 billion worth of unsecured obligations consisting of bond debt, pension certificates, the pensions' underfunding claims and retiree healthcare claims.

Orr stressed sustainability in his announcement of the city's latest effort to avoid filing Chapter 9 bankruptcy. "The city and its creditors and constituents will have worked too hard and sacrificed too much for the gains of the restructuring to go for naught," he said.  "We will need an oversight structure to ensure that the tough decisions and the compromises we make today are sustainable and allow Detroit to become a vibrant and growing American city once again."

But the severity of the haircut proposed for creditors has many thinking they'd be better off in bankruptcy. For his part, Orr has said that he would prefer to avoid filing Chapter 9, but pegged the city's chances of a successful out-of-court workout at 50-50.

Ratings agencies reacted to Detroit's default with further downgrades of the city's already beleaguered debt quality. Standard & Poor's (S&P) cut Detroit to CC from CCC-, while maintaining a negative outlook on the city's potential bankruptcy filing. Moody's beat S&P to the punch, downgrading several classes of Detroit debt to Caa2 with a negative outlook while also acknowledging the boldness of Orr's plan. "The structuring plan is unconventional and precedent-setting in the municipal market," said Moody's in a statement. "It builds a strong case for insolvency, girding the city for a tough fight with creditors of all types."

Several observers have noted that the actions Detroit takes to dig its way out of its $17 billion hole will ripple through the world of municipal bankruptcy. Bruce Nathan, Esq., of Lowenstein Sandler LLP predicted at last month's Credit Congress that a Chapter 9 filing by a tier-one, household-name city like Detroit would be huge news for practitioners, as well as for other municipalities on the brink of their own filing. Similarly, the reception of Orr's controversial restructuring plan will be a bellwether for other efforts by cities and towns to scrape by without having to file.

- Jacob Barron, CICP, NACM staff writer

Industries to Watch: European Automotive

Throughout the world, there are many pockets of strength in automotive production. Aside from the supply-chain disruptions caused by a triple-disaster, Japan has maintained a prominent position, and the U.S. industry’s rebound has been surprisingly strong since two of its “Big Three” manufacturers declared bankruptcy several years ago during its domestic recession. However, such tales of success are looking fewer and farther between among European auto producers and, as such, credit professionals conducting business with these manufacturers or those who are a downstream suppliers should be watching the situation very closely for emerging solvency problems.

The ongoing debt crisis in much of Europe continues to put a strain on many industries, even more so for those selling primarily in the European Union. While companies like Mercedes and Volkswagen continue to do well because of their worldwide branding, many others are simply not competitive and probably won’t be for some time said FCIB Europe Economic Advisor Freddy Van den Spiegel. “Brands like Fiat and others, I don’t see how they can get out of their position,” he said in an interview at FCIB’s Annual International Credit and Risk Management Summit in Prague, where he was a keynote speaker. “There is a lot of competition from Asia.” He added that increased European legislation designed to address issues like carbon emissions and global warming put European producers, especially in countries like Italy and France, at a distinct disadvantage.

Meanwhile, Stefan Rasche, head of treasury at Czech Republic-based Skoda Auto, said everyone in the industry is keenly focused on falling markets and that “everyone has to deal with it,” as margins get pressured. However, Rasche noted that those producing in Eastern Europe are not facing problems as large as those in western and southern Europe because there is less dependence on local buyers. “We’re only partially dependent on the local, Czech market,” he said. “When you have a wider global footprint, it helps you balance off. We’re lucky in that regard.”

Still, Rasche said it has been critical to put more effort into quality risk management since the consumer base throughout Europe has shrunk due to increased unemployment or a fear of it. Such fear, and the resulting lack of consumer confidence, isn’t likely to cede anytime in the near term given the depths of economic problems in the EU.

- Brian Shappell, CBA, CICP, NACM staff writer

Detroit Bankruptcy Chances a Virtual Coin-Flip

Detroit Emergency Manager Kevyn Orr's first public appearance discussing the city’s financial problems in a public forum was far from uneventful. The man charged with righting the ship financially for the beleaguered Michigan city reportedly publicly placed the chances of filing for Chapter 9 bankruptcy protection at 50%, all while hundreds of city residents—many retirees or current public workers fearing cuts to pensions, wages or benefits—were locked out of attending because of overcrowding.

