Thursday, August 23, 2012 by
(Press Release) Pacific Northwest small-and-medium sized business owners will have more opportunities to boost sales through exports because of increased presence by the Export-Import Bank of the United States (Ex-Im Bank). Today, at a Global Access for Small Business forum, Ex-Im Bank Chairman Fred P. Hochberg and Senator Maria Cantwell (D-WA) announced the opening of a new Ex-Im Bank office in Seattle, Washington.
This is the third opening of four new regional export finance centers this year by Ex-Im Bank in its effort to assist local businesses in improving their export sales. The center will provide enhanced access to the Bank's products and services, and it will assist local businesses in obtaining export financing to grow foreign sales.
"The Export-Import Bank supports more than 83,000 jobs at more than 100 businesses in Washington state," said U.S. Senator Maria Cantwell. "We know that when we become exporters we increase jobs in Washington state. This new office is a tool for Washington businesses to increase exports and sell Washington products around the world."
John Brislin will serve as the Bank's Seattle regional director, and the new office will be located in the U.S. Export Finance Assistance Center at 2001 6th Avenue, Suite 2600 in Seattle, Washington. Potential exporters may call (206) 728-2264 for more information. This year, Ex-Im Bank has opened regional centers in Minneapolis, Atlanta, and Seattle and is scheduled to open an office in Detroit this fall.
Tuesday, August 14, 2012 by
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/).
Tuesday, June 26, 2012 by
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.
Wednesday, May 30, 2012 by
The Senate Judiciary Committee approved a bill last week that would aim to make it easier for small businesses to properly reorganize.
S. 2370, the Small Business Reorganization Efficiency and Clarity Act, was reported without amendment on a unanimous voice vote during an executive business meeting. As reported in last week's edition of NACM's eNews, in addition to imposing a number of interesting research requirements on various government agencies, the bill would also double the time by which a court must confirm a small business reorganization plan, from 45 to 90 days, and give courts the authority to compel a debtor to self-identify as a small business.
A reorganization process specifically designed for small businesses already exists within the Bankruptcy Code, but debtors can choose whether or not to use it, regardless of how small they are. S. 2370 gives courts the authority to dismiss a debtor's case for failing to identify itself as a small business debtor. NACM suggested such a change in its previous work with S. 2370 sponsor Senator Sheldon Whitehouse (D-RI).
In remarks made during the bill's markup, Whitehouse described S. 2370 as a modest group of agreed-upon amendments that gives courts and debtors more time to confirm a plan, while also eliminating "catch-all" reporting requirements that served no useful purposes. Cosponsor Senator Chuck Grassley (R-IA) and Senator Tom Coburn (R-OK) agreed with Whitehouse's characterization of the bill, with Coburn describing it as a good, common sense compromise.
The Senate is in recess until next week. It remains unclear when the full chamber might take up S. 2370, or if the House Judiciary Committee has any plans to take up a similar bill, or use the legislation as a vehicle for other related purposes.
Stay tuned to NACM's eNews for ongoing updates on this bill and NACM's other legislative priorities. If you have any questions or comments about NACM's Advocacy program, email Jacob Barron, CICP at email@example.com.
- Jacob Barron, CICP, NACM staff writer
Wednesday, May 16, 2012 by
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!
Friday, March 30, 2012 by
If there was any federal agency that lawmakers were tripping over themselves to help, it’d be the Small Business Administration (SBA). Its close connection to the nation’s job creators is an easy source of political points for any interested legislator.
Yet, the SBA’s budget for Fiscal Year 2013 has recently received scrutiny for the agency’s skyrocketing cost of loan subsidies. At a hearing in the Senate Committee on Small Business and Entrepreneurship, Ranking Member Olympia Snowe (R-ME) grilled SBA Administrator Karen Mills on her agency’s ability to handle these increases.
“With our country’s economic recovery from the recent recession still lackluster at best, we must ensure that the SBA can be the catalyst small businesses require to get Americans back to work,” said Snowe. “That’s why it is critical the SBA establish a clear plan to reduce the subsidy costs in future years.”
