February 8, 2024

Signing a Non-Disclosure Agreement (NDA) has become standard practice for credit managers seeking access to sensitive customer financial information. By committing to confidentiality, credit managers reassure customers that their data will be handled with the utmost care and discretion. This proactive step not only fosters trust but also makes customers feel more comfortable and confident in sharing vital financial details knowing their information will be protected.

By the numbers: A recent eNews poll revealed 72% of credit managers have signed an NDA at some point in their credit career to obtain important customer financial information.

Some credit professionals will offer to sign a financial NDA proactively because it empowers their company in negotiations. By presenting your own NDA, you can ensure that the terms align with your policies and interests, providing greater control over the confidentiality agreement. This also prevents you from being held liable for information outside of your scope that might be included in a customer’s NDA.

Because an NDA is a legally binding contract, it's best to have your legal team review them before you sign. “Generally, we prefer to use financial NDAs on our end, so we’ll always press a customer to use our paper first,” said Joe Lange, CCE, ICCE, CCRA, senior credit manager at Brenntag North America, Inc. (Wauwatosa, WI). However, if the customer insists on using their own NDA, Lange said his credit department will run the customer’s information through a system used by his company’s legal team. “A lot of legal offices use tracking systems to have a thorough look at what’s in writing. If our legal department looks at an outside NDA, it ends up being like our approved NDA.”

If NDAs are sent from both the credit department and customer, legal teams on both sides may go back and forth in sending NDA documents to review, whether it’s certain clauses or requirements included in the contract. Stephen Ennis, regional credit manager at Carolina Atlantic Distributing, Inc. (Sanford, NC), said his legal department handles financial NDAs for bigger, multi-billion-dollar corporations. “Typically, your privately held companies are going to be the ones to ask for the NDAs first,” he said. “Mom and pops usually don’t. It's always easier to have the customer sign your NDA because it’s something your legal department has already reviewed and signed off on. From a time perspective, it also allows you to get it signed quicker and have the legal department look over any changes the customer may want to make.”

Artificial intelligence also can be used for contract review if you need to sign a customer’s NDA. “If I get a financial NDA from a customer, I’ll read it and also run it through an AI tool like ChatGPT,” Ennis said. “I’ll ask it to remove the legalese included in the document and have it tell me what the contract is saying in simpler terms just to double check that what I’ve read and what I think I’ve read are the same thing. I always scrub the documents myself as well and do not rely on ChatGPT alone.”

Credit departments can also work with their sales team to receive financial NDAs. For example, when making a credit decision, if a customer does not qualify based on any third-party information given or if there is no payment history of the customer and there is a need to justify a higher credit line, credit departments can work with sales as the point of communication to request financial statements. “In many cases, the customers will send the information back through our sales team,” said Steve Frederiksen, credit manager of global business at Underwriters Laboratories LLC (Northbrook, IL). “A customer will sometimes send us their NDA first, but our legal team will say we need to send our financial NDA first with our language—so, it can be a little back-and-forth sometimes.”

Some credit professionals like to keep a copy of their customer’s financial NDA on file. “We keep our documents long-term,” Ennis said. “We’ve never gone in and actively deleted material, especially legal documents. We keep the customer’s NDA, and credit file—which are all electronic nowadays—in accordance with our document retention policy.”

The bottom line: You will likely find that customers are willing to sign the NDA to protect their financial information. Inquiring about financial NDAs is one of the best practices for companies to follow to protect themselves and minimize risk. “Never shy away from it,” said Ennis. “Don’t be afraid to sign a financial NDA as long as you know what you’re signing. Always have your legal team or lawyer review it.

In B2B credit management, where numbers often speak louder than words, it’s easy to overlook the human element behind the figures. However, credit managers are not calculators; they are visionaries, strategists and above all, individuals with voices longing to be heard.

Whether they’re negotiating credit terms with customers or collaborating with internal teams, credit managers want to matter. They want a seat at the table, not just as silent observers, but as valued contributors whose opinions shape decisions and outcomes.

Across all industries and generations, we have more in common than we realize. Every professional wants the same thing: their voices to be heard. Everyone has a universal desire to matter and make a difference.

The youngest generation entering the workforce is not all that different. Thanks to social media, our Gen Z staff, or Zoomers, want to immediately engage, immediately make a difference and immediately matter. They are seeking out mentors and they want a professional network they can turn to, at a moment’s notice. These “wants” are not so different from the generations that have come before or the generations to come in the future; the younger generation is just more comfortable vocalizing their expectations.

