August 25, 2022



Motivate Your Credit Department with Metrics

Jamilex Gotay, editorial associate

Credit professionals are no stranger to metrics as a way to track and measure staff efficiency. But what you do with the findings of those metrics is as important as the metrics themselves. Several credit leaders chose to use those results as a way to motivate their staff.

“Our metrics are tied to a person’s objective,” said Ty Knox, ICCE, director of credit and risk at EFCO Corp (Des Moines, IA). “We keep a scoreboard with everyone’s individual metrics and hold weekly meetings to discuss. That way we can see who is meeting the objective or if anyone is behind, and it plays to people’s competitiveness.”

Knox puts meaning behind the metric results in another way, as well—with cold, hard cash. He tracks several metrics on both an individual and team level, including percent current, cash application, electronic payments and some tasks not directly related to collections.

The results then determine a biannual bonus for both individuals and teams—so everyone is trying to drive their individual results for a better compensation package, but all are contributing to a team bonus as well, he added. “It doesn’t have to be a lot of money, but that’s how you drive results. It’s cheaper than hiring another body and you can get results like you had an extra person or two.”

While money is major incentive for individuals, the privilege to work remote has become equally as important to employees in recent years. Cody Christensen, credit manager at Waxie Enterprises, Inc (San Diego), tracks four metrics for each individual and awards the ability to work from home accordingly: DSO, average days to pay beyond terms, percent over 60 days and the collection effectiveness index (CEI).

“If the individual meets the benchmark for one category, they can work from home one week out of the month; two categories and they can work from home two weeks out of the month; three and three weeks; and if they meet all four, they can work from home the entire month,” Christensen explained. “A lot of people have been really driven by this so they push themselves to meet those numbers.”

Some credit leaders find more success when tracking metrics focused on the entire team. JoAnn Malz, CCE, ICCE, director of credit and collections at The Imagine Group LLC (Jordan, MN), monitors department efficiency in detail through billing cycle time, unbilled revenue, weekly invoice creation, invoice delivery failures and average days delinquent to name a few.

Though Malz’s metrics are more team focused, she also uses graphs to showcase an individual if they met a target so they can still get “recognition over the team,” she said. “If team members meet their targets, they receive a merit increase and it helps keep them motivated.”

If you would like the opportunity to discuss metrics with fellow credit professionals, be sure to join NACM’s Performance Metrics Thought Leadership Group. Contact Tracey Lerminiaux, director of education services, at This email address is being protected from spambots. You need JavaScript enabled to view it., for details.

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Exporters Return to Ocean Shipping as Congestion Eases

Kendall Payton, editorial associate

Exporters are shifting away from air freight and back to ocean transport as congestion slightly clears. Air transport volumes decreased “moderately, in part due to modal shifts back towards ocean freight products, as customers recognized the again improved schedule reliability in ocean freight,” per DHL Global Forwarding—while ocean freight volumes grew by 11.3% in Q2.

Air freight was elevated during the height of supply disruptions because it cut down delivery times. But global ocean vessel reliability improved in June for the first time since the start of the pandemic, according to data from Sea-Intelligence. “We have just adjusted back to shipping by boat since ocean freight has improved,” said Jeffrey Borgens, CBA, senior manager of operations and finance at Aiphone Corporation (Redmond, WA). “Air freight was acceptable when we had more limited delays of certain products.”

Air freight speeds up delivery time, but it comes at a high cost. Air freight is the most expensive way to ship goods, costing as much as 16 times that of sea transport, according to the World Bank. Still, Borgens said his company briefly used air carriers as an alternative a few months ago because “supply chain issues were at their worst in May and June of this year, with lead times out to 6 months with unknown improvement or change.”

But lead times for ocean freight are trending downwards in some cases, even as port volume remains high. “Imports will begin easing somewhat,” Gene Seroka, executive director of the Port of Los Angeles, told American Shipper. “I expect to see that reflected in our August cargo numbers. China factory orders are slowing and some retailers continue to have elevated inventories. You’ll start to see a tapering of some imports, specifically the commodities that won’t be repeatedly purchased every year: appliances, fixtures, furniture, sporting goods.”

It turns out that air freight was not a sustainable solution for businesses to ease backorders because of the impact freight costs had on their bottom lines. Nikola, an electric vehicle manufacturer, switched to ocean freight after spending roughly $8.3 million in air transportation in Q2, CFO Kim Brady said on an earnings call.

Until ocean transport recovers further, however, air freight will remain an option for businesses desperate for their customers to receive goods on time. “People are starting to finally recover from China being shut down… but when you still can’t get materials and there are backlogs, it still creates pressure on the supply chain. This means people have to start looking for faster ways to get material from air freight rather than ocean,” said Phillip Poland, Esq., an international trade attorney for LimNexus LLP (Washington, DC).

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The Tango Between General Contractors and Architects

Annacaroline Caruso, editor in chief

General contractors and architects are hired by the property owner to work toward a common goal during construction projects, and yet the two sides do not always see eye to eye. One major point of disagreement is when it comes to materials. 