From 2005 to 2009, the SBA’s flagship 7(a) and 504 loan programs operated at zero subsidy, meaning they paid for themselves through fees without any need for taxpayer support. In each of FY 2010 and FY 2011, however, the SBA required $80 million to subsidize these programs due to increased defaults, with subsidies ballooning to $350 million this year. “Looking at historical data, subsidies compared to the overall SBA budget continue to get higher every year, accounting for 12% of the total SBA budget in FY 2011; 26% in FY 2012; finally reaching an alarming 37% in FY 2013,” Snowe added. “This is the paramount issue in the Agency’s FY 2013 budget, and I urge the SBA to take these concerns seriously.”
It wasn’t all bad news for Mills, as Snowe tempered her concerns with effusive praise for Mills’ efforts to reduce the SBA’s administrative costs. “I have said that all Federal agencies, including the Small Business Administration, must tighten their belts during this difficult economic time, and I commend Administrator Mills for her effective management in this regard,” said Snowe. “Agency-wide overhead costs are largely held steady or reduced in this year’s budget request. Karen is demonstrating that the Federal government can and must do more with less, and I appreciate her leadership.”
Jacob Barron, CICP, NACM staff writer
Wednesday, February 22, 2012 by
It’s been a long, hard-fought trip to the finish line, one wrought with political and labor interests, even though a free trade agreement FTA between the United States and South Korea was forged some five-years ago. But now, barring a threatened yet unlikely veto by South Korea opposition lawmakers, the FTA is set to go into effect in a few weeks.
U.S. Trade Representative Ron Kirk and South Korean Minister for Trade Park Tae confirmed that the US-South Korea FTA will be fully in play on March 15. The deal's value is estimated at nearly $90 billion. Domestic manufacturers, especially in the automotive and agricultural products industries, stand to gain levels of market access with the Asian trade partner never realized before within said industries. Approval of the FTA with South Korea as well as Panama and Colombia had long been seen as important to boost business for U.S.-based companies feeling the pinch of lower domestic demand. The FTAs, in theory, will significantly expand U.S. exports in those markets, help small businesses and lower tariffs on American goods. The Korean FTA was widely regarded as the most significant of the three new U.S. pacts and will be the first to go into effect.
(Note: More extensive background on the fight to establish the U.S.-South Korean FTA will be featured in this week's NACM eNews, available Thursday afternoon at www.nacm.org).
Brian Shappell, NACM staff writer
Thursday, January 19, 2012 by
U.S. production should continue to move forward with solid growth through much of 2012, largely on the strength of the automotive and aerospace industries, says a manufacturing trade association economist and recent study.
Dan Meckstroth, chief economist and director of research for the Manufacturers Alliance for Productivity and Innovation (MAPI) said the organizations latest measurement of the overall business outlook was essentially unchanged between November and December. Meckstroth characterizes this as an “extremely optimistic” view for continued expansion over the next three-to-six months. Granted, small businesses are somewhat less so because of its dependence of real estate values as a primary asset in most cases.
Meckstroth noted a “major driver” for U.S. manufacturing will be necessary capital spending on the part of most U.S. businesses because so much capacity shed during the downturn needs to be replaced. Other significant drivers for manufacturing, according the recently unveiled forecast, are tied to aerospace and motor vehicle/parts production, said Meckstroth, who recently appeared at a National Economists Club event.
(Note: For extended coverage of this topic, check this week's eNews compilation available late Thursday afternoon at www.nacm.org).
Brian Shappell, NACM staff writer
Tuesday, January 10, 2012 by
In what could catch the attention of municipalities struggling with entitlement costs throughout the nation, a judge has approved a deal between public employees and a small Rhode Island city that was largely encouraged by a Chapter 9 filing in mid-2011.
U.S. Bankruptcy Judge Frank Bailey has approved a deal forged by Central Falls and many of its retired employees to voluntarily reduce the level of benefits they are receiving. The judge also approved a new collective bargaining agreement where current police and fire employees there are taking a haircut on future benefits.
Retiree benefits/pensions obligations were the overwhelming cause for Central Falls to file in 2011 as communities throughout the country fret about escalating costs for retiree health care and pensions. Though unable to negotiate concessions beforehand, the Chapter 9 inspired public workers and retirees to take significant voluntary cuts because it, in theory, means they will keep more than if the benefits were slashed to the proverbial bone during the bankruptcy reorganization. It is estimated the newly forged deal will help the city save more than $1 million this year, which has been characterized as critical for Central Falls to resume any semblance of operational normalcy.
