eNews July 19, 2018

Augmented, Virtual Reality Catching Attention of B2B Communities

Workplace use of artificial intelligence (AI) is trending in the business-to-business (B2B) community, but it isn’t the only technology drawing interest from credit managers. Advancements in augmented reality (AR) and virtual reality (VR) technology are reigniting old conversations and sparking new ones about how these tools can be used in the industry.

Marketing and sales content specialists believe the manufacturing sector is the first stepping stone to implementing AR and VR into B2B settings because it allows suppliers to show how their equipment operates through a digital experience.

According to Forbes, AR is a mixture of real-world and digital experiences where users can interact with digital content that is projected into their surrounding environment. Smartphone users can download this technology using apps, mainly gaming content. An example is the Pokémon Go gaming app that shows the titular creatures moving around in real-world settings. VR differs in that it completely immerses users into a virtual environment, including sights and sounds, by using specialized headsets, computers, gaming consoles or other devices.

“AR adoption has been aggressive in limited cases, but it continues to be slow when viewed across all markets,” Principal Analyst Eric Abbruzzese, of advisory firm ABI Research, said in a June 2017 press release. ABI completed a B2B technology survey, Transformative Technology Adoption and Attitudes—Augmented and Mixed Reality, consisting of answers from 455 U.S. companies in nine vertical markets. “Early adopter and pilot phases are ongoing. True AR will be seen in [2018 and 2019], with a greater foundation for growth in enterprise and compelling consumer products coming to market.”

A quarter of respondents already use AR for business purposes, while the remaining 75% exhibit different levels of interest for future use. The study found more than 40% of respondents in the manufacturing sector were already using AR, specifically smart glasses, and only 4% were uninterested in doing so. ABI predicts manufacturing will make up nearly 20% of the AR market through 2021.

International law firm Perkins Coie released a 2018 Augmented and Virtual Reality Survey Report in March that found 17% of respondents anticipate the most investment in AR or VR technology in the next 12 months. Another 18% predict more investment from the retail sector, an increase over the 7% who predicted more investment in the sector in 2016. Only a few respondents expressed concern about the financial and investment obstacles; however, 44% said they were fearful of the legal risks to consumer privacy and data security.

More than half of respondents said they seek funding through venture capital, angel investment, strategic investors or pre-funding.

“The results … show that AR/VR startup respondents are still in a growth phase and actively seeking funding,” the Perkins Coie survey stated. “In general, AR/VR financing remains largely in the seed phase, at least through the first few months of 2017. Startups are still taking a longer-term view in growing their companies, given that most selected raising capital as their growth and exit strategy for the next three years, as opposed to pursing acquisitions or strategic partnerships.”

CEO Pieterjan Bouten, of B2B sales solutions provider Showpad, told PYMNTS B2B firms need to jump on this train before it leaves the station because “this feature has barely been taken advantage of,” and it “delivers a better, more immersive buyer experience by showing buyers virtual products within the context of their actual environment.”

In addition to manufacturing and retail, Bouten added construction could also reap the benefits of AR and VR technology.

—Andrew Michaels, editorial associate

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Don’t Miss Out on Payment by Missing Deadlines

Deadlines are deadlines, regardless of how soon after they’ve passed—especially for mechanic’s liens, at least in New York state. After a supplier filed a mechanic’s lien in New York one day past the four-month deadline for a single-family residence, the supplier and attorney were left to prove the property fell outside of the single-family residence category; otherwise, the lien may be denied.

In New York, suppliers have four months to file a lien for a single-family property; however, if the property falls under residential development or is found to be a multi-family home or owned by a corporation, the window to apply extends to eight months after the last supplies were delivered. Attorney Kevin Laurilliard filed the lien just after deadline on a single-family residential property based on speculation that the property may fall outside of the single-family residence classification.

This circles back to understanding properties and customers. Laurilliard noticed the name of the owner is an LLC, not a person, which may mean his lien will not be denied, even after four months. A company ownership likely points to a property that falls beyond being a single-family home, giving Laurilliard and the lien claimant the flexibility of eight months instead of four.

“[The property] is a large vacant lot, and the name of the owner is a corporation, which indicates to me there’s some planned development—more than just a single-family residence,” Laurilliard said. “On this project, it’s not that the law lets you file beyond four months; you can file any time. But in your lien, you must specify when was the first day you provided materials and when was the last day. If I file my lien more than four months after I provided materials, then the owner of the property can get the lien discharged.”