“Both parties serve two very different purposes,” said Chris Ring, of NACM’s Secured Transaction Services. “The architect comes up with a design that is pleasing to the eye, and that design has to be translated to the general contractor who is in charge of the actual building. Those two worlds can easily collide.”

The root of arguments between architects and contractors comes down to good design versus cost and time management. Few architects believe contractors propose material substitutions that serve the client’s best interests, while most contractors report they best serve clients by ensuring the projects stay within budget and schedule, according to a report from the American Institute of Architects and the Associated General Contractors of America.

“As an architect working for a GC, I’ve noticed that the details I used to draw (when I was a young architect) are no longer in the construction documents and are now required as ‘shop drawing’ submittals from my subcontractors,” one respondent wrote. “Scope definition that was part of my job as a young architect has unintentionally become the responsibility of the general contractor (me) and my subcontractors. The specifications for design-bid-build projects are incomplete, incorrect, or, at their worst, unedited. It has led to major disputes on the construction site. I spend most of my time correcting the design when we are in the middle of construction.”

Architects are focused on designing a structure that stands out and that vision does not always carry over to the contractor. For example, “when freedom tower was built, the architecture was specified and we knew it was going to be a huge project,” explained Jerry Drake, CCE, director of credit and collections at Apogee Services, Inc (Owatonna, MN). “The glass that went into the building was super thick and big.”

But if an architect and contractor can’t agree on where to purchase the material or exactly what type, it can cost a lot of time and money. Ultimately, it’s the property owner who has the final say of what material to purchase, but both parties try to plead their best case. “The architect may be looking at a supplier whose material is aesthetically pleasing but is not made by a dependable supplier, and the general contractor may try to convince the architect to switch to a replacement, especially if they already have a relationship with a certain supplier. We are kind of at the mercy of the architect in this case.”

As a creditor, you don’t want to sell that special material to just anyone, he added. “Sometimes the subcontractors who are hired by being the cheapest bidder are people who won’t perform well on the job. If they aren’t credit worthy, we try and get every protection we can and as a last resort will walk away.”

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Prepare Your Culture for a Recession

Denise Lee Yohn, author of What Great Brands Do

What should you do to get ready for the looming recession? Act now. Taking strategic action early on before a downturn can reduce its negative impact on your business—and possibly set you up to thrive and grow during the slowdown.

So, get to work on stabilizing your financial position, examining your resource allocation, right-sizing your workforce … and cultivating your company culture.

Yes, that’s right—ensuring you have a healthy, effective and resilient culture is a critical part of preparing for a recession. It may seem like culture-building is soft, nice-to-do stuff that you can put off when your business is under pressure—but it’s actually one of the most important actions to undertake to prepare for a recession.

According to Gallup, companies with engaged workforces recovered from the 2008 recession at a faster rate. And the resilience that McKinsey researchers credit for having driven higher post-recession total shareholder returns in 10% of the companies they analyzed can be attributed as much to cutting costs as to cultivating culture.

Specifically, I recommend you focus your culture-building on brand-culture alignment and customer intimacy.

Are you aligning your brand and culture?

When you align and integrate both your external brand identity and your internal organizational culture, you not only build a culture that supports and advances your differentiation and perceived value, which becomes more important during a recession—but you also achieve the clarity and alignment you need for decision-making under pressure.

Recessions tend to call for tough decisions—which products to discontinue, which projects to fund, which customers to prioritize. Some people might advise you to centralize your organization so that these decisions can be made more easily and quickly. But with centralization, you lose the ability to respond to local developments and to make the on-the-ground calls that are often needed in turbulent times.

Instead, you can make your priorities and decision-making criteria clear by locking in a single organizational purpose and a single set of core values that guide your brand AND your culture. With brand-culture alignment, you ensure that everyone in your organization shares a common understanding of your non-negotiables.

How intimate are you with customers?

Second, I recommend cultivating a culture of customer intimacy. To get ready for a recession, you need to deepen relationships with those customers who are likely to stay committed and remain the most profitable to you through the downturn. That means, everyone in your organization needs to embrace those customers and understand what they want and need.

So, democratize your customer insights. Open access to customer profiles, journey maps and needs analyses, so your people know who to focus on and how serve them. Cultivate empathy throughout your workforce, so your people can better respond to customer needs as they change in light of economic changes. And provide visibility to the entire customer journey so your people can determine where to focus your limited resources in the customer experience.

Why the time to prepare is now

Building brand-culture alignment and customer intimacy takes time, so now is the time to prepare your business for the next recession by cultivating your culture.

This first appeared in SmartBrief; reprinted with permission.

Denise Lee Yohn is an author and brand expert who has become an in-demand keynote speaker, inspiring business leaders around the world to improve their brands. Her keynote presentations have captivated international audiences at conferences including the Consumer Electronics Show, The Art of Marketing, the National Restaurant Show, and American Marketing Association, among others. Visit her blog, sign up for her newsletter, buy her book and connect with her on Twitter.

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