And finally, part two of an interview with second-year GSCFM student, Denise Moller, CBF, CICP. Moller was chosen by her classmates as the class of 2012's Best Student last night during the graduation ceremony, and will receive her award at next year's Credit Congress in Las Vegas.

I've said this to everybody, but it seems like the networking here is just as important as the educational sessions. What would you say the difference is between the networking atmosphere in the first year and the networking atmosphere in the second?

I think the first year you come here you really don't know what to expect. You meet people that are at all different levels in their career, and it's fortunate. I am not at the point at my career, say, where [current second-year GSCFM student and Immediate Past National NACM Chairman] Kathy Tomlin is, and it meant a lot to me to be able to look at someone that's further on in their career, and see what steps I could take in my career to reach my personal goals and my professional goals within the industry. So just speaking with her and other people, and the financial statements courses, were the highlight of this. Not that the others didn't serve a purpose, but if I had to say what was the most important for me I would have to say the networking and the financial statement classes.

Are you guys planning on staying in touch after graduation?

I do hope that through Credit Congresses we'll be able to meet up with people, and I know that over the course of the last year I emailed different people and texted different people, so I do hope that we'll be able to stay in contact.

I know that some people's companies are not as willing to send them to different things, and I for one am very fortunate to be able to participate in those, so I know I will see certain people. [Fellow second-year student] Julia Ungren, her company just acquired a company that's an hour away from me, and next week she's coming in for a meeting, so we're hoping to be able to get together, and hopefully we'll continue to do that.

Like I said, I'm not at the end of my career. I'm hoping to establish a network over the years because I feel that the things you pick up from other people are what make you a better person for your company, things that you might not necessarily learn on your own, but that you learn from experiences with others.

How long have you been doing credit?

I have been doing collections 26 years, but I have been doing credit for six, and I never really knew there was a huge difference just because this was my job responsibility and this is what they called it. Then when you get into other companies, what they're calling credit and collections are two different functions; there are the collection people and there are the credit people. I have worked for other companies that are much smaller compared to some of these others, and I never worked with companies where, you know, we're making these multi-milion dollar deals and we're getting these financials. I rarely, rarely see financials

So that has been one of the best things for me as far as NACM is concerned, being exposed to that so that I'm not so tunnel-visioned.

NACM thanks all of our first-year and second-year students for attending the Graduate School of Credit and Financial Managment (GSCFM) program! To learn more about how to apply for next year's program, click here.

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.

NACM's Graduate School of Credit and Financial Management (GSCFM) is currently ongoing on the campus of Dartmouth College. NACM Staff Writer Jacob Barron, CICP is also in attendance, and will be posting interviews with students throughout the program. Today's feature focuses on one second-year student's journey to grad school, and their relationship with their classmates.

What brought you to GSCFM in the first place?

Somebody within credit recommended that I come. They said that it was a good program, that it was a good thing to have the CCE, especially if you're looking to stay in credit. With [my company], they look at roles within finance as typically moving people in and out and giving people growth opportunities, but with credit being a more technical track, they really try to build you, but to build you within your own technical track.

One way to grow people is to give them other opportunities, but if you've decided that this is where you want to focus, then the only way to grow you is to give you extra exposure and different experiences within that.

Is there any one aspect of the GSCFM program that's been especially helpful for you?

I think the negotiation training will be, but from a networking perspective, and just working with people in a team...I'm sure you probably hear this from everybody that they have a really good class, but I think we have a really good class from the perspective of people working together on things. We had all 12 of us there studying [for the CCE] last night and [one class member] has been really good at just getting everybody together on a monthly basis to go through the stuff. So I think from a relationship standpoint it's been really helpful.

Do you stay in touch with your classmates throughout the year?

Yes, but most of it hasn't been from a work perspective. We've definitely kept together as a group from a studying perspective, to make sure that we're all on track.

What advice would you give to credit professionals considering the program?

I guess some people have to sell it, and in order to make that happen they need to understand the value of it, which I didn't have until I came here last year. When I started the program last year I did send an email out to a couple people I knew and say “this is a good program.”

Stay tuned for more interviews throughout this week and next. To learn more about NACM's GSCFM program, click here.
 

More than 30 students arrived on the campus of Dartmouth College yesterday for the 71st edition of NACM's Graduate School of Credit and Financial Management (GSCFM). A welcome banquet was held last night, as first-year students got to meet their colleagues and second-year students reunited with their classmates, and the comprehensive educational sessions began this morning.

This year's class includes an array of senior level professionals from different industries and backgrounds, each of them seeking an enhanced knowledge of commercial credit, along with an expanded professional network. Classes are taught by leading experts from industry and academia, and topics range from advanced negotiations to financial statement analysis.

GSCFM represents the peak of NACM's suite of educational opportunities. Stay tuned to NACM's blog all this week and next for updates and interviews with students.

-Jacob Barron, CICP, NACM staff writer

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

It seems to go without saying that information is perhaps the best weapon a credit manager can have in ensuring payment in virtually any industry. It would also seem that most would take getting accurate and useful information would be treated as importantly. But often, it isn't even in situation where it screams out as a necessity (Re: legal documents and statutes).

During a Credit Congress session with Greg Powelson, director of the Mechanics Lien & Bond Service, and Karen Hart Esq., of Bell Nunnally, pounded home the need for credit professionals to not just do homework (a common theme at Credit Congress...see previous story), but to do it the right way.

Powelson noted that he is often approached by clients who e-mail him articles talking about laws and statute new or analysis they found on some random Internet site that are out of date or are simply not accurate, and maybe never were.

“There's a reason free stuff is free a lot of the time. There's no obligation to keep it up to date,” Powelson said.

