February 9, 2023


Most Credit Departments Still Rely on Paper Credit Applications

Jamilex Gotay, editorial associate

Like many industries these past few years, B2B credit has needed to adjust to a new digital reality. Most credit departments have adopted more technology and automation than ever before, except when it comes to digital credit applications. According to an eNews poll, more than half of credit professionals say only 25% or less of credit applications they receive are online, while 18% have fully digitized the credit application process and no longer accept paper.

For those who predominantly use digital credit applications, it is a huge time saver. “Customers can go to one spot, fill out the credit application, have it DocuSigned and in our hands in about 10 minutes,” said John Sheehy Jr., CFS director at L&W Supply Corporation (Chicago, IL). “In the past, you had to give the paper application to the customer, they returned it and then it had to be emailed, faxed or mailed to the credit department which could take days.”

When a credit application is submitted electronically, it is easier to keep track of all of the related documents so nothing gets lost, said Justin Cowart, credit supervisor at Nucor Yamato Steel Co. (Armorel, AR). “I’m able to check the progress of the credit applications and see the documents that we’ve obtained for them so that I’m not having to bug my two credit analysts and slow them down.” It also helps larger companies like his, composed of 50 facilities, to have a shared automated system so that there’s no need for double the work.

Digital credit applications came in handy during the pandemic, and many of those same benefits are still true today. Travis Newkirk, corporate credit manager at Ply Gem Industries, Inc. (Cary, NC) no longer accepts paper credit applications. “We can go through the process without having to meet or interact with the customer face-to-face, which helped a lot during the pandemic,” he said.

However, setting up a process to accept digital credit applications takes time, especially when paper applications have been around for so long. “You have to make sure that the system works as designed and that the credit applications flow to the correct departments, which takes a lot of time to get up and running,” explained Roxanne Price, CCE, CCRA, NACM Board director and corporate credit manager at H&E Equipment Services, Inc. (Baton Rouge, LA). “If there’s a hiccup or if the system is down, which doesn’t happen too often, it can cause some delays.”

For others, digital applications lack that fifth sense, leaving more room for error. “If you go truly digital with automation, you lose the human touch or that credit manager’s ‘gut feeling’ to point out whether something on the application looks better or worse than it appears,” said Darrell Horton, ICCE, director of revenue and credit at AGS, LLC (Las Vegas, NV). Out of all the credit applications he receives, 25% are counted as digital in that they are completed in PDF form and then emailed back to him with no use of a web portal.

Some credit professionals whose companies currently rely on paper applications are hoping to make the move toward digital applications in the near future. “It’s much easier to read a digital credit application than a paper credit application,” said Mark Speiser, CCE, director of credit, North America at Archer Daniels Midland Company (Decatur, IL) who currently doesn’t accept digital credit applications. “There’s also the benefit of privacy, specifically for businesses that are sole proprietors, because confidential information can be redacted in a digital credit application as opposed to paper credit applications.”

Whether credit professionals are ready or not, the digital transformation is underway. “A lot of companies are not using digital credit applications but I think in the next two to three years, that’s going to change,” Speiser explained. “There are more ways to drive the benefits of digital credit applications than there were two years ago. Not to mention it is less expensive to use digital credit applications.”

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Get Promoted Without Leaving Your Company

Kendall Payton, editorial associate

Earning a promotion gives you opportunities for career advancement, financial compensation and confidence in your impact and value as an employee. So why is it so difficult to do without moving to another organization? Some companies may reward promotions based on specific accomplishments, but others may not provide the opportunity unless a job scope changes—and these challenges can drive employees to leave for more recognition elsewhere. Early-career employees should aim to get promoted every three years, according to ZipRecruiter.

“The financial performance of a company may impact a person’s eligibility for a promotion or raise,” said JoAnn Malz, CCE, ICCE, NACM chair elect and director of credit and collections at The Imagine Group, LLC (Shakopee, MN). “If the company performance is tenuous, or the possibility of a recession occurs, employees might be asked to delay their merit increases for up to a year.”

Before a manager decides on who they want to promote, certain qualities are needed to fill certain roles. For example, have you shown your leadership skills consistently? What value have you added to the company? These traits are nonnegotiable when taking on more responsibility as you move up the ladder.

