Panama’s rise in prominence continues to catch the eyes of the business and investment worlds. The latest to take note, and take action, was Moody’s Investment Services.

NACM has noted previously Panama’s commitment to massively expanding its well-known and oft-used canal as well as its continued work to break down inter-governmental trade barriers has helped in positioning the small Latin American nation as increasingly prominent. Moody’s Investment Services listed the same among many reasons it raised the government’s credit rating Monday.

“Panama's economy has grown at an average rate of 7.3% during the past 10 years, the highest rate of growth in Latin America and among the highest in the world. Despite weakening external conditions, Panama continued to show remarkable economic dynamism in the first half of 2012,” Moody’s said. “Though recent growth rates are not sustainable, medium-term growth prospects remain strong thanks to the expansion of the Panama Canal, the Martinelli administration's ambitious infrastructure investment plans and the recent ratification of the free trade agreement by the U.S. Congress.”  Moody’s added that newfound commitment by Panamanian officials toward gold and copper mining also make the nation attractive from a credit and investment point of view.

This comes less than two months on the heels of the Commerce Department noting that, among major export markets, no nation has seen a larger rise in the purchase of U.S. goods in recent years. To wit, the 36.3% increase since 2009 (through September) bested the second faster riser (Turkey) by nearly 8 percentage points.  

Key to watch in the coming months and years will be something else that has been already been on expert market-watchers’ radar: whether the government there can manage growth responsibly and avoid creating troubling fiscal imbalances for the medium- and long-term. It’s something that not-too-distant neighbor Brazil, despite its hot status of recent years, has once again seemed to fail in mastering.

-Brian Shappell, CBA, NACM staff writer
 

The October Credit Managers’ Index, available now at www.nacm.org, reflected the mood of the overall economy, one with some aspects point in a positive direction and others decidely the opposite.

The sense is that a few of the big issues that have been affecting other economic measures are having an impact on the CMI. While it is hard to point explicitly at the “fiscal cliff” as a cause for overall decline, it is quite apparent that the uncertainty affecting business decision-making is having an impact, as some of the future indicators are weaker than expected at this point.

The most distressing category in this month’s survey, and the one that seems to point to the fiscal cliff issue, would be sales. CMI statistics on sales show a decline to the lowest level since the middle of 2011. While disappointing and troublesome, sales remains in expansion terriorty, if nothing else.

"The silver lining in this case would be that a solution to the crisis would likely result in a jump in capital expenditures and investment in general, said Chris Kuehl, PhD, economist for the National Association of Credit Management (NACM) regarding the fiscal cliff issue. "The downside is that the powers that be could still allow the unthinkable to occur."

Meanwhile, favorable and unvavorable factors stayed on the encouraging side of the growth/contraction line. However, one particular category of importance showed a significant decrease. Dollar amount beyond terms sported the biggest decline among unfavorable factors. In the past, this has indicated that companies are starting to struggle to meet their obligations, and in the months to come some of the other negatives start to accelerate.

The complete CMI report for October 2012 contains the full commentary, complete with tables and graphs. CMI archives may also be viewed on NACM’s website.

-NACM Staff

Small business lending is expected to increase according to the most recent survey of bank risk professionals published by the Fair Isaac Corporation (FICO).

Bankers expressed widespread optimism about the small business lending sector, voting by more than a two-to-one margin that the approval rate for small business loans and the total amount of credit extended to small businesses would increase rather than decrease. More than half of all respondents predicted that the overall supply of small business credit would meet demand, although this could simply be a symptom of weak demand rather than a boost in available credit.

Notably, survey respondents were less positive about small businesses' requests for credit. In the first-quarter survey, a large majority of 61.9% of respondents predicted an increase in the amount of credit requested by small business. This figure increased to 69.1% in the second-quarter survey, but fell hard to 56.5% in this quarter's survey. This is still a positive trend, with a majority of participants expecting increased requests for credit, increased approval rates and increased credit in general, but it's not as positive as many had hoped.