Orr, who has extensive bankruptcy experience and represented Chrysler in its well-publicized bankruptcy reorganization, also confirmed he is to meet with representatives from various creditors by week’s end. Detroit is currently in a race against time to cut debt before default and eventual insolvency will essentially force the city into a Chapter 9 filing. Some see it as unavoidable given the deep problems with the falling tax base, as well as retirement and health care costs. Orr reportedly has made it known that he plans to file as early as this summer if some of the city's long-term debt, estimated at a range between $15-17 billion, can't be renegotiated with various creditors.

Bruce Nathan, Esq., of Lowenstein Sandler LLP,  predicted at last month’s Credit Congress that, because the value in play and the name-recognition as a first-level U.S. city, a potential Detroit filing would be the biggest newsmaker in Chapter 9 to date. He was among several attorneys at NACM’s annual event who believe the potential for a wave of new municipal bankruptcy filings is growing.

- Brian Shappell, CBA, CICP, NACM staff writer

U.S., Brazilian Economies Passing Ships in the Night?

What a difference a year – more realistically, two or three years – makes. During the early part of this decade, Brazil was in many circles becoming the belle of the world economic ball, as experts lined up to say positive things about the emerging Latin powerhouse. At the same time, criticism mounted about the United States’ debt issues and weaker-than-expected economic growth. Both seem to be reversing course enough to get on Standard & Poor’s very public radar.

S&P did not change the U.S. sovereign credit rating this week, but it did move its outlook on the nation from “negative” to "stable." In late 2011, S&P made the controversial decision to lower the U.S. credit rating by one notch from the top, “AAA” status and skewered U.S. lawmakers for not being able to work together without partisan-based brinksmanship. That seems to have improved in S&P’s view, even if slightly:

“On the political side, Republicans and Democrats did reach a deal to smooth the year-end-2012 ‘fiscal cliff", and this deal did result in some fiscal tightening beyond that envisaged in BCA11 (Budget Control Act of 2011), by allowing previous tax cuts to expire on high-income earners. The BCA11 also has engendered a fiscal adjustment, albeit in a blunt manner. Although we expect some political posturing to coincide with raising the government's debt ceiling, which now appears likely to occur near the Sept. 30 fiscal year-end, we assume with our outlook revision that the debate will not result in a sudden unplanned contraction in current spending--which could be disruptive--let alone debt service.”  S&P also applauded the U.S. ability to absorb economic or financial shocks and the stability of the dollar as the world's leading reserve currency.

S&P was not so kind with Brazil, as it moved the nation’s sovereign credit rating outlook to “negative” on escalating debt problems and what is predicted to be the third straight year of lackluster growth after a tremendously hot run there. It is believed S&P could lower Brazil’s credit rating by at least one notch by early 2015, if not sooner.

-Brian Shappell, CBA, CICP, NACM staff writer

Mainstream Media Story Fails to Depict Key Split Between Commercial, Consumer Credit

The following is NACM’s official response to an Associated Press article about credit and small businesses that ran in several mainstream media outlets late this week:

An article from the Associated Press that ran in several news outlets, titled "How small businesses can avoid loan rejections," or some variation thereof, had good intentions and a considerable amount of important information for small businesses seeking to improve their commercial credit standing. However, while it focused on the relationship between small businesses and their banks, it completely ignored the important relationship between small businesses and their suppliers. It is this relationship that defines the commercial credit score for all businesses.  Further, the article missed the fact that Dun & Bradstreet Credibility Corp. (DBCC), whose CEO provided all of the article's quotations, is a by-product of a greater problem regarding consumer and commercial credit.

The problem, in short, is that not many people recognize the vast differences between how consumer credit and commercial credit are extended, as well as how consumer creditors and commercial creditors are assessed for creditworthiness.

Regrettably the article failed to note that DBCC's primary product is a credit monitoring service which is sold to businesses for a fee.  It's a carbon copy of countless other credit monitoring services offered to consumers by credit bureaus, financial institutions and other companies.  While both consumers and businesses can monitor their own credit reports and address discrepancies for free, what DBCC's business model represents is an attempt to take a consumer product, and apply it in a commercial setting.

