December 2, 2021




November CMI Slips to Lowest Reading in the Last Year

Annacaroline Caruso, editorial associate

NACM’s Credit Managers’ Index (CMI) combined score for November fell 0.6 points to a reading of 57.4, its lowest in 2021. NACM Economist Chris Kuehl, Ph.D. said that the decline is no reason to be alarmed. “This month shows a slight reduction in activity that still remains robust,” Kuehl said. “The rebound of the global economy in 2021 was equally as unprecedented as the pandemic itself.”

The combined index of favorable factors saw a 1.3-point drop to 66.4 this month. Sales fell by 2.4 points to a reading of 70.3, and the dollar collections category saw a 3-point drop to 60.4. Amount of credit extended slipped by 0.4 points to a reading of 69.6.

The index of unfavorable factors dropped to its lowest reading after two-consecutive months, with a 0.2-point decrease (51.3). Rejections of credit applications improved by 1.1 points to 53.2. Disputes saw a 0.5-point improvement, but still remains in the contraction zone at 49.0. The dollar amount of customer deductions category experienced a 1-point drop (48.5), falling deeper into the contraction zone.

“As recently as September all the categories in the unfavorable index were in expansion territory, and now there are three that have fallen into contraction and that has not been the case in over a year,” Kuehl said.

For a complete breakdown of the manufacturing and service sector data and graphics, view the November 2021 report. CMI archives also may be viewed on NACM’s website.

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Credit Congress Is Back! Special Offer for First Timers

Annacaroline Caruso, editorial associate

Registration is now open for the 126th NACM Credit Congress & Expo, taking place June 5-8, 2022, at the Kentucky International Convention Center in Louisville, KY.

Never attended a Credit Congress before? In honor of the 126th conference, NACM is offering a special not-to-be-missed opportunity. Any fully paid delegate can bring a colleague who will be attending for the first time for only $126. (Both delegates must have separate rooms at the host hotel—The Galt House.)

NACM is offering this discount for the first-time ever, in hopes it will give companies the opportunity to extend the Credit Congress experience to team members who may not have been able to attend previously.

“Having first-time attendees sharing and learning at Credit Congress will add to everyone’s conference experience and hopefully inspire continuing participation within our organization,” said Jill Leimbach, director of meetings with NACM. “Their inclusion will help promote knowledge within the credit community at every level—within their companies and among delegates as well as open up new goals and aspirations for those new to Credit Congress!”

Other Credit Congress attendees should register by Dec. 31 to take advantage of early bird savings. You can find out more details about sessions, speakers and exhibitors on the NACM website.

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New York Court Case Demonstrates the Importance of Responding to Notices

Bryan Mason, editorial associate

Mechanic’s liens provide subcontractors and suppliers with the leverage they sometimes need to get paid by general contractors and property owners. However, their strength falls and rises with the details as one subcontractor recently discovered.

In the case of Janus VII LLC v. Par Plumbing Co., Inc., the property owner, Janus VII LLC, served Par Plumbing Co., Inc., with a notice to either enforce its mechanic’s lien or to demonstrate why the lien should not be canceled. Par Plumbing had 30 days to respond; however, it did not. Janus then motioned the courts to have the mechanic’s lien dismissed, and the Supreme Court of the State of New York, New York County, ruled in its favor. The court noted that the owner’s notice aligned with New York’s lien statute and that Par Plumbing failed to support its claim that the notice was not properly served. The plumbing company also acknowledged that it had not responded to the notice because of a pending action against the property owner by the general contractor that had employed Par Plumbing. However, Par Plumbing had never requested to be added, as a party, in the general contractor’s pending action. 

If Par Plumbing had responded prior to the expiration of the 30-day notice, the outcome could have been much different, said Connie Baker, CBA, director of operations for NACM STS. “When served a ‘Notice to Commence Action to Enforce Lien,’ the recipient should seek legal counsel to make sure the appropriate action or response is made in a timely manner to maintain lien rights.” Although this particular case refers to a New York statute, other states have similar notices, Baker warned. 