Still, the third-quarter survey, conducted for FICO by the Professional Risk Managers' International Association (PRMIA), didn't leave the banking industry wanting for reasons to be anxious. Concerns in the student loan market were rampant in the survey, with a 61% majority of respondents expecting delinquencies on student loans to increase over the next six months. This marks the fourth consecutive quarter that respondents have predicted a worsening of student loan delinquencies.

Commercial credit risk managers might not have to worry about the threat of student loan defaults, unless they're their own, but the adverse effects on the economy at large from these delinquencies could be potent.

- Jacob Barron, CICP, NACM staff writer
 

Angela Bradbury, ICCE, group credit manager at UK-based Innospec, Inc., and moderator of the first of five upcoming FCIB roundtable events focused on “The Credit Department as a Profit Centre” noted that there are two kinds of credit managers out there right now: “There are those with flair who are getting involved in the business [and big decisions] and the others who are operating in a very restrictive space.

Getting more involved in the company, getting your voice heard and advancing the role of today's credit professional are becoming not just wish-list type items for today's credit manager but, rather necessities.

"It’s not about going in the CFO’s office shouting and screaming, it’s about showing you’re an indispensible service," Bradbury said. "It’s not about making life difficult or easier, it’s about being a bigger part of the business’ bottom line.” Bradbury, like 2012 NACM Mentor of the Year Larry O’Brien, CCE, ICCE and a growing group of others, added that too many credit managers don’t push the agenda and confirm that his/her outlook and goals are still in line with those of upper management, the finance people or even sales.

The FCIB roundtable events, to begin on Sept. 13 at the Clerkenwell London with Bradbury, are designed to get credit people talking about how to sell the credit department’s value to others in a company, the “P.R.” it takes for this to work and how to assess the credit and risk assessment expectations that exist at your company (and how to react to them), among other topics. Subsequent events this fall in the FCIB series will be held in Amsterdam, Brussels, Zurich and Dusseldorf.

-Brian Shappell, CBA, NACM staff writer

For more information or to register for the first roundtable event in London, visit http://www.fcibglobal.com/events/event-calendar/details/125-the-credit-department-as-a-profit-centre-your-value-in-the-supply-chain-uk-london.html.


 

A poll of small business owners finds that the perception on the street is that it is unlikely they’ll be approved for the credit they ask for – whether via a partial amount granted or full-on denial – so many have simply stopped applying. But there does seem to be some optimism out there for the next year, whether based on tangible signs or blind hope. Meanwhile, interviews from the poll seem to tangentially promote an idea near and dear to NACM: workers need to advance and expand the roles of their positions to boost their stability.

The Federal Reserve Bank of New York unveiled its Small Business Borrowers Poll, which included results that indicated microloans are at a peak demand right now yet remain highly difficult to garner, especially among start-ups. This often is the case even for new businesses run by a proprietor with a sterling credit history. Poll results based on N.Y. Fed polling also found that nearly 50% of those small business that did not apply for credit/bank loans, opted not to do so out of belief and/or fear of rejection. Perhaps that is with good reason as only 13% of those who did apply in recent months and participated in the poll received the full amount requested. Just more than one-third received a portion of the requested amount, according to the N.Y. Fed.

Additionally, interviews included in the Fed’s report shined a light on the widely held believe that small business owners do not see smooth sailing for most of the remainder of 2012, even if they are upbeat about things being better at this time next year. But, in the meantime, business owners are preparing as if credit isn’t going to come their way, and want employees, from sales to credit, to realize the importance of stepping out of the traditional box of their job descriptions to provide more value and, thus, boost the prospects for the business and their job security alike.

“Whatever you think cash-flow-wise you will need for your worst, worst scenario, like the one you think is never going to happen, double it,” said Allison O’Neill, a New York clothing store proprietor interviewed by the Fed. “Everyone who works here wears many hats…Everyone who's here is a sales associate and a social media manager, and a marketing manager, and an inventory specialist…”

-Brian Shappell, CBA, NACM staff writer

(Note: To view the full report, visit http://www.newyorkfed.org/smallbusiness/2012/).
 

