June 9, 2022

	I. Themes of NACM’s 2022 Credit Congress
	II. What Is Succession Planning? 7 Steps to Success

	III. How the Option to Work from Home Impacts Employee Retention
	IV. More Details about VA Changes to Newly Enacted Ban on Contingent Payment Provisions

Nearly 1,000 business-to-business credit professionals and exhibitors gathered in Louisville, KY, this week from June 5-8 for NACM’s 126th annual Credit Congress and Expo. The energy and excitement felt by attendees was palpable as they joined together in person over the four-day event. The event kicked off with the General Session as keynote speakers and co-authors of the best-selling book, Good Comes First, Chris Edmonds and Mark Babbitt explained why leaders must work extra hard today to build a positive work culture.

“Most leaders have never been asked to pay attention to the quality of work culture or people’s relationships,” Edmonds told the crowd. “So, they focus on results, which is a common Western fallacy. If you want an organization where people are clamoring to get in, want to stay there, are satisfied and maybe even God forbid happy, then leaders have to be much more intentional about the quality of workplace relationships.”

Over a three-day period, attendees were greeted with a wide variety of educational topics and networking opportunities to help them in their careers. The current economy was clearly on everyone’s mind as NACM Economist Amy Crews Cutts, Ph.D., CBE, addressed a packed room during her economic outlook. Using her magic wand, Cutts pointed she would eliminate Bitcoin and other cryptocurrencies. “Because without [cryptocurrencies], the dollar cost of fraud would not be possible. Ransomware is impossible without the anonymity of cryptocurrencies.”

Some educational sessions focused on helping credit managers who continue to navigate the economic aftermath of COVID. “Pandemic-era stimulus helped keep many companies afloat that would have gone bankrupt otherwise,” said Andrew Behlmann, partner at Lowenstein Sandler LLP, during Out of the Abyss: Distress and Bankruptcy After the COVID-19 Pandemic! “But now that has ended and when mixed with the current struggling economy, we expect bankruptcies to tick up significantly in the coming months.”

The sessions ranged from foundational business credit subjects to help those new to the credit profession to more advanced topics for seasoned professionals. “In order to create an efficient credit department, you want to start with clear guides and documents,” said Alaina Worden, CCE, credit and collections manager with CECO Inc., during How to Build Efficiencies in Credit. “Everything from your company’s credit policy to on-boarding and cross-training documents should be organized because it makes a bigger difference than you might think. The idea is to create something you can use over and over again.”

One presenter used magic to explain the psychology behind credit decisions and how those decisions are hijacked by disruptions. “Complacency means you won’t be prepared for disruptions,” said Steve Haffner with Pinnacle Thinking during Disruptions, Deceptions and Decisions. “We love the status quo, and change messes with that. But if you wait until something is broken before you fix it, it may be too late.”

During Identifying & Mitigating Risk for More Accurate Cash Receipts Forecasting, attendees shared their current struggles with supply disruptions and brainstormed possible solutions with speakers. “There have been these physical constraints with getting product in and out, which means it is taking longer for us to get paid and that causes havoc on trying to forecast cash flow,” said Ed Bell, Ph.D., ICCE, senior credit manager at W.W. Grainger, Inc.

“We sell products into Kazakhstan and the goods normally travel by land through Russia and Ukraine,” one attendee said during the session. “Obviously, that is no longer an option so we had to reroute and the product now has been sitting for months.”

The Expo was comprised of diverse and unique companies representing products, services and solutions, ranging from banking and financing to cash applications and cash forecasting. These companies unveiled their products and services, demonstrating how they may be essential resources to credit professionals in performing their daily responsibilities effectively and efficiently. A special shoutout goes to this year’s sponsors: Billtrust, Blackline, CreditRiskMonitor, Dun & Bradstreet, Fiserv, HighRadius, NACM National Trade Credit Report, Serrala, UTA, Versapay and YayPay.