With more cities struggling with a host of financial challenges, most significantly entitlements, the issue could likely become increasingly common in the 26 states that allow municipal bankruptcy through Chapter 9 filings. While few believe Chapter 9 will become an epidemic, it certainly bears watching given the state of budgets out there.
“There are big problems for a lot of these municipalities, especially the collective bargaining agreements that have built in generous retirement obligations,” said Bruce Nathan, Esq., of Lowenstein Sadler PC. “I think you will see this continue and increase well beyond this year. If state laws can be complied with, why wouldn’t [struggling municipalities] do it if this is an option for them to deal with their financial problems?”
(Note: More on this topic and the court cases of greatest important to credit professionals will be featured in the upcoming, February edition of Business Credit Magazine. Look for it in about two weeks).
Brian Shappell, NACM staff writer
Wednesday, November 23, 2011 by
Amid a surprisingly chaotic scene that puts the U.S. Congress’ bickering to shame, South Korea’s parliament voted overwhelmingly to approve a U.S.-South Korean free trade agreement (FTA) that has been in the works for some five years.
Though a significant portion of the voter base is against the measure in fear of job losses or economic hits, South Korea’s ruling party called a hasty, surprise Wednesday vote on the FTA, one started during the Bush Administration and signed by President Barack Obama about one month ago. One opposing politician even let off some form of tear gas or pepper spray in parliament’s chambers, reports indicate. The deal’s value is estimated at nearly $90 billion.
After years of languishing and political one-upmanship on both sides of the political aisle, the pact was among three Free Trade Agreement (FTAs) passed by Congress in October. Approval of the FTAs with South Korea, Panama and Colombia has long been seen as important to boost business for U.S.-based companies feeling the pinch of lower domestic demand. The FTAs, in theory, will significantly expand U.S. exports in those markets, help small businesses and lower tariffs on American goods.
Getting the measure through though saw U.S. supporters and opponents alike coming from both political parties as the idea of job protectionism divided lawmakers more on regional lines than the usual partisan ones. In South Korea, the divisions seemed to come from a two groups: big business versus the middle class and working poor. Some paint the deal as more beneficial to the United States and more of a move for the sake of appearances and posturing on the part of Seoul.
The Korean vote was seen as the last significant hurdle to implementation of the FTA, widely regarded as the most significant of the three new U.S. pacts.
Brian Shappell, NACM staff writer
Wednesday, October 19, 2011 by
The Federal Reserve’s periodical roundup of economic conditions in each of its 12 districts throughout the nation finds that, in most areas, growth is continuing but at a notably weaker pace than the same time last year. Additionally, the word of the day appears to be “uncertainty.”
The Fed’s Beige Book roundup finds growth best characterized as “modest or slight,” with a decidedly slower pace than in recent months or early fall 2010. Though not every industry sector or district is reporting bad news, conditions are not nearly as positive as had been expected because of long-time “expert” predictions that, by this point, the economic recovery would be in or near full-swing.
Consumer spending, overall, was up for the recent six-week period ending in early/mid-October. However, much of that was driven by auto sales and tourism increases. Businesses also increased spending in most districts, with areas of construction and mining equipment as well as auto-related products setting the pace. Yet, in a continuation of the good news-bad news theme, Fed contacts noted particular “restraint in hiring and capital spending plans:”
Manufacturing, long the proverbial bread-winner among all industries during the slow recovery period, showed improvement from the declines reported in the last two Beige Book periods. Again, the auto producers performed best.
On the credit front, a lengthy period of small improvements in credit conditions are ceding in some areas for anyone not in the very top tier of borrowing. That said, demand remains stunted anyway, especially in districts like Chicago and Kansas City. Also important to those two districts were declines in the agriculture sector. While yields have not fallen to shortage level, almost unilaterally, yields are noticeably down for this time one year ago. Part of this is fallout from unpredictable and/or uncooperative weather earlier in the year, especially in the central-south part of the country.
Real estate, unsurprisingly, was changed little as activity remains at low, weak levels.
Brian Shappell, NACM staff writer
Friday, October 14, 2011 by
The House Ways and Means Committee approved a bill yesterday, H.R. 674, that would repeal the 3% withholding tax. The legislation is expected to reach the House floor for a full vote before the end of the month.
Should the bill be signed into law, it would eliminate a provision that requires all local, state and federal entities to withhold 3% from their payments to contractors starting in 2013. H.R. 674 was approved by voice vote, a procedure typically used for measures that are non-controversial and enjoy widespread bipartisan support.