So, how can credit managers ensure that their voices resonate, and their perspectives are valued?

Completing NACM’s Credit Managers’ Index (CMI) each month can accomplish just that. The CMI provides a powerful platform for credit professionals to make an impact. This Index is special to the credit industry and is one of but a few economic indicators that is forward-looking.

“Overall, I think that credit managers—more than any other person in the company besides the CEO—have the best view of what’s happening in their company and their industry,” said NACM Economist Amy Crews Cutts, Ph.D., CBE.

The CMI is a valuable tool when building a report to present to the C-suite. It also signals to upper management that you can be relied on for information. “The executive team meets weekly, and I present the CMI results to them, so they have an idea of what is going on,” said Cathy Klein, controller at Crystal D (Saint Paul, MN), who has actively participated in the CMI for almost 20 years. “It opens a good discussion about what’s going on in the industry and figuring out strategies to use moving forward. It’s also a good way to compare what we’re seeing versus the entire industry. With my AR department, we use it a lot as a reminder that we might be hitting our slow season where we have to ramp up our efforts.”

The more participation in the CMI, the more accurate the economic forecast will be. By participating in the CMI survey, credit managers add value and credibility to the profession with information only they can provide. “The idea that they have a small impact in the economy in relation to their firm is simply not true,” Cutts said. “Each response can determine the strength of economic activity and complements other economic data used by economists and policymakers. The more participation we have, the stronger the results are that indicate where the economy is headed.”

The bottom line: By empowering credit managers to speak their truth and fostering an environment where their voices are heard, companies can cultivate a culture of trust, collaboration and excellence—one where every credit manager truly becomes heard round the world.

The CMI is now open. Complete the Survey to earn .1 CCE point.

Competition creates significant consumer benefits, including increased innovation, efficiency, variety, quality and lower prices. Antitrust laws, which prevent companies from unfairly dominating markets or stifling competition, ensure that customers have options.

Why it matters: Understanding and complying with antitrust laws is essential in the credit industry to preserve competition, prevent violations that could lead to severe penalties including fines and imprisonment, and maintain a company's reputation and future business opportunities.

Antitrust in Credit Groups

Antitrust laws help govern what can be shared and what cannot be shared during industry credit group discussions. Information shared during these meetings cannot restrain trade or influence decisions and must be impartial, historical, factual and unemotional. Therefore, it is prudent that each group member be vigilant as to not violate antitrust, either intentionally or unintentionally. NACM Credit Group Administrators (CGA) play an important role in making sure everyone abides by antitrust laws during credit group meetings.

Off-Limit Topics Under Antitrust

• Quality of your product and production levels.
• Distribution strategies.
• Boycotts and blacklisting.
• Company transactions for mergers and acquisitions.
• Joint ventures, which fall under the extension of credit.

But the main antitrust topic in the credit industry is price. “Not only can we not talk about price, but we also can’t talk about terms because payment terms are part of price,” said JoAnn Malz, CCE, ICCE, NACM Chair and director of credit, collections and billing at The Imagine Group LLC (Shakopee, MN).

When analyzing whether there was price fixing, price is any factor in the commercial terms that affects the total cost to the customer. This also includes:

• Payment terms, such as cash in advance, cash on delivery or 30/45/60 days terms.
• Transportation surcharges.
• Credit card surcharges.

Trade References

Antitrust also governs what group members can say and reply to customer trade references. “This is something that is competitively sensitive to the company that's being asked to provide that information,” said Jonathan Lewis, partner in the Antitrust and Competition at Lowenstein Sandler LLP (New York, NY). “You also have to think about the contract with your customer which may say specific terms and references are confidential. By sharing that information, you'd be potentially losing a competitive advantage.”

Antitrust Topics Under Debate

Talking about what you’re doing now or intending to do in the future clearly increases the risk of violating antitrust laws. Cash in Advance (CIA) or Cash on Delivery (COD) may be viewed as a historical credit term but are often considered as current credit terms as it pertains to the customer today. “If you share with other members in a group that you’re on CIA terms, they can place that company on CIA terms without doing their own independent evaluation and documentation,” Lewis said. “It becomes a directional change that presents an issue to antitrust laws.”