And It’s not too early to start planning for next year’s conference to be held June 11-14 at the Gaylord Texan, in Grapevine, TX.

You can’t run a business, regardless of its size, without talented people ready to move into key positions when the current occupants leave. Even the most successful employers can run off a cliff if they don’t have a solid succession plan in place.

What is succession planning?

Succession planning is a strategy for identifying and developing future leaders at your company—not just at the top but for major roles at all levels. It helps your business prepare for all contingencies by preparing high-potential workers for advancement.

Here are seven tips for kick-starting the succession planning process at your company.

1. Be proactive with a plan

Sometimes, you’ll know well in advance if a hard-to-replace team member is going to leave the company—planned retirement is a good example. But other times, you’ll be caught off-guard by a sudden and potentially disorienting employee departure. That’s why you need a plan—now.

First, consider all the key roles on your team and answer these two questions:

• What’s the day-to-day impact of X position on our company or department?
• If the person currently in X position left, how would that affect our operations?

2. Pinpoint succession candidates

Once you have a handle on the ripple effect that the departure of certain employees might cause, choose team members who could potentially step into those positions.

Ask yourself:

• If we were to hire for X position internally, which employees would be the strongest candidates for stepping into this role?
• Would those candidates need training? And, if so, what type?

While the obvious successor to a role may be the person who is immediately next in line in the organizational chart, don’t discount other promising employees. Look for people who display the skills necessary to thrive in higher positions, regardless of their current title.

But don’t just assume you know how people on your team view their career goals. You may have certain team members in mind for senior management roles, but who’s to say they’ll even be interested in the idea once it’s presented to them? If you haven’t already, talk to these employees about how they view their professional future before making your succession choices.

3. Let them know

In private meetings, explain to each protege that they’re being singled out for positions of increasing importance. Establish an understanding that there are no guarantees, and the situation can change due to circumstances encountered by either the company or the succession candidates themselves.

4. Step up professional development efforts

Ideally, you have already been investing in the professional development of those you select as your succession choices. Now that preparation needs to be ramped up. Job rotation is a good way to help your candidates gain additional knowledge and experience. And connecting them with mentors can boost their abilities in the critical area of soft skills: The best leaders have strong communication skills, as well as polished interpersonal abilities, such as empathy and diplomacy.

5. Do a trial run of your succession plan

Don’t wait until there’s a crisis to test whether an employee has the right stuff to assume a more advanced role. Have a potential successor assume some responsibilities of a manager who’s taking a vacation. The employee will gain valuable experience and appreciate the opportunity to shine. And you can assess where that person might need some additional training and development.

6. Integrate your succession plan into your hiring strategy

Once you’ve identified employees as successors for critical roles in your organization, take note of any talent gaps they would leave behind if tapped. That can help you identify where to focus your future recruiting efforts.

7. Think about your own successor

When making a succession plan for your organization, keep in mind that your own role will someday require backfilling. Maybe you’ll decide to take advantage of a new opportunity, or you’ll put in your time and retire from the workforce. So, it’s important to ask yourself, which employee could step into your shoes one day? And what can you do, starting now, to help that person prepare for the transition?

The members of your workforce aren’t fixed assets—and changes in your team’s lineup are inevitable. You may not always be able to predict a valued employee’s departure from the firm. But through effective succession planning, you can pave the way for the continuity so critical to your business’s future.

Reprinted with permission by Robert Half.

A few years ago, working from home sounded like a luxury only experienced by a minority of businesses. In 2018, just 5.7% of the American workforce was remote, whereas today nearly 27% work at home full-time and 92% spend at least one day a week working remotely, according to Zippia. And now, the option to work from home can be the difference between keeping or losing staff.

“We are never going back to what we used to call normal and there is good reason for that,” said Mark Babbitt, speaker and co-author of Good Comes First, in a recent episode of Extra Credit, NACM’s new podcast. “Because to be honest, the old normal for many people sucked, and 56 million people in the last 15 months made it clear the old normal sucked for them as well because they voluntarily left their jobs. So, as leaders you can’t go back to an old workplace. You have to create something new.”