Germany long was held up as the model for business efficiency in Europe. Even as problems among southern European Union members first began to bubble over, the business community looked to the Germans as the likely salve to the problem, not just in bailout money but in production, efficient management and consumption by its natives. But, on top of stumbles by others in the retail sector there of late, this week came the headline-grabbing insolvency filing of mail-order retailer Neckermann.

Neckermann reportedly was working on garnering concessions from creditors, but they fell through. Some 2,000 jobs could be lost as part of the retailer’s collapse, and it led many to jump to the conclusion that the EU debt crisis is the primary culprit for the ills of this company and others who have found it tough to stay afloat.

Ben Deboeck, country and sector risk coordinator for Belgian-based Ducroire Delcredere, told us this week that it’s worth noting Neckermann was in trouble for a long while, and that it was potentially unfair to pin its failings entirely on the larger debt crisis. That said, such instances of insolvency could be part of an increasing trend pending on how the EU responds to troubles with members such as Greece, Spain and Italy.

“Given the current sluggish economic environment, it should of course be of little surprise that weaker companies, even in stronger countries such as Germany and the like, are heavily exposed to the current downturn,” said Deboeck, who keynoted FCIB’s Annual International Credit and Risk Management Summit in Hamburg. “I guess the Peugeot/Citroën problems are probably a better example of the direct fallout of the crisis, though, and may be more worrying in regards to things to come for European industries if the downturn becomes really protracted.”

-Brian Shappell, CBA, NACM Staff Writer

The Credit Managers’ Index (CMI) for June shows little change after a disappointing June, according to statistics available in Thursday's eNews release and at www.nacm.org.

The most distressing trend in the latest CMI is that sales continue to sag, and the slowing pace of expansion does not bode well for the summer months. Concern exists in areas such as accounts place for collection. However, there has been no surge in bankruptcy activity.
That is a good indication of the fact that most business has not yet fallen back to the miserable patterns of a year or so ago.

Positive news in the latest CMI can be found in dollar collections and the rise in amount of credit extended, according to CMI data.

The economy as a whole seems to have settled into a pattern that is not in crisis, but neither is it expanding at an acceptable pace. It has been opined that no news is good news. There is something to be said for a month of data that didn’t really change, especially when changes of late have been more negative than positive. The latest CMI report is nearly identical to the prior reading, and right now that is a cause for some optimism. Not that there weren’t variations in the details—those will be the trends assessed in the coming months.

(Note: Check for more on the June CMI in Thursday's eNews or in the headlines bar on the NACM homepage, www.nacm.org).

First-year student Justin Blackford, CICP, of Builders FirstSource outside of Charlotte, NC discusses how his role has grown post-recession, and how he got to GSCFM.

How long have you been in your current position?

I've been with my company now for five years, but I've been in the industry for almost 10.

What do you handle on a day-to-day basis?

I manage the department, and that team has been pressed because of the economy, but we review accounts, existing or new, to increase and establish credit lines. We manage the collection function, dispute resolution with our customers, that sort of thing.

That sounds pretty broad.

Very broad. I also do financial analysis on not only our customers but our business, including sales, so it's definitely widened.

Is that expanded role sort of a recent phenomenon?

It's always been a credit management role, but based on my desire to be innovative and obviously, the economy, everybody's wearing one or two different hats that they weren't wearing before.

How'd you hear about this program?

We've got a strong NACM group, particularly in construction in Charlotte, so it's something I've been aware of for a while. Being new to the field and fairly young in my career, I can't think of a better opportunity than this to enhance my knowledge and learn from people, and network. I don't think there's a better opportunity out there for a credit manager.

I made this comment to another student the other day, but it seems like the socializing aspect of the program is just as important as the actual education.

Absolutely. This is a great networking opportunity. The group is small and for that reason it's a close group, and you learn a lot of different perspectives from people. Not everyone's in the same industry so you learn how they manage their operations and handle similar credit issues that transcend the differences.

Classes continue at NACM's Graduate School of Credit and Financial Management (GSCFM), currently being held at Dartmouth College.

Some of GSCFM's most valuable discussions take place beyond the confines of Dartmouth's classrooms, as noted below by Ed Walsh of Samuel, Son & Co., Limited in Mississauga, Ontario.