An agreement among competitors to increase price (add a surcharge) violates antitrust laws. “If credit professionals discuss adding a surcharge during an industry group meeting and participants then decide to add a surcharge afterwards, someone observing these events may conclude that the surcharge came about as a result of an agreement,” Lewis said. “The risk here increases where the companies adding the surcharge cannot show—by pointing to contemporaneous documents, memos and emails—that they made an independent decision to add the surcharge.”

Malz suggests that every credit professional clears these antitrust topics with their legal teams. “From my perspective and understanding, CIA, COD and surcharges are governed by antitrust because they are all payment terms, which are part of price,” she said.

Understanding the Consequences

Antitrust violations can lead to significant consequences. Criminal antitrust violations can end with jail sentences and hefty fines. Individuals can be sent to jail for up to 10 years or face fines of up to $1 million.

Corporations can face fines in an amount calculated as the highest of:

• up to $100 million or
• twice the loss inflicted on customers or
• twice the unlawful gain to the offending corporation.

Companies that violate antitrust laws also may face future business restrictions. Companies convicted of criminal violations of the antitrust laws can be barred from federal and state business and can lose commercial customers as well. Antitrust violations also may result in treble damages in civil lawsuits. If a company is found to have violated the antitrust laws in a lawsuit brought by consumers, it may have to pay three times the amount of the actual damages.

Defending against antitrust claims is expensive, not only in legal fees but also in payments to expert witnesses and consultants. Antitrust claims also involve analyzing years of emails, memos and financial information, with data analysis expenses that can run up millions of dollars per year.

Antitrust claims are disruptive to business operations. It frequently involves many of a company’s key employees, taking up a great deal of their time and energy. Involved individuals may be fired and it is often difficult for people in these situations to get another job of the same type or level in the future.

The bottom line: Understanding and adhering to antitrust laws is crucial for companies to avoid significant consequences, such as fines, business restrictions and potential damage to their reputation and future job prospects.

After a brief respite of bipartisanship in January, the border security and foreign aid package is officially dead in the water, and the Senate’s busy legislative calendar has effectively stalled the bipartisan tax package that the House passed last week. In other words, everything is back to normal in D.C.

On Wednesday, Jan. 31, the House passed, by a strong margin of 357-70, a bipartisan tax package that extended the increased child tax credit for another two years as well as several business tax provisions that were part of the Trump tax cuts in 2017. Most notably:

• Research & Development Tax Deduction: The 2017 Tax Cuts and Jobs Act included a ‘pay-for’ that changed the R&D tax deduction starting in 2023 by requiring businesses to deduct their R&D expenses over a five-year period, rather than in the year in which the expense was incurred. The tax package averts this change for another two years, allowing businesses to continue to fully deduct their R&D expenses for the tax year in which they are incurred.
• Bonus Depreciation: Bonus depreciation allows businesses to deduct a significant portion of certain kinds of expenses, such as real estate rental properties, vehicles, computer equipment, and office furniture, in the year in which they are incurred. The 2017 tax bill increased the bonus depreciation from 50% to 100%, however that increase expired in 2023. The bill retroactively extends this increase through 2026, giving businesses another two years to make significant capital investments and fully write them off in the same year.

The business tax cuts amount to an estimated $33 billion, and along with the roughly $32 billion child tax credit increase, the bill represents a significant injection of cash into the economy. This would go a long way towards cementing the economy’s ‘soft landing’ following last year’s interest rate hikes and high inflation rates.

Unfortunately, while many thought that the House would be the larger obstacle, the Senate calendar is proving equally vexing. After failing to pass the bipartisan border security and foreign aid package, the Senate is leaving for a two-week recess at the end of the week. They will come back on Feb. 26 and immediately have to tackle the expiring government funding bills which come due on March 1 and March 8. Realistically, that means the Senate won’t have time to vote on this package until mid-March, which is getting perilously close to the April 15 tax deadline and would be very challenging for the IRS to implement.

Adding to the uncertainty, Senator Crapo, the lead Republican on the Senate Finance Committee, has spoken out against the bill and specifically against the increases to the child tax credit. He is hoping to have an open amendment process in the Senate, and if any new amendments are adopted, it would require the House to pass the bill again, a prospect that is far from guaranteed. While Senate Democrats could ignore Sen. Crapo’s request, this would jeopardize Republican support for the bill and could cause it to fail to get the 60 votes it needs to advance.

The bottom line: In short, what looked like a likely bipartisan win is now likely to be a bipartisan flop.