eNews September 13, 2018
In the News
September 13, 2018
Supply Chain Management Styles Stand in Their Own Way
It’s one thing to learn from a mistake after it happens, but the future isn’t 100% predictable. Uncertainty makes business-to-business credit professionals uneasy, particularly in regard to the supply chain process, which if disrupted, could leave a business in shambles. As companies scour for effective ways to mitigate risks to their supply chain, Dun & Bradstreet completed a global survey of about 1,100 finance professionals in the U.S., U.K. and Canada to determine today’s most common risks to finance leaders’ supply chains and the strategies they use to combat them.
The (R)evolution of Risk Management: Finding Opportunity for Modern Finance in a Universe of Risk was completed in April and released last month, including a report by Dun & Bradstreet’s Eric Dowdell, the global head of the trade credit business. The survey led to the surprising conclusion that what stands in the way of finance leaders wasn’t so much external parties as it was their own efforts to “manage, monitor and predict risk.” For example, the old ways of data collection, such as data silos, are hindering organizations’ abilities to expect the unexpected.
Much like a farm silo used to store grain, data silos keep data in one central location. Dowdell’s report states the data is handled by one department and kept out of reach from others in the company. According to the survey, more than 60% of respondents said their data is kept in silos, while only 20% share the data.
“It’s clear that modern data management practices haven’t yet reached full adoption, and that investments in resources and strategic direction are necessary to ensure organizational risk is managed effectively with data and insight as strategic guidelines,” the report states.
Rather than adopt this new technology, more than half of respondents are using self-created analytics, followed by credit reports and third-party data. Only 14% use machine learning and artificial intelligence (AI), with a mere 2% utilizing blockchain technology. In his analysis, Dowdell cited that companies might be unaware of the latest opportunities or simply don’t have the means to pay for the upgrades and/or properly train staff.
Although the future is never entirely predictable, using machine learning or AI increases companies’ awareness of potential risks before they happen. Dowdell said in his report that companies can build detailed, predictive models to determine their customers’ purchasing habits and who is risky. NACM Economist Chris Kuehl, Ph.D., shared similar thoughts on technology adoption, saying “it makes no sense whatsoever to hold back.”
“It would simply mean that companies would start a slide toward irrelevance and would soon be driven out of business by a competitor that did embrace that technology,” Kuehl said. “As always, the simplistic answer is training. Those who have seen their jobs replaced by a machine have to adapt and develop new skills that are relevant to the new employment world. This is often much easier said than done, however.”
—Andrew Michaels, editorial associate
Call for Proposals—Deadline Approaching
The National Association of Credit Management will hold its 123rd Credit Congress & Exposition in Aurora, Colorado, from May 19-22, 2019. Please visit creditcongress.nacm.org to fill out the form to submit abstracts, proposed sessions and communications pertaining to participating in the program. Submissions must be made using this form.
Please submit ideas by September 28, 2018. Any proposals that are incomplete or are received after this date will not be considered.
Protect Your Lien Rights Before the Project Begins
Claims of lien are common issues in any construction dispute. Filing claims of lien can often be complicated and sometimes tricky, especially for contractors and subcontractors performing work in multiple states. Although lien law varies greatly from state to state, several states in the Southeast have specified certain steps that parties must take, before the project begins or soon after starting work, to protect the project from liens of unknown sub-subcontractors or to protect their lien rights.
For prime contractors, they can often take certain steps, such as filing a notice of commencement, to protect the project from liens of unknown sub-subcontractors. Also, subcontractors or sub-subcontractors’ right to a claim of lien can often be affected by whether that party sent or filed a notice after starting work on the project.
For example, in Georgia, a prime contractor, or the owner, may file a Notice of Commencement in the county property records office within 15 days after the contractor commences work on the project. The prime contractor, or the owner, must also post a copy of the Notice of Commencement at the project site and send a copy of the Notice of Commencement to any subcontractor that requests a copy of such notice within 10 days after receiving the subcontractor’s request.
Even if a Notice of Commencement is filed, the sub-subcontractor can still preserve its lien rights by sending a Notice to Contractor within 30 days of beginning work. If the prime contractor, or the owner, correctly follows the steps to perfect the Notice of Commencement and a sub-subcontractor does not timely provide a Notice to Contractor, then any lien filed by such sub-subcontractor is invalid. Although the procedures are different, North Carolina and South Carolina have notice of commencement and notice to contractor concepts that are relatively similar to Georgia.
In Florida, a subcontractor must serve the owner with a Notice to Owner, which is a statutory form, within 45 days of commencing work on the project. A sub-subcontractor must adhere to a similar notice procedure. If a subcontractor or sub-subcontractor does not correctly provide the Notice to Owner, then any lien filed by that subcontractor or sub-subcontractor is invalid.
This article serves as a reminder that prime contractors and subcontractors must verify and follow the particular procedures required for the particular state in which the project is located before beginning work on the project. To wait longer risks losing your lien rights. As the old axiom goes, “an ounce of prevention is worth a pound of cure.” This is especially true when dealing with liens.
Reprinted with permission from Bradley Arant Boult Cummings, LLP.
Daniel Murdock, Esq., focuses his practice on representing various clients throughout the construction industry, including owners, design professionals, general contractors and subcontractors, with drafting their construction contracts, providing project counsel and resolving construction disputes.
Connect and Learn with Credit Professionals in your Region
Regional conferences are a wonderful opportunity for members to network and share news, information and tips with fellow credit professionals from their