How long have you been doing credit?

Almost 20 years.

How'd you get started?

By accident.

It seems like everyone says that.

Yeah, it's the same thing you know? They need somebody and then you start working there.

It seems like the socializing here is as much of an aspect of the program as the actual education sessions.

Yeah, I think developing relationships is a big part of it and also with that, just the subtle conversations that you get the opportunity to have with people, you know, be it about dealing with problem employees, compensation issues around credit management.

How do these conversations come about?

You know you don't sit down and say “let's talk about this or let's talk about that” but as we're walking from class to lunch or sitting around the dinner table you get the opportunity to just pick people's brains about things that happen. Now it's not all business talk all the time, but you don't get that opportunity normally in a three hour class or something like that.

Can you think of one thing that you were able to bring home from one of these conversations?

Yeah I would say certainly about dealing with difficult employees and how others have dealt with them. It gives me a lot to think about and just how I will deal with a particular situation that I have going on, and so you're able to say “hey, what would you do in this situation” and you get a bunch of people's perspective on it coming from the same type of departments. It either validates or it gives you things you haven't thought of.

NACM's Graduate School of Credit and Financial Management (GSCFM) continues on the campus of Dartmouth College until Thursday.

Mark Woolnough, CPA, O'Neal Steel Co., Inc. will be sitting for the CCE exam tomorrow morning with most of his other second-year grad school classmates. Here he talks about how GSCFM prepared him for the exam, and how his role in credit has changed.

How long have you been in credit?

I'm a director of credit and I haven't really added up the years but let's just say somewhere or another I've had 25 years of involvement in credit, and the last 7 years that's all I've been doing. I'm very much involved in setting policy and working with sales on the big picture, looking at our portfolio and making sure we're hitting the right milestones, and sort of setting the pace.

How is what you're doing now different from what you were doing, say, 10 years ago?

I think there's a heightened realization that what we do really can impact the business, whether it's from impacting cash flow, whether it's to minimize risk, to even how we can make sales and find the right customer. Also helping sales know what baggage customers bring with them so that they can price accordingly. We're not so much viewed as a hindrance anymore. We're moving more and more into that partnership relationship.

What do you enjoy most about what you do?

It's a lot of diversity, and the business situations are what makes up that diversity. You don't know what you're going to get hit with next, and you have to maintain a level of creativity because what worked yesterday might not work today.

Are there aspects of the grad school program that allow you to exercise that creativity?

I think the most creativity comes about when you're dealing with your peers in this setting. Not only are you asking the people who are instructing us, but you're asking your peers what they would do in this situation, and that's helpful.

Stay tuned to NACM's blog for more updates from NACM's ongoing Graduate School of Credit and Financial Management (GSCFM).

First-year GSCFM student Eddie Olewnik of CertainTeed Corporation discusses how he got into credit, and eventually the graduate school program.

What moved you to enroll in the GSCFM program?

One of the things, personally and also for my company, is continuing development to make us more well-rounded and value-added employees to our company. My immediate boss who had been through it and highly recommended it, suggested this as a great way to improve my skills and to develop and be more valuable to our company

How long have you been in commercial credit?

I've been in credit 10 years.

How did you get into it?

I've been with CertainTeed 22 years and I went a roundabout way of getting into credit. I was actually hired as a graphic artist in the art department and then my computer skills allowed me to evolve and be migrated into our IT function and all the while I was going to school at night for finance and business management. Once I got that degree, there was an opening as a cash applications supervisor which I applied for and got into credit that way. It's kind of evolved from there.

I've heard similar stories before, but you're the first person I've met that jumped from graphic design to credit.

Yeah [laughs], but that just goes to show the continuing, evolving, developing process. It's really a prime example of that.

Was there anything in particular that you hoped to get out of the program? Either from an educational or a networking perspective?

I was going to say networking is definitely high on the list, especially those in the same industry that I'm in and there are plenty in this year's class, so I'm really happy about that.

How has the program been going so far?

One of the things is that being away from everything and away from distractions, even though you're not totally away from distractions because of technology, but it's the best way to focus, and it makes a better learning experience. I think the benefits outweigh the quote-unquote sacrifices of the personal, creature comforts.