“Today we have taken an important step in doing what Americans have called upon Congress to do: work together in a bipartisan way to encourage job creation,” said Rep. Wally Herger (R-CA), the bill’s original sponsor. “The 3% withholding tax stands in the way of jobs because it threatens to constrict the cash flow of thousands of small businesses that provide goods and services to federal, state and local government agencies. Permanently repealing this tax is an important step toward giving these businesses the assurance that it’s safe to invest, grow, and hire more workers.”
“We’re looking for actions Congress can take to create jobs right now. This is a win-win. I urge all members to support this legislation,” he added.
As reported in yesterday’s edition of NACM’s eNews
, the 3% withholding tax was originally enacted as part of the Tax Increase Prevention and Reconciliation Act (TIPRA) of 2005. While its goal was to address the nation’s tax gap, representing the annual $345 billion in taxes legally owed but left uncollected, the provision would ultimately do more harm than good, wreaking havoc on the cash flow of companies that do business with government entities.
Prior to the markup, NACM sent a letter in support of H.R. 674 to Ways and Means Committee Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI). NACM has opposed the 3% withholding requirements since its enactment and welcomes the repeal bill’s progress.
For more information on NACM’s fight to repeal the 3% withholding tax, click here
.Jacob Barron, CICP, NACM staff writer
Friday, September 16, 2011 by
One provision in President Barack Obama’s recently released American Jobs Act would further delay the 3% withholding tax on government contracts by another year. GOP lawmakers, and a coalition of business advocates, are pushing him to go a step further, to a full repeal.
The 3% withholding tax is currently set to go into effect on all government contracts worth more than $10,000 in 2013, after a series of delays since its enactment in 2006. A full repeal has remained elusive however, as eliminating the withholding requirement from the books would keep an estimated $11 billion from the nation’s ailing Treasury. Nonetheless, Republican officials are using the newly proposed delay to mount a new push for a full repeal.
"The President must know how damaging the 3% withholding rules are, as his Jobs Act calls for an additional year delay in its implementation. But if it is so harmful to small business—which it is—why not repeal it outright?,” asked Rep. Mick Mulvaney (R-SC), chairman of the House Small Business Committee’s Subcommittee on Contracting and Workforce. “Majority Leader Eric Cantor has signaled that the repeal of this job-crushing withholding requirement will be on the House agenda this fall. I hope that the President & Senate Majority Leader Harry Reid (D-NV) will also support this repeal.”
“The 3% withholding tax would hurt small business cash flow and job growth. Delaying its repeal only continues uncertainty for small business contractors. Permanent repeal will provide more certainty and help create jobs now,” he added.
Joining Mulvaney at a press conference this week was Rep. Wally Herger (R-CA), sponsor of H.R. 674, a bipartisan bill that would repeal the 3% withholding tax and has garnered 241 cosponsors. “The 3% withholding tax will harm small businesses as well as state and local governments. We need to get it off the books once and for all to avoid placing small businesses, jobs across America and our economic recovery efforts at greater risk,” said Herger. “I look forward to working with House Leadership to ensure that we get this bill passed to help our economy.”
NACM has supported a full repeal of the 3% withholding tax since its enactment, and is a proud member of the Government Withholding Relief Coalition (GWRC)
, which continues to lobby for relief from this burdensome tax. Stay tuned to NACM’s blog
and NACM’s eNews
for further updates on the repeal effort.Jacob Barron, CICP, NACM staff writer
Thursday, September 1, 2011 by
The Credit Managers’ Index (CMI) for August hasn’t been this low in more than a year—falling from July’s 53.9 to 52.7—and is now tracking at levels last seen in 2008–2009. “The news this month is not good and comes as no shock to anyone who has been tracking the data coming from all directions,” said Chris Kuehl, PhD, economist for the National Association of Credit Management (NACM). If there is any good news, it is that the combined number has not yet fallen below 50, the threshold separating contraction from expansion. But the index of unfavorable factors fell to contractionary levels. The last time the unfavorable index was this low was in the 2009 period when the recession had just started to show signs of easing. The fact that the data was not worse this month than it was is probably worth noting as most of the other indices released in the last few weeks suggested there might have been an even steeper decline.