When a credit manager is cognizant of who the owner is, filing liens and understanding rights surrounding different properties becomes easier. If a manager has to file late—even so much as a day late—the manager should be aware of the consequences.

“If they have to file late, they should be prepared for the owner of the property or somebody on the project coming in and saying, ‘You’re a day late, we’re going to discharge your lien,’” Laurilliard said. “You have to be careful with these deadlines: If it says four months, it has to be four months. At least New York is like that.”

—Christie Citranglo, editorial associate

Connect, Network, Learn and Share

Regional conferences are a wonderful opportunity for members to learn and grow by attending educational sessions and networking with fellow credit professionals from their respective geographic regions.

Central Region Credit Conference
September 13, 2018
Minneapolis, MN
Hosted by: NACM North Central

Western Region Credit Conference
October 10-12, 2018
Salt Lake City, UT
Hosted by: NACM Business Credit Services, Utah & Arizona

All-South Credit Conference
October 21-23, 2018
Clearwater Beach, FL
Hosted by: NACM Tampa

For more information and to register, contact the local Affiliate.

Blocking the Threat: Cybersecurity in US Companies

More often than not, companies address cyberattacks only after they occur and the damage has been done. “What happened? Why? How can we stop it from happening again?” But what if these same companies asked those questions before they were impacted? According to recent findings, a significant number of companies in the U.S. are beginning to heed the warnings from those who were too late by taking precautionary measures.

Threat intelligence programs are a growing trend among U.S. businesses, ranging from firewalls and online platforms to intrusion prevention/protection and end-point detection and response. Some companies cite specific incidents that led them to implement programs, such as the Equifax breach in September 2017 that impacted roughly 148 million Americans. During the cyberattack, consumers’ Social Security numbers, birth dates, addresses and even driver’s license numbers were stolen, the credit reporting agency stated.

A 2018 survey by security operations and analytics platform ThreatConnect found U.S. companies are cracking down on cyberthreats to their IT departments, using cybersecurity services, technologies and solutions. The Building a Threat Intelligence Program survey’s 351 respondents were classified as the “cybersecurity decisionmakers” within their companies, where more than half have worked in the position between four and 10 years.

The six-day survey, which ended in April, revealed some surprising strides in the organizations, most notably how they managed to find success in preventing certain cyberattacks. The most success was reported by respondents against phishing attacks (67%) and breach of customer data (60%), followed by ransomware attacks and insider threats.

“Nearly four-in-five (78%) cybersecurity decisionmakers with threat intelligence programs said that their organizations have successfully used those programs in the last year to block threats that otherwise would have cost the business a significant sum of money,” the report noted—an average of nearly $9 million in the past year.

However, there’s definitely room for improvement in the banking and finance sectors, where the survey found 29% of respondents were unable to block similar threats in the past year. Manufacturing was less successful at 42%, while telecom and communications (10%) and retail and consumer product goods (14%) saw minimal impact.

Just as the U.S. is seeing some success in reducing risks, Canada is not far behind. On July 10, Canadian publication The Globe and Mail reported the government’s Finance Department recently improved its cybersecurity features, such as separating the IT network that has budget information and changing how sensitive information is exchanged within the government. Cyberthreats are still possible, the article stated, after an internal analysis concluded the department is at a medium risk of “a breach or disruption with ‘significant’ impact” that targets the government’s abilities to provide policy options, advice and/or critical operations.

“Threats in cyberspace are complex and rapidly evolving; now more than ever, cybersecurity is of paramount importance,” Department Spokesman Jack Aubry said in the article. “Evolving cyberthreats to IT security require constant vigilance and continue to be rigorously monitored.”

—Andrew Michaels, editorial associate

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Liens Filed Against Kentucky College Projects

Kentucky has been in the news recently due to the fallout surrounding Louisville-based Papa John’s Founder John Schnatter for using inappropriate language and the court case surrounding the large, deferred-payment salary of former University of Louisville President James Ramsey. The university was also in the limelight earlier this month for another unfavorable reason.