At any time prior to the expiration of the notice, Par Plumbing could have become a party in the lawsuit with the general contractor. “Other parties that have an encumbrance on a property are normally served a summons that a foreclosure action has been filed giving them rights within an appropriate amount of time to become part of the action,” Baker explained. “They also can pull the property up in the county recorder’s office to determine if there are other liens filed.”

Par Plumbing may still have options, said Kevin Laurilliard, shareholder at O’Connell & Aronowitz, PC (Albany, NY). Because New York enforces the trust fund statute, Par Plumbing could use this law if the general contractor gets paid following its pending action against the owner, which means the general contractor will be “held in trust” to pay its beneficiaries.

Depending on the time elements, Laurilliard also said Par Plumbing could file another mechanic’s lien if it is within the eight-month window following the installment of the last furnishing on the project. Or, if Par Plumbing still has the option to join any pending litigation against the owner, it should ask the judge involved with that case to be added as a plaintiff so it may recover some of its losses if the general contractor wins the case.

Despite the remaining options, Par Plumbing’s initial mistakes occurred when it decided not to respond to the initial notice, Laurilliard said. “When you get a notice, you can’t be cavalier about it.”

Cases like these demonstrate the importance of understanding lien laws in states where you do business and not ignoring notices of any kind. Subscribers to the NACM STS Lien Navigator can learn more about state-specific lien laws.

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How to Reform Your Company Culture to Create a Healthier Workplace

Bryan Mason, editorial associate

What does it take to build a workplace culture that is civil and respectful? NACM’s November Author Chat considered the topic from the perspective of Mark S. Babbitt and S. Chris Edmonds’ book, Good Comes First.

The book serves as a “guide” to help leaders develop an uncompromising company culture that achieves five key practices:

  1. Respect is as important as results.
  2. Values are defined as measurable behaviors.
  3. Leaders model desired behaviors.
  4. Workplace respect is measured (like results).
  5. Everyone is held accountable for respect and results.

Babbitt and Edmonds shared that many companies fail to put these practices into action. Instead, many company cultures are accidental, contradictory or subpar, which puts them at a competitive disadvantage.

When employees feel respected and validated their engagement increases. “They serve customers better and results happen much faster with much less drama,” Edmonds said.

One factor that can damage company culture is not addressing poor behavior, Babbitt said. The book states that culture is built by rewarding desired behaviors and is torn apart by tolerating disrespect and unproductive behaviors. 

The book outlines four tactical tools leaders can use to promote positive change within their organizations:

The Organizational Constitution formalizes your company’s servant purpose, defines your company values, defines measurable behaviors and contains your company’s strategic goals.

The Three Phases of Culture Change create the foundation of the process that Edmonds and Babbitt propose. These three sequential steps include a define, align and refine phase.

The define phase is included in the development of your organizational constitution when you specify your company purpose, values, behaviors and goals. The align phase requires leaders to inspire team members to create awareness of, and a commitment to, the ideal culture. Lastly, the refine phase is the revision phase, which can be used as needed to revisit your company purpose or promote change to gain a competitive advantage.

The Performance-Values Matrix helps leaders place equal importance on values as they would for performance. It starts with everyone buying into the reformed company culture (as displayed by your organizational constitution), Edmonds said. Leaders can use this matrix to assess employees and determine if they are displaying a high performance-high values, high performance-low values, low performance-high values or low performance-low values match.

The Accountability Model provides leaders with the chance to reflect on their own behaviors in conjunction with the organizational constitution. It accounts for several important actions: modeling, coaching, celebrating and mentoring.

NACM Author Chats typically are held 11 a.m. ET on the third Thursday of the month on Zoom. Members have an opportunity to meet and speak with authors on a wide range of leadership topics. The next chat takes place Feb. 17 with author, Matthew Barzun, about his book, The Power of Giving Away Power.

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