Kuehl said the best news in this month’s data is found in the favorable index. Here the data barely changed, going from 58.9 to 58.1. This is still much lower than most of the last year, but the precipitous collapse that took place in the companion part of the overall index did not take place here. There was even some improvement in the amount of dollar collections, while declines in the sales category were slight, from 60 to 59.2. “The most interesting aspect of the data is that extension of credit actually improved in the middle of all this gloom and doom. The fact that favorable factors have improved slightly or remained stable provides some hope that conditions will improve in the coming months,” said Kuehl. “There is still demand and business progress, but the crisis in the overall economy has been putting pressure on the finances of many companies.”
Upon examining the unfavorable factors, it is striking that the problem is primarily one of sudden business stress and failure. The biggest declines were in accounts placed for collection and dollar amounts beyond terms. These are signs of real distress among customers, but it is equally significant that filings for bankruptcies did not increase dramatically and there was not an acceleration in the rejection of credit applications. The divergence in these factors is particularly interesting and informative. While speculative, one could look at this data and conclude that companies got in trouble in the last month or so because of a sudden drop in business after anticipating better times. Evidence from earlier in the year showed that companies across the board were anticipating better days in the second half of the year and many were trying to prepare for this with expansion plans. This anticipated economic growth did not come to pass and these companies swiftly got into trouble.
If there is a small silver lining to all this, it is that the level of bankruptcies has not risen at the same pace. That means one of two things. If the economy gets back in gear in the next couple of months, companies struggling now will have some time to gain control of their budgets and be able to avoid sliding further toward collapse and ultimately bankruptcy. If the economy doesn’t catch fire to some extent in the near future, the bankruptcy rate will start to climb and the index will reflect it. The other mildly encouraging piece is that the rate of rejection for credit applications was not markedly different from last month. There is still credit available to customers that are bucking the trend. This is not like the situation at the end of 2008 when the entire credit system came screeching to a halt and even the best of companies were denied access.
The data this month is mixed but with a decidedly downward slope. The CMI remains in expansion territory, but is holding on to that status by a thread. There may be another month of essentially flat growth in store, but after that the economy will begin to tilt in one direction or another. If there is no real improvement in some of the fundamentals, the index will reflect continued deterioration. There is some resilience evident in the index numbers as the favorable categories are holding their own. The sectors that will drag the whole index further under include those that are most dependent on the decisions that companies made when they were expecting some solid economic growth by now. The credit requested made sense at the time, but now there is some serious concern as far as what happens next if the growth rate remains mired in the predicted 1% to 1.5% region.
The online CMI report for August 2011 contains the full commentary, complete with tables and graphs. CMI archives may also be viewed online.
Friday, August 5, 2011 by
The big three U.S.-based credit ratings agencies have been slow, to say the least, in handing out upgrades of credit ratings or outlooks for anyone not included in the BRIC nations (Brazil, Russia, India, China) since they were universally lambasted for their poor analysis and risk assessment in the run-up to the global economic downturn. That what makes the late-week gushing over Panama by Moody’s Investment Services all the more noteworthy.
Though leaving the nation’s credit rating unchanged, Moody’s upgraded Panama’s outlook to positive from stable. Perhaps more significant was the agency’s statements lauding Panama’s economic evolution, centered largely on the $5.25 billion Panama Canal expansion project. Said Moody’s, “the Panamanian economy has continued to show remarkable and enduring dynamism, and is well positioned to grow at rates above its potential thanks to the expansion of the Panama Canal and the government's ambitious efforts to improve and modernize the country's infrastructure…Panama continues to be one of the fastest growing and diversified countries in the Baa rated category.”
As discussed in a Selected Topics story in the November/December edition of Business Credit Magazine, the expansion of what had become an antiquated pass-through will allow much larger cargo ships, among other vessels, to travel through canal, opening up much faster and more direct shipping options to and from many ports, especially in the United States. To wit, the biggest benefit to domestic exporters and those abroad is cheaper shipping costs for reasons including less fuel costs because of shorter routes from the biggest ships, the lessened needs for larger ships to stay in ports longer to get a full load and competition largely absent from the market at present. Additionally, the expansion should spur more choice and variety as far as ports that realistically can be used. With an open, expanded canal, ports such as Savannah, New Orleans and Houston become much more important.