While this is logical, it's also dangerous because it further blurs the important lines separating the world of consumer credit from the world of commercial credit. If providers of commercial credit reports begin to treat the subject of their reports as though they were consumers, soon enough, legislators will, too. Any law or regulation that threatens commercial credit reports will threaten the free and open exchange of credit between businesses, ultimately exacerbating what's already a critical lack of information company creditworthiness.

There is a data vacuum that exists about businesses in this country, especially small ones. When companies consider providing goods or services to another business, they use whatever information possible to determine whether or not this potential customer will pay its bills on time. These suppliers sell on unsecured terms, meaning they often take no collateral for the goods and services they supply and are the last ones to be paid in the event of their customer's bankruptcy. This makes the financing they provide to small businesses considerably less expensive than traditional lending, and also creates a symbiotic relationship between the supplier and their business customer.

What these companies rely on most before selling to a small business is historical payment data, which answers the question "does this company pay its bills on time?" This data is included in a business' credit report and factored into their credit profile, but often there's too little information to really be of any use in making a decision, especially for small- or micro-sized businesses.

The problem is that too few companies report the payment activity of their customers to providers of commercial credit reports. This is a process that can be done electronically and anonymously, posing little risk to the company providing the information and to their customer. This lack of information sharing has created a scenario where small businesses can't even get a credit profile, let alone a bank loan, and all because no one is reporting their business' behavior.

Instead of paying a fee for a monitoring service that helps a company know and improve its credit report, the companies that sell to other businesses should be reporting their customers' payment history and accounts receivable data to the companies that create these reports. The more businesses do this, the easier it is for their business customers to create a credit profile and, hopefully, acquire more financing to expand. While some of the information in the article is useful, the piece ignores the real problem that's keeping loans out of the hands of America's job creators: the lack of available payment data.


Bankruptcies Fall Again, but What Happens When Interest Rates Go Up?

Year-over-year commercial bankruptcy filings continued their decline in May. A total of 4,017 businesses filed bankruptcy in May 2013, representing a 25% decrease from the 5,341 businesses that filed in May 2012. Total commercial Chapter 11 filings also fell by 25% to 537 filings in May 2013, compared to 716 Chapter 11s in the same period last year.

The decline was mirrored, though not as deeply, in the consumer filings, which fell 11% last month to 92,413, almost 12,000 filings lower than the May 2012 total. All in all, total bankruptcies fell 12% from May 2012's figures, capping off a trend that's been driven by historically low interest rates.

"Sustained low interest rates, tighter lending standards and decreased consumer spending are assisting consumers and companies to shore up their balance sheets," said American Bankruptcy Institute (ABI) Executive Director Samuel Gerdano. "As households and businesses remain committed to deleveraging, the number of filings will continue to decrease."

Currently, with interest rates hovering around zero, it's inexpensive for banks to allow financially-distressed companies to continue limping along with the hope that something in their business, industry or market will improve and they can make good on their financing arrangement. In a similar way, it's easier for most businesses in today's financing environment to continue operating by refinancing their existing debt, instead of acquiring new credit from still-stingy lenders to grow their business. The answer to the question of what happens when the Federal Reserve raises interest rates, which it has pledged to do when the labor market recovers, could be a rash of commercial and consumer bankruptcy filings.

For businesses, Chapter 11 also still remains an extraordinarily expensive procedure, and if the company considering a filing doesn't already know where the financing for a reorganization will come from, it's likely that it will just close its doors rather than attempt a costly bankruptcy proceeding.

- Jacob Barron, CICP, NACM staff writer

Beige Book Showing Continued Growth

The latest Federal Reserve Beige Book report, a roundup of economic for all 12 U.S. regions for approximately six weeks leading up to May 24, finds an overall economy continuing to grow at a “modest to moderate pace.” And, like the recently released Credit Manager’s Index, a positive outlook seems to be more pervasive going forward.

The gains are led by the rebound in the manufacturing sector, which increased throughout most of the nation, save Philadelphia and Richmond. Manufacturing was also aided by a long-absent ally: suppliers of materials for residential construction. Firms within manufacturing appear to be mostly optimistic heading into the summer, certainly more so than in early 2013.