But not all companies are equipped to allow employees to work from home, and some feel that productivity and cooperation is lost through remote work. “The company mentality is they want people to collaborate and be in the office,” said Seena Urquhart, credit manager at Vicor Corporation (Andover, MA). “Also, the position we are trying to fill was not really made for working from home because a lot of paper is involved and you receive tasks from all different departments.”

However, Urquhart said not having a remote work option has shrunk the pool of candidates. “If we become more automated then one day working from home may be an option,” she explained. “I think after COVID people are looking for more of a work-life balance and companies have to be more attuned to that. The new generation is just looking for different things than what we have offered in the past, and as a company we need to look forward.”

Urquhart is not alone. According to a recent eNews poll, 67% of credit departments have lost staff to other companies due to the ability to work from home. For some businesses that have allowed staff to stay either fully or partially remote, the story is different.

“Our turnover has been a lot lower in the credit and collections area than the rest of our company, which has been great,” said Bob Moulton, director of customer financial services at Covetrus, Inc (Dublin, OH). “During the pandemic, our company started hiring people regardless of location; [we are] more focused on finding the right candidate.”

While several businesses have started calling employees back into the office as the pandemic winds down, Moulton is hesitant to do so. “I think we have not yet had trouble retaining folks because secretly they wanted to work from home; and now, they are,” he explained. “And with the inflation we are experiencing, if we all of a sudden were to tell them they need to come to the office again, it becomes an expensive endeavor to drive to work every day. That would definitely lead to turnover because they know there are other remote opportunities. But as long as we are providing that opportunity and paying a competitive wage, I am hoping we can keep our turnover at the lows we have been experiencing because I know it is unusual.”

In April, we wrote about Virginia Senate Bill (SB) 550, which sought to amend VA ST §§ 2.2-4354 and 11-4.6 to prohibit the use of contingent payment provisions in public and private construction projects. Since then, SB 550 was formally enacted and signed into law on April 27, 2022. We observed that it was still unclear as to whether this law applied retroactively or not, but also that Governor Glenn Youngkin sent a proposed amendment of the bill back to the legislature on April 11, 2022, stating that the bill “shall apply to construction contracts executed on or after January 1, 2023.” This revision was accepted, along with these other revisions that the governor made:

1. SB 550 previously contained 45-day deadlines on private projects for the owner to pay a general contractor or a higher-tiered contractor to pay a lower-tiered subcontractor, but Governor Younkin’s amendment lengthened these deadlines to 60 days.
2. There was initial concern regarding the practicality of certain formal requirements of notice for withholding funds in private contracts. The prior drafts of SB 550 stated that if an owner withheld funds from a contractor, the owner must specifically identify “the contractual noncompliance, the payment amount being withheld, and the lower-tier subcontractor responsible for the contractual noncompliance.” The governor revised that language to state more broadly that the notice must be “in writing and with reasonable specificity.” By relaxing the notice requirement, the revised language is more workable for owners withholding funds. However, general contractors still must go through those more formal steps in order to withhold all or a part of an amount invoiced by their subcontractor.
3. SB 550 originally specified that, for public and private contracts, the contractor or higher-tiered contractor was to be individually liable for the amounts owed to the subcontractor or lower-tiered subcontractor, respectively. Governor Younkin removed the word “individually” from the provisions to address concerns that this law may require individual liability beyond the contractor or subcontractor entities.
4. The governor added the following sentence to the sections covering private projects: “Nothing in this subsection shall be construed to apply to or prohibit the inclusion of any retainage provisions in a construction contract.” This eased concerns about the ambiguity of whether or not retainage would be affected by the new law.

With the new law coming into effect on January 1, 2023, contractors and subcontractors should start looking at their contracts, making necessary revisions and understanding how those revisions affect their operations.