Additionally, it expands capabilities of small business exporting efforts routed from the West Coast ports to access emerging economies on the eastern shores of Latin America. This includes the pearl of economies in that part of the world: Brazil. The nation was ranked 10th among nations receiving exports from U.S. companies, taking in $41 billion in products in 2008, according to the U.S. International Trade Commission and a July report from left-leaning Washington think tank the Brookings Institution. And that number is expected to rise among nearly all predictions as Brazil’s growing appetite for products emanating from the transportation equipment industry as well as consumer products aimed at its newly emerging local middle-class and tourists en route there for the 2014 FIFA World Cup (soccer) and the 2016 Summer Olympics.
Brian Shappell, NACM staff writer
Monday, July 18, 2011 by
Small businesses could face severe regulatory challenges as the U.S. continues its effort to converge its generally accepted accounting principles (GAAP) with International Financial Reporting Standards (IFRS).
The process of creating a singular global accounting standard has been ongoing for several years now, but at a recent roundtable hosted by the U.S. Securities and Exchange Commission (SEC), no matter how regulators choose to go about imposing the new standard on the nation’s public companies, the smaller of them will face technical and financial difficulty.
“I see no benefit to IFRS at all,” said Shannon Greene, a panelist at the roundtable and chief financial officer and treasurer of Tandy Leather Factory, Inc., a small leather and leatherworking supply company based in Fort Worth, Texas. “All it’s going to do is cost us money.”
Greene noted that while her company is looking to expand internationally, as many other small companies are in a time of booming export opportunities and low domestic demand, there will be no real way to escape the cost of implementing and abiding by the new standard. “I think it’s just going to be painful for a small company,” she noted, adding that while regulators often cite increased comparability as a benefit afforded to companies that switch to IFRS, Tandy Leather Factory’s unique position and industry renders this benefit largely non-existent. “For comparability purposes, we don’t really have any competitors,” said Greene. “I don’t even get the benefit of my financial statements being comparable to someone else’s financial statements for investment purposes, for banking purposes, for capital investment purposes, et cetera.”
“Anytime you ask us to spend money that doesn’t help us sell more product, you get a lot of flak from the senior management team,” she added. “I don’t have anything really positive to say from our company’s perspective. Personally, I get it, but I just can’t see how we get from where we are to where we want to be.”
Jacob Barron, NACM staff writer
Friday, July 1, 2011 by
As noted an eNews story last week (link at bottom of story), a small business trade association took issue with the U.S. Small Business Administration’s declaration that nearly 23% of government contracting dollars went to small businesses, calling the statistics “misleading.” In a subsequent interview with National Association of Credit Management, which occurred after this week’s eNews deadline, the SBA is firing back saying its statistics are legit.
The new federal “Scorecard” on small business contracts for FY2010 included statistical findings that nearly $100 billion, 22.7% of all federal contracting dollars, went to small businesses. However, the American Small Business League (ASBL) alleged that 61 of the top 100 recipients of the so-called small business federal contracts in 2010 were, in reality, large firms. The association calls the Obama Administration’s assertions “dramatically inflated” and alleges some of the “small business” recipients in FY2010 included Lockheed Martin, AT&T and Hewlett-Packard.
Michele Chang, SBA’s senior advisor for government contracting and business development, told NACM that agencies have gone through painstaking processes to ensure the data is “clean” and free of data anomalies such as “miscoding.” She said SBA stands by the 22.7% number originally released and said an allegation from ASBL that only 5% of those receiving federal contracts were, in reality, small businesses simply was “not true.”
“We have a comprehensive data-quality process that ensures accuracy,” said Change. “We’re confident this is the cleanest data we’ve had and the cleanest it can be.”
However, when asked if Lockheed Martin, AT&T and Hewlett-Packard received money classified under small business allotments, Chang said she “can’t comment on them specifically.” Change noted that, sometimes, a smaller firm awarded an ongoing contract sometimes expands and becomes a mid-sized or large business or gets bought out/taken over by a larger firm; but she placed the onus on the businesses to report the happenings to SBA within 30 days for classification. When pushed, Chang admitted none of the aforementioned businesses would have been considered small business for a number of years and again declined to comment on whether any were classified among small businesses for the purpose of this year’s scorecard.
The original eNews story posted Thursday is available here.
Brian Shappell, NACM staff writer
Wednesday, June 15, 2011 by
Though overall business optimism has appeared to remain on a small upswing or at least level, that of small businesses continues to wane as the slow economic recovery has repeatedly failed to demonstrate signs of a quick acceleration. Meanwhile, some of those same small business owners take issue with more recent mainstream media and analysts’ suggestions that credit has been easier to come by for companies.