Become a Mentor

Take every opportunity possible to mentor others, even if you aren’t in an official leadership position. An example could be how well you work with other departments, or your personal relationships with customers. “It’s good to be someone who can connect the dots across many functions and processes,” Malz said. “And the attitude of being seen as a partner, relationship builder, and being able to solve problems for customers and for your business partners will help give you that needed push to elevate your career.”

If you start acting like a leader and helping others, upper management is more likely to view you as a leader and consider you for a promotion. Mentoring is a way to practice those leadership skills before you really need to manage a team. “Reach out to a person outside your business unit that would welcome your help and commit to spending an hour with them once a month for a year to work on an issue they raise,” reads an article from Harvard Business Review.

Focus on Relationships

Relationship building is one of the most important skills to master if you hope to get recognized at your company. Businesses are complex, and so are the relationships that exist within those four walls. “People don’t leave their companies, they leave a manager,” said Eve Sahnow, CCE, corporate credit manager at OrePac Holding Company (Wilsonville, OR). “You want to appreciate your manager’s values and how they view compensation. Everyone wants more money in their paycheck but that’s not always what makes people happy. Managers should be aware of their employees needs and be flexible with them on those inherent values that give more to them than just a paycheck.”

Learning to work productively with difficult personalities will set you up for success. We don’t get to choose our coworkers or bosses, but we do get to choose how we react. “The earlier you can identify the specific personality characteristics that are challenging for you, the more time you have to develop strategies for working effectively with them,” reads the article from Harvard Business Review. “When you take accountability for getting along with coworkers of all types, you eliminate friction and make it easy for management to promote you.”

Make Yourself Irreplaceable

Figure out how you can add more value to your company so that they have no choice but to promote you—if they don’t want to lose you to another organization. “A lot of people tend to rely on their bosses to continue to promote them and give them higher wages without making themselves more valuable,” Sahnow said. “Being the expert in your field makes you more marketable and education never stops.”

Adding value comes in all forms, whether it’s earning a designation, developing a skill that no one else can do or finding creative ways to solve a problem in the credit department. “It's all about work ethic,” said Jason Mott, CCE, NACM board director and corporate credit manager at MFA Incorporated (Columbia, MO). “Do more than the daily tasks you’re simply required to do, and show how your tasks have an impact on the company.”

Documenting your responsibilities is an effective way to show your manager your overall productivity. “The sooner you can figure out your job impacts the financials of the company, the faster you can set yourself apart,” Mott added. “Don’t be just a ‘task-doer,’ be someone who really digs in. That’s how you can set yourself up for a big promotion.”

Learn to make strategic career moves that will put you in a position for promotions by registering for NACM’s new Strategic Leadership track at Credit Congress in Grapevine, TX from June 11-14.


Is Nearshoring the Next Move for Supply Chains?

Jamilex Gotay, editorial associate

The global supply chain hasn’t been the same since COVID-19 forced lockdowns, shifted demand and changed the structure of trade as we once knew it. Now, companies are looking to find alternative solutions to prevent further supply disruptions as they head toward a potential recession and geopolitical tensions rise.

“Nations will be skeptical about cross-border trade cooperation; cyber criminals will ramp up activity; there will be key material access turmoil,” reads an article by KPMG. Not only that, but “manufacturing footprints will change shape; retail and distribution supply chains are morphing rapidly; supply chain technology investments will accelerate.”

Roughly six out of 10 global organizations expect geopolitical instability to have a detrimental impact on their supply chains in the next three years. “Border restrictions, particularly in Eastern Europe, make it almost necessary for many European countries or certain U.S. companies to consider deglobalization,” said Scott Chase, CCE, CICP, global director of credit at Gibson Brands, Inc. (Nashville, TN). “Not being able to get foreign exchange or the cost of currency exchanges create a gross profit deficit unrelated to the cost of your product and goods.”

Jeffrey Borgens, CBA, director of operations and finance at Aiphone Corporation (Redmond, WA) has a Japan-based manufacturer and several factories in Asia, primarily in Thailand, Japan and Vietnam. “COVID lockdowns in China caused a major lag in manufacturing so that we could not get the parts and components we needed,” he said. “So, our typical lead times, usually 60-90 days, have remained at between five to six months since April-May of last year.”