According to the Louisville Business Journal, there are $1.4 million in liens filed against university projects. Whittenberg Construction was the general contractor for an $80 million classroom building at the Belknap campus and subcontracted with Walker Mechanical Contractors, who in turn subcontracted with GCH International for sheet metal. GCH International has a mechanic’s lien for $937,000, and claims it stopped supplying materials after Walker Mechanical stopped paying.

Whittenberg Construction President Andrew Mays claimed GCH was falling behind schedule and failed to meet deadlines, resulting in GCH walking off the job and Walker Mechanical hiring additional subcontractors.

A separate lien was filed by US Millworks for more than $350,000 for work at the university’s Novak Center for Children’s Health. Whittenberg was also the general contractor for this project, and Mays said the lien against the public land is invalid since it is a public project. A third lien for slightly more than $100,000 was filed against the school’s real estate holding foundation for work at the Thrive Center, which opened last fall.

As with all states, it is important to remember the steps which must be followed to perfect a lien are different depending on the type of project. The items to follow often vary within the state where the project is located as well. For instance, liens can be invalid if filed against public property, which is why bond claims and other securities exist for creditors.

For private and public construction jobs in Kentucky, NACM’s Secured Transaction Services suggests serving a preliminary notice within 45 days of last furnishing to prompt payment from the customer. For private, commercial projects only, a notice of intent to lien must be served to the owner within 75 days of last furnishing for claims of less than $1,000 and within 120 days of last furnishing for claims of more than $1,000. The lien must be filed within six months of last furnishing with a copy of the statement sent to the owner within seven days of the filing.

On the public side, a bond claim notice is required within 60 days of the last day of the month in which materials were supplied. Those working on a public project in Kentucky also have the option to file a public improvement lien on the funds due to the contractor from the owner of the property.

—Michael Miller, managing editor

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Know Your Customer & Their Financials

“Credit insurance is a vital part of the retail supply chain, protecting suppliers against the risk of a customer going bust between the point of accepting an order and payment being made,” explained The Sunday Times this past weekend. “When insurers cut or withdraw cover, suppliers tend to demand payment upfront, putting strain on a retailer’s working capital,” the British paper continued.

The article focused on a report that U.K. department store Debenhams is hurting for cash, resulting in credit insurers squeezing terms and putting pressure on the retailer. However, in a statement, the retailer said, “Debenhams has a healthy balance sheet and cash position. All the credit insurers continue to provide cover to our suppliers and we maintain a constructive relationship with them,” according to an article with Reuters. “It is well documented that market conditions are challenging, but Debenhams continues to be profitable, has a clear strategy in place and is taking decisive actions to strengthen the business‎,” added the retailer.

According to The Times report, Debenhams plans to sell its Danish retail chain and a printing firm to help generate cash. The Times also said credit insurer Euler Hermes reduced cover for Debenhams suppliers, and fellow insurers Atradius and Coface have refused to cover new shipments. As of July 19, company stock prices are down roughly 15% over the past five days and nearly 30% over the last month.

If Debenhams had to pay creditors a month earlier, it would cause a cash outflow of roughly $133 million, said Berenberg Analyst Michelle Wilson in an article with Bloomberg.

The concern surrounding U.K. retailers, and brick-and-mortar stores in general, is the rise in online shopping, which was seen just this week with Amazon’s Prime Day. The shopping event saw more than 100 million products sold. According to Coresight Research, Amazon was expected to bring in at least $3.4 billion. Traditional retailers, such as Target, Macy’s and Kohl’s, are trying to compete with Amazon and added their own e-commerce sales as well.

“It is becoming a finance business, not a clothing business,” said one supplier to fashion news outlet Drapers. “One of the biggest issues we are facing is credit and finance,” the supplier continued. “Retailers are extending payment terms up to 120 days and insurance companies are pulling the plug. For a supplier, it is a risky time not to have credit insurance, but for a retailer, it could make them potentially go under because no one wants to supply them.”

The global credit insurance market is valued at $7.75 billion and is expected to grow to $8.56 billion by the end of 2023, according to a global credit insurance market report.

The latest FCIB Global International Credit & Collections Survey on the U.K. (April 2018) shows payment terms have generally remained constant from the previous survey results in July 2017. Cash flow issues was the third-most reported reason behind payment delays after billing disputes and customer payment policy.

—Michael Miller, managing editor

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