We've still got a long way to go but it's been great. I've learned a lot since I've been here and I'm looking forward to continuing that and then over the course of the next year keeping in close contact with everyone in this class and being ready for next year.

NACM's Graduate School of Credit and Financial Management (GSCFM) is ongoing on the campus of Dartmouth College. Stay tuned to NACM's blog for more dispatches and student insights.

The NACM National Trade Credit Report (NTCR) officially launched its Preffered Partner Program at Credit Congress last week in Grapevine, TX.

The Preferred Partner program is designed to help eliminate some perceived technical obstacles to using and sharing information with the NTCR initiative and its database. The partners will be working with interested NACM members and their clients to optimize the interface and ease information extraction and reporting for the report.

The founding members of the program are Billfire, CreditPointSoftware, Cforia, CMS (Credit Management Systems Inc.), Forseva and High Radius. Workflow A/R also is a valued partner of the program.

The NTCR illuminates elements such as credit scores, trade payment data and oft-requested “days beyond terms” statistics among tools drawn from a growing database fed by more than 10,000 businesses and 1,000 trade groups nationwide. The report website (http://www.tradecreditreport.com) is now live and designed to educate potential users by providing information on various aspects of what is included in the reports, viewable samples, downloadable brochures and links to help find NACM affiliates selling the NTCR, among other features.

-Brian Shappell, CBA, NACM staff writer

International business and credit emerged as a key area of focus at the 2012 Credit Congress more than perhaps any year before. Among the growing popular track was a discussion lead by FCIB International Credit & Risk Management Online Course instructor Pam Thomas.

Thomas likened the credit policy to the foundation of a house, where the base needs to be strong. Developing a checklist of what the policy needs to address and identifying those key features – like the who, what and how much – are critical in creating that base strength. Being thorough and spending time defining what you are really looking to accomplish from the start are essential.

Thomas advocated a “customer first” mentality where sales and not rules should be the first priority. As the cornerstone of this philosophy, she promoted working more closely with the other departments around upcoming strategies and, thereby, be more informed about future business plans. She contended this helps to streamline the policy writing process.  That said, flexibility to account for various factors, like political changes and corporate shifts, certainly need to be taken into account.

“It’s not like a t-shirt – one size doesn’t fit all,” maintained Thomas.

-Darren Rudham, FCIB/NACM staff contributor

A three-person Executive Exchange panel that served as the first internationally focused offering of the 2012 Credit Congress may have drawn from diverse industries, but the theme of “do your homework… and a lot of it” emerged as a key take-away.

Larry O’Brien, CCE, ICCE; Gary Gaudette, CCE, ICCE; and Karen Hart, Esq. each agreed that managing the details on the front-end streamlines virtually everything thereafter. Hart particularly stressed the necessity to sign contracts early “before it gets hazy down the road.” She later added that “good customers can turn bad,” and it can happen in a hurry. So, in short, credit professionals should always know where to look for the customer's assets. O’ Brien and Guadette gave significant focus to the importance of staying on top of customers when requesting current financials.

“Push the guy on the other side because you probably aren’t the only one looking for it,” O'Brien said. “Ask for interim statements. Be persistent with them. Let them know that you aren’t going to let it go.” said O’Brien, who was named NACM Mentor of the Year during the June 11 Credit Congress General Session. Gaudette added the suggestion to “walk the line of being pushy with existing customers.”

But, it's not all about the financials and contracts, obviously. The panelists stressed the need to have conversations with customers and to go on international customer visits when possible. And, of course, do homework ahead of time, because knowing a strong amount of the details ahead of times can prove valuable in many ways.

“[Review] financials and bank info first, then set up a battery of questions to educate yourself on the missing info,” said O'Brien. “I usually have an idea of the answer beforehand but I want to see how they answer it to gauge trustworthiness,” said O’ Brien.