Some credit professionals who have facilities in China are considering moving elsewhere to prevent any delays in the transportation of goods. “We are moving away from Chinese networks to suppliers with similar, higher-quality goods,” Chase said. “We’re also moving our manufacturing out of a factory in Qingdao, China to our acoustic facility in Montana and bought a guitar case company located in Costa Rica.”

Other companies have made similar moves to manufacture product closer to home and purchase from different suppliers to diminish the chances of supply delays. “Similar to offshoring, nearshoring is a tactic that allows companies to move their operations to the closest country with a qualified workforce and reduced cost of living without the time difference,” according to Forbes. The benefits include faster shipping, closer communication with suppliers and the “ability to react swiftly to external supply chain changes.”

However, nearshoring costs time and money. “I could see nearshoring for other companies to include Mexico and some other markets for specific parts and components that they can’t get from Asia,” Borgens explained. “But even then, it’s going to take some time, maybe several years.”

Some experts don’t see nearshoring or deglobalization as the answer to supply chain resilience. “Where the technology supply chains are, and where semiconductors are built, is more important for the next 5 decades,” Intel CEO Pat Gelsinger told CNN. “We need this geographically balanced, resilient supply chain.”


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Missouri Court Case Highlights Fraud Risk in DBE Programs

Kendall Payton, editorial associate

Disadvantaged Business Enterprise (DBE) programs are intended to aid small businesses owned by minorities, women or service-disabled veterans. However, these programs can create holes for fraudsters to take advantage. Under the False Claims Act (FCA), whistleblowers or “relators” are provided incentives to bring complaints or lawsuits against any enterprise or person who defrauds the federal government.

A certain percentage of participation is required for disadvantaged contractors in order to be involved in construction projects. “Anyone involved in a project with a DBE is required to complete due diligence,” said Chris Ring of NACM’s Secured Transaction Services. “And anyone selling to these contractors now has to verify that who they are selling to is a legitimate disadvantaged enterprise. The material supplier can get caught up in a mess and prosecuted under the False Claims Act at the state or federal level if it turns out that they are not selling to a legitimate DBE contractor.”

DBE programs can be taken advantage of when non-DBE companies use them as a front to perform work at lower costs, keeping the extra profit. A recent case in January brought against HBD Construction Inc., in St. Louis, Missouri highlights the importance of due diligence—as the offending company pretended to qualify for a DBE program. The former owner and chief operating officer, Brian Kowert Sr., pleaded guilty to two counts of wire fraud, according to a press release from the U.S. Attorney’s Office.

At the time, Kowert was also acting as the project manager for the renovation and redevelopment of a building for Greater Goods LLC on Chouteau Avenue in St. Louis. Kowert and Charles Kirkwood, the owner of Midwestern Construction, a company that was a Minority Business Enterprise, agreed to falsely list Kirkwood’s company as providing materials and performing work on the project. Kowert sought to falsify the information to comply with St. Louis requirements for 25% participation by MBEs to qualify for a 10-year tax abatement.

In more complex DBE fraud cases, multiple parties are impacted, not limited to the general contractor. “It’s critically important for credit managers and material suppliers to check for DBE participation,” said Ring. “When involved with large public-work projects, responsibility falls on the credit department to verify the legitimacy of a DBE contractor. This type of fraud is not something that you, as a credit manager, want to be caught in the middle of.”

Beginning on Aug. 4, 2020, Kowert caused 14 HBD checks with a total value of about $220,000 to be issued to Kirkwood’s company for the work performed and materials provided by the three non-MBE companies. Kirkwood deposited those checks into his company bank account and then issued checks to the three non-MBE companies, at Kowert’s direction. Kowert then used Kirkwood’s company as a fraudulent “pass through” in order to exchange the checks and violate the MBE requirements on the construction project.

Between May 2021 and November 2021, “Kowert and HBD caused a false application for tax abatement on behalf of Greater Goods for the Chouteau Avenue redevelopment project to be submitted to the St. Louis Development Corporation,” the press release reads. “The application falsely represented that Kirkwood’s MBE company had performed about $224,361 in project costs and omitted the three non-MBE companies. The $224,361 comprised approximately 6.5% of the required 25% MBE participation in the project.”