By sector and sub-sector tracking, the Fed reported notable gains in consumer spending, especially automotive and tourism; transportation, residential and commercial real estate as well as bank lending. On a district basis, the hottest performance this spring emanated from the Dallas region. The following are excerpts from the latest Fed Beige Book:

Consumer Spending and Tourism
“Most Districts noted that consumer spending increased during the reporting period, ranging from slight to moderate gains. Retail activity in the Boston, Philadelphia, and Dallas Districts was characterized as modest or moderate, while the Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City and San Francisco Districts reported slight growth… Vehicle sales generally increased moderately across Districts. The New York, Richmond and San Francisco Districts reported that sales remained strong or at high levels.”

Real Estate and Construction
“Residential real estate and construction activity increased at a moderate to strong pace in all Districts. Several Districts reported that higher demand and low inventory of homes available for sale are resulting in multiple offers on properties. Almost all Districts reported higher home sale prices.”

Banking and Finance
“Credit quality improved, on balance. The New York and Cleveland Districts reported widespread decreases in delinquency rates for business and consumer loans. Several Districts reported that credit standards have not changed much since the previous report.”

Agriculture and Natural Resources
“Agricultural conditions remained mixed across Districts, as weather patterns varied. Recent rains brought drought relief to the Atlanta, Chicago, and Minneapolis Districts but delayed or slowed plantings in the Richmond, Atlanta, Chicago, St. Louis, Minneapolis and Kansas City Districts.”

-Brian Shappell, CBA, CICP, NACM staff writer

Jefferson County Bankruptcy Conclusion Close with Creditor Deal

What was once the largest municipal bankruptcy filing case (by dollar value ) in U.S. history appears to be winding down.

Jefferson County, AL officials and legal representatives reportedly have agreed with a group of creditors, including JPMorgan Chase, over the massive sewer renovation project-fueled debt that left the municipality financially crippled, paving the way for a quicker than expected exit from Chapter 9 bankruptcy. Various secured creditors will reportedly take a 20%-40% cut of what the county owes them. Insurers could be out as much as 50%. The county will likely retain control of sewer operations.

Jefferson County Commissioners voted in 2010 to file for Chapter 9, with apparent support of Alabama Gov. Robert Bentley. The Chapter 9 filing listed the county’s debts in excess of $4 billion, with most stemming from a sewer system retrofit that turned into a massive and unexpected drain of financial resources. The debt was nearly double the previous record for a U.S. municipal bankruptcy, but has since been eclipsed by Stockton, CA.

This is at least the third time in the last two years that a settlement was agreed upon well after the Chapter 9 court process started. It raises the question of whether more debt-saddled municipalities will look to Chapter 9 as a new strategy to garner negotiating power, be it with suppliers or labor representatives.

-Brian Shappell, CBA, CICP, NACM staff writer

Interactivity a Hallmark of Credit Congress Exchange Sessions

Now it their third year, the three-hour Executive Exchange sessions at Credit Congress continued to spark interesting conversation and debate among topics dear to credit managers from throughout the United States and beyond.

Extended question-and-answer periods helped fuel such interactive sessions, especially in the respective collections and construction exchange sessions.  Construction session moderator Karen Hart, Esq., of Bell Nunnally, started immediately in with an audience question, one regarding preliminary notices and state-by-state nuances.   A robust discussion followed regarding statutory vs. non-statutory notices followed by an eventual consensus speaking to the immense value of the notice not only as a tool to retain lien rights, but also a valuable tool in of itself to reduce DSO (day’s sales outstanding).

Panelist Greg Powelson, Director of NACM’s Secured Transaction Services agreed, adding “beyond the notices sometimes just the collection of job information can get help you get paid.  When the client knows you’re organized and consistent you’re more likely to get paid over someone who’s not.”

Following the conference, Powelson applauded the evolution of the Executive Exchange format and how much it brings out the ideas and experiences of the delegates in attendance: “You never know where these sessions are going to go; I’ve picked up new ideas every year. The members are more engaged, and the conversations more spirited every year.”

-NACM staff

Note: See more on this story in this week's edition of NACM eNews, available late Thursday afternoon (EST).