-Darren Rudham, FCIB/NACM staff

Creditworthiness and paying habits along sovereign lines was, as expected, a recurring topic of interest throughout FCIB's Annual International Credit and Risk Management Summit in Hamburg in May. While sources noted the importance of weighing conditions within each region of a country and relationships with existing customers in such places, FCIB delegates still craved information at the national level, and not just about often-discussed problem nations like Greece, Spain and Russia. Based on panelist, speaker and delegate observations, here is a rundown of some of the latest risk and big-picture economic trends to keep in mind for some less-discussed nations:

Argentina and Bolivia: Concern is growing among those who do business in these nations as the threat of confiscation, such as in Venezuela in the recent past, continues to rise. As such, the short-term credit market is rife with risk, and options like credit insurance are in short supply. The key phrase here is "wait and see."

Bangladesh: Emerging as a manufacturing outsourcing destination because of lower wage demands than other production powerhouses such as China and India.

Egypt: Major changes to the banking system are taking place post-revolution. Hence, even timely payments are often subject to delays of a week or more. One panelist noted that Egypt resembles the Turkey, now a sub-BRIC emerging economy of note, of 25 years ago. Granted, the process of change and reaching potential is more likely to come over decades, not months or years.

Hungary: Those doing business here generally do so on open account following a short period of COD-type arrangements, and characterized Hungary as one of the better-paying European nations at present. However, it often takes three to five days for clearing and gaining access to the payment.

Italy: This PIIGS nation fell off media radar somewhat, but is doing a good job of quickly executing reforms. However, its debt burden remains tremendous, and the nation could struggle more if well-publicized problems in Greece or Spain escalate further.

Netherlands: Held up as the example of how a nation can progress from perennial debtor (up to the late 1990s, early 2000s) to creditor over the course of a decade. Few are in better a position financially, save Germany, in the European Union at present.

Nigeria: Continues to be a high-risk market although, because of the oil trade, can be lucrative as well. Financial problems at Pipelines and Products Market Company (PPMC) remain a concern with possible spillover effect. Fuel shortages have been blamed on PPMC woes, and it is estimated the private market has exposure well exceeding $1 billion.

Slovenia and Croatia: Cash-flow problems for companies there have been an issue for years, but that seems to be abating somewhat.

Tunisia: Showing no improvement, payments are continually late or delayed. A wait of a month for banks to make the money available is not out of the question even when payment is made on time.

United Arab Emirates: The UAE actually benefitted from the Arab Spring revolts. Like parts of Turkey, Dubai now has become a bit of a trading center between more Islamic-tied business, including those operating under Sharia Law, and the west.

- Brian Shappell, CBA, NACM staff writer

The latest Credit Managers’ Index (CMI), now available at NACM’s website (www.nacm.org), finds an manufacturing and service sector swoons in play yet again in 2012 despite what was seen as strong potential at the onset of the year.

The main sense provided by the new CMI statistics is that consumers are feeling tentative. This is compounded by what NACM Economist Chris Kuehl intimates are significant secondary scenarios contributing to the “spring swoon:” those being continued concern over the European financial crisis, high domestic unemployment and inflationary pressure. Granted, conditions have not deteriorated to a point that calls for panic on the part of businesses and credit professionals.

“The gains made in the last year have largely been erased, and now the question is whether there will be a swift and significant comeback,” said Chris Kuehl, PhD, economist for the National Association of Credit Management (NACM). “The [CMI’s] drop from April to May is not quite as steep as the one from March to April, but the decline is worrisome nonetheless.”

The CMI report for May 2012 is available online now and contains full commentary, complete with tables and graphs. CMI archives may also be viewed online.

-Brian Shappell, CBA, NACM staff writer

The struggles of nations like Greece and Portugal have been well documented as the European Union’s 2011/2012 economic downturn rages on. And, like NACM sources based in the United States, experts in economics, finance and credit management attending FCIB’s Annual International Credit & Risk Management Summit in Hamburg last week all appeared focused on one area of the map: Spain.

At the onset of the conference, Ducroire Delcredere Country and Sector Risk Coordinator Ben Deboeck expanded upon points he made previously to NACM’s eNews noting the implications of a continued downward spiral in Spain would be “catastrophic,” and far outpace the red herring that has been the Greece story.  With demand down throughout the EU, regions having vast autonomy that is hard for the Spanish capital to pull back on and unemployment surging to near 25% with youth figures exceeding 50%, things look bleak in the third most important economy on the continent.