This week, the National Federation of Independent Business’ (NFIB) Small Business Optimism Index slipped for the third straight month in May by a slight 0.3 points. NFIB characterized the present index reading (90.9) as that of a ‘recessional-level reading.”
The results corresponded with the decline found in the Wells Fargo/Gallup Small Business Index for the first-quarter, released earlier this spring, which found small business owners positions shifting from slightly-to-moderately positive to neutral.
Wells Fargo followed that up this week with a report that small businesses still are finding it exceedingly difficult to access credit with any kind of favorable, or even perceivably fair, terms. The firm’s study found that at least 30% of responding company representatives found credit hard to come by during the last year, and 36% believe it will be increasingly difficult to do so. Despite economic growth, albeit tepid, conditions changed little in the Wells Fargo study from the first-quarter to the second-quarter. The peak in actual difficulty was slightly more than 35%, reported in Q1 2010, according to Wells Fargo statistics.
Businesses did, however, get at least one piece of somewhat good news this week…sort of. The Producer Price Index (PPI) statistics for May showed a 0.9% increase, mostly tied to increases in food and energy costs. The good news was that experts had expected the PPI to increase at a much higher rate.
Brian Shappell, NACM staff writer
Wednesday, May 25, 2011 by
With small business exporting becoming an increasing important element of the majority of U.S. commerce, attendees at NACM’s 2011 Credit Congress in Nashville flocked by the dozens to the first sessions in a series of five on “Doing Business in ___” series hosted by FCIB.
The first of which, “Doing Business in Canada” drew well in excess of 100 people and became one of the first standing room only, so to speak, sessions of Credit Congress this year. Hubert Sibre, of Davis LLP, described Canadian business terms as extremely varied depending on the province. For example, Alberta is considered very liberal from a pro-debtor standpoint, while Quebec is considered much more conservative on matters of business and credit.
Sibre suggested registering one’s business in every province is almost essential because it greatly improves their position to protect intellectual property in Canadian courts, among other things. It also helps to have a subsidiary based there because bankruptcy judgments made in the United States are unenforceable without a Canadian court officially recognizing it.
A subsequent session on South Korea was led by Kyle Choi, Esq. of Bluestone Law Ltd. Choi spoke the various aspects of why the nation’s stock is rising in the international business community, which includes a highly evolved infrastructure, a wealth of available credit information available on companies there and business-friendly law. Also helpful is its prestigious business quality rating by the World Bank and, according to Choi, that its free-trade agreements with the United States and the European Union will increase competitive fairness by reducing the gap in tariffs, estimated by some at 10%. Also, he contends it will force South Korean companies to produce better products, components and services across the board.
But there are many cultural differences and barriers that need to be taken into account, such as a desire for officials at companies to speak directly with employees on their level with your company (don't pawn her off on the secretary) and the need for formality even in e-mail correspondence.
(Note: Subsequent sessions on Doing Business in Chile, China and Brazil had not been completed at the time of this posting. More coverage is coming to NACM’s blog, eNews and the July/August edition of Business Credit Magazine in the coming days and weeks).
Brian Shappell, NACM staff writer, can be reached firstname.lastname@example.org
Wednesday, May 11, 2011 by
U.S. trade activity went through its growingly common routine of another one leap forward, one leap backward in March, the latest U.S. Department of Commerce Statistics indicate. The sum of it all remains an ever-growing trade deficit.
U.S. Commerce Secretary Gary Locke announced that U.S. exports of goods and services in March 2011 increased 4.6% between February and March to a record $172.7 billion. Both the goods side ($124.9 billion) and services ($47.7 billion) hit high-water marks historically. Among other records were the surge in the export value ($7.7 billion) as well as value of trade routed to Canada and South and Central America. The U.S. even managed to shave its Chinese trade deficit down from $18.8 billion to $18.1 billion, thanks in part to small business exporting levels. Ignoring the elephant in the room, escalating demand and prices for oil products, Locke celebrated the news in a brief statement on the Commerce website.
Far less discussed by Commerce officials was that the trade deficit increased to $48.2 billion, about a 6% increase from February to March. Oil imports spiked by 18% in March to a dollar-value-level of $39.3 billion, the highest in nearly three years.
Brian Shappell, NACM staff writer