Hart quipped that credit professionals need to be sure to go to reputable sources, such as Westlaw, or perhaps “pulling the books”/hard copy for the statutes.

“Laws are changing quickly; legislatures are active. Just because it is on the internet doesn't mean it's right,” Hart said. “It might be. But the minute you have a problem, it's going to cause you a lot of heartburn.” In short, it's worth doing things right early in a process, even if that means having an attorney looking at a contract in many instances, whether a one-off or a standard document.

-Brian Shappell, CBA, NACM staff writer

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

NACM National Chairman Marshall Kahn, CCE, kicked off the second full day of the 2012 Credit Congress with news that NACM enjoyed its second consecutive year of profitability after a couple of lean years during the deep U.S. and global recession.

Kahn noted that membership remains well above 15,000 at 2011's end, yet reiterated the importance for members with potential for national and board of directors to step up to become a board volunteer in the near future. And though speaking about the importance of Washington advocacy and calling your lawmakers on behalf of issues important to credit professionals, his sentiment about taking action drew parallels on other key issues for the association and profession, such as membership recruitment.

“Please don't assume that others will carry the burden of acting,” Kahn said. “Each of you plays such an important part through participation.”

Among those showing the way in that regard were affiliates MACM Midwest, NACM Upstate New York in Buffalo and NACM Wisconsin; and each of which received a 2012 membership award.

Kahn also invoked a long-standing theme at NACM: Strength in numbers. It's a theme speaker/author Garrison Wynn also drew upon during his presentation. The former comedian energetically delivered a speech about the need for credit managers to prove competence and trustworthiness in credit departments, all while peppering in a healthy dose of humor for the Credit Congress delegates. And, as he put it, trust is largely built on two things; compassion and competence.

And while teamwork and strength in numbers matters, Wynn also stressed to delegates the need to, as an individual, act naturally. Every winning team needs different personalities, even employees that could be labeled as negative (they might be the one that sees a problem in advance that some more optimistic employees might miss).

“The reality of things is we have to be honest about who we are...voice what you know,” Wynn said.

-Brian Shappell, CBA, NACM staff writer

(Note: Check back for more on-site coverage from 2012 Credit Congress throughout the week).

NACM's Credit Congress kicked off this morning with a rousing, inspirational presentation from Jamie Clarke, an author, motivational speaker and adventurer in the purest sense of the term.

Clarke noted that his roots as an adventurer started with his mother. “She gave me books, and around age 13-ish I accidentally start to read the books,” laughed Clarke. “I began to read the stories and in these adventurous tales they came home changed and I said 'I think I want to be an adventurer.'”

Eventually Clarke's accidental reading soon became a habit, and he stumbled into one goal in particular that became his focus. “So I grabbed the encyclopedia and learned what is mountaineering and I found this one mountain,” he noted.

That mountain, as one could guess, was Mount Everest.

While his goal was now clear, Clarke's actual journey was a bit more complicated. Years later, when it came time to actually make the trek to the top of the world's highest mountain, he faced a great deal of adversity. For example on his first attempt, “we failed in our attempt to reach the summit,” and then he tried “three years later and we didn't make it,” this time only coming about 160 meters shy of the summit. “It's a block and a half,” said Clarke.

Then in his third attempt, having never succumbed to fear of failure or loss of purpose, Clarke made it to the top of the mountain that had so fascinated him years before. “Fear is manifested in any kind of adventurer,” he noted. “Fear of judgment, all those things in our lives that we're concerned about, sometimes they create paralysis and prevent us from doing anything.”

“That intrigues me,” said Clarke. “Why is that fear there?” And it was at the top of Everest that he found that simply asking that question, and really considering it, makes it so that “it's no longer as scary as we thought. It was here that I learned how to manage that fear.”

In a way, fear became a flag, or a signifier for Clarke. “Fear is a companion, and fear also brings that energy,” he noted. “There's a little worry that maybe I won't measure up, and that fear is a good indicator that maybe you should give it a whirl.”

Now having ascended the famed Seven Summits, including Everest on multiple occasions, as well as becoming the first person since the middle of last century to cross the Arabian desert by camel, Clarke's endeavors served as a potent metaphor for attendees looking to ascend their own educational peaks, to the heights of continuing credit education. “On the other side of that fear is freedom,” he said. “Freedom to build the life we want

Stay tuned to NACM's blog for more updates from this year's ongoing NACM Credit Congress!

-Jacob Barron, CICP, NACM staff writer
 

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

In what came as a shock to perhaps only the winner herself, Regine Hilgers, CICP, EMEA credit controller based in Germany for Ashland Specialty Ingredients, was presented with FCIB's Service Development and Growth Award as the Annual International Credit & Risk Management Summit came to her native Germany in May. Flanked by the first winner of the award – Mannes Westhuis, CICP, of Bierens Collection Attorneys – as well as NACM's Robin Schauseil and FCIB's Noelin Hawkins; the seemingly tireless Hilgers accepted the distinction designed to recognize the valuable contributions volunteers are making to further grow and develop FCIB’s member services and to encourage more people to serve. The award program is a way to thank and honor FCIB members who, by their demonstrated commitment and example, inspire others to engage in volunteer service.

Westhuis, the first ever recipient in 2011, said he hopes the achievement by himself and Hilgers – as well as Luis Noriega, who was the first North American-based recipient last year  -- helps inspire credit professionals to do more to support the profession and FCIB as an organization.

"The award says you can combined the 'what's in it for me' – getting in touch with leads, customers – with social and professional responsibility,” Westhuis told NACM. “It can go hand-in-hand, together. If you don't support an organization like FCIB, the credit profession won't grow and won't get better."

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