“Spain’s banking problems pose the largest threat to public finances," he said. “It’s hard to see where robust growth should come from in the coming years.”

However, all is not lost just yet. Deboeck mentioned that, like Italy, Spain has done a good job to date meeting austerity/economic reform targets. In addition, there are examples where high-debt nations that made massive changes to policy emerged strong eventually. To wit, few save for Germany are in better shape presently than the Netherlands, a perennial debtor nation even during periods of last decade that is now in somewhat of a catbird’s seat. In addition, Germany consumerism could play a role in healing some problems.

“Greed can be good, as long as it's German consumer greed; It would spike demand for products,” Deboeck said.

Meanwhile, panelists Silvina Aldeco-Martinez, of S&P Capital IQ, and Jane Johnson, of Atradius, cautioned over analyzing big-picture, “simple” sovereign ratings without looking into things like intra-country regional happenings as well as established trade relationships. There can be low-ranked countries from a sovereign ratings standpoint that have some well-performing regions, and vice-versa.

“Between the good, you can always find a little bit of bad,” said Aldeco-Martinez. “In between the bad, you’ll find a little bit of good.”

Brian Shappell, CBA, NACM staff writer

Note: Business and credit issues stemming from global economic conditions in Spain and many other nations will be on full display at this year's Credit Congress, including a June 13 education session dubbed "An Uncertain Global Economy and Its Effect on Credit," among many others. For more information on or to register for Credit Congress, being held June 10-13 in Grapevine, TX, visit http://creditcongress.nacm.org/.


 

Though outsourcing has its detractors in the United States and pro-labor countries because of protectionism and/or grim economic prospects, many international credit professionals at FCIB's Annual International Credit & Risk Management Summit in Hamburg still rely on a shared services center or have more regularly come to establish their own new roots working in one.

FCIB Board Member Martine Zimmermann, credit manager at F. Hoffman-La Roche in Switzerland, noted many in her industry have centers in places like India and some Eastern bloc countries. However, having faced uncertainties, with the most notable ones being salary increases and frequently changing staff, she admits some colleagues are not quite as sold on it.

"This is especially an issue in India, where its known escalation as a key emerging economy is forcing a change in demographics, or at least demand from those who want to move up a rung amid newfound wealth, or for some, a livable wage," one credit executive at the conference noted during a question-and-answer session that intimated it might not be the right time to outsource anything more to India. "But there are still plenty of Asian and Middle Eastern areas drawing attention for the same reasons India did a few years ago: significant cost reduction."

Meanwhile, FCIB Board Member Henk Swinnen, of Netherlands-based DSM Shared Financial Service Center, defended the use of shared services centers. He noted," let's say the average rate is 7000 euros—if you increase it 10% per year, it's still much cheaper than Holland, and northern Europe." He added that his company was not outsourcing, "we're offshoring," and noted that after 10 years of use, a shared service center has been very positive.

Katarzyna Wawro of Hitachi Data Systems noted that she has been working in a shared service center, adding that, like many others, that satellite office of a foreign corporation started small and expanded after finding success. "Initially, we only did simple processes. Now everything for managing credit is there and we are doing all collection for Europe, Canada and the U.S.," Wawro said.

Not every delegate at the summit was without serious concerns, however. For example, panelist Raul Davila of New York-based Bamberger Polymers was among those who said complications with moving functions of the business farther and farther away from the main credit department hub can easily arise and oftentimes be harder to fix when thousands of miles away, or when they're operating on significant time differences, or in a vastly different cultural landscape.

- Brian Shappell, CBA, NACM staff writer

Look for more coverage on FCIB's recently-concluded International Credit and Risk Management Summit in NACM's eNews, on NACM's blog, and in Business Credit magazine!

As would be expected, FCIB’s annual International Credit and Risk Management Summit kicked off with a lot of talk of the problems in the European Union. Notably, doomsday predictions about Spain and of a potential Greek exit from the Euro—which have been covered in NACM's eNews and blog—were front of mind. Also of particular interest during the conference, currently ongoing in Hamburg, was talk of conditions in the Middle East.

During a discussion looking at the region, and trade therein, one year removed from the Arab Spring uprisings, panelists surprised some in the crowd by outlining a perhaps overlooked fact about Middle East-based businesses and their proprietors amid the many perceived cultural differences: that there are actually more significant commonalities with so-called “traditional” businesses in the West than often depicted.

“We have exactly the same types of worries; we have the same concerns about the future, our kids, etc.,” said Ferda Efe, a senior director with Ashland Specialty Ingredients in Istanbul. “They’re really not that different from the rest of the world. We are all one world now, in the end.”

Additionally, panelists poked some holes in notions that Middle Eastern businesses, officials, salespeople or credit professionals are so culturally unique for taking the time to build the trust level of a relationship, having distaste for when someone overpromises but under-delivers and being dogged in negotiations. Among those three characteristics, are any of these things an American or European credit professional would NOT want?

Similarly, a presentation on Islamic banking laws/Sharia law compliance by Dr. Salman Khan generated interest, if not controversy at times, by showing that the traditional banking methods and products are similar. In fact, to become Sharia compliant with a credit agreement, a traditional product is held up as the model and stripped of things that are not considered compliant (the ability to make money off interest, things considered not in “good faith” or ethical, etc.). Additionally, Khan alleged there was “little meaningful difference between the conventional banking industry and the Islamic banking industry at present.” He characterized the differences as “cosmetic, theoretical and superfluous.”

“What has happened in reality, the facts are thus: the implantation in practice has diverged from theory to a large extent,” he told FCIB delegates. “You have a Sharia-compliant, not Sharia-based, industry paradigm. The Islamic banking and finance industry operates almost entirely from infrastructure designed for the conventional banking system. There has been no development of a tailored system. The point is Islamic banking has to fit into the platform, however that is even really possible.”

Brian Shappell, CBA, NACM staff writer

Through this week’s elections, the Greek populous and opposition politicians sent their anti-austerity message and thumbed their noses at those holding the purse strings behind the European Union and International Monetary Fund’s bailout of the debt-addled nation. Other members of the EU, mostly northern, aren’t taking it lightly—and the response could lead to even greater uncertainty.

Railing against the austerity demands allowed by incumbents, neither of the two major parties—New Democracy and Pasok in Greece—were able to come close to winning a minority. This situation will cause heightened uncertainty (disruptions) in the nation and beyond over the coming weeks. The politicians who made the gains railed against any ideas for alliances and have publicly voiced rhetoric about desiring more favorable bailout conditions.

Those footing the bill, notably the Germans, aren’t amused and have answered with thinly veiled threats about delaying the planned bailout payment to Greece scheduled for today (Thursday). Worst-case scenario has Greece falling out of the Euro by some time this summer, NACM Economist, Christ Kuehl noted.

But what is the big impact on the credit industry? Perhaps the answer, for the short-term, is to do nothing except keep an eye on things very closely in the coming days and weeks ahead. Remember the basics: know your customer.

Ben Deboeck, country and sector risk coordinator for Ducroire Delcredere (keynote speaker at FCIB’s International Credit & Risk Management Summit in Hamburg from May 13-15), noted that Greek unrest rarely comes as a surprise anymore. Deboeck pointed out that bond markets barely moved.

“Nothing too surprising happened yet,” the Belgian-based Deboeck told eNews. “So, immediate consequences of the Greek elections, as well as French elections, are rather limited I'd say. More important than Greece/France is probably what is happening in Spain, with the government finally moving towards action to tackle the banking problem”.

Going forward, however, Deboeck admits the impact of sustained volatility or an increase in volatility could affect consumer and business confidence and therefore eventually, credit.

- Brian Shappell, CBA, NACM staff writer

For more information on next week’s International Credit & Risk Management Summit, including Deboeck’s keynote speech, visit www.fcibglobal.com. Additionally, check out the NACM blog and future editions of eNews for on-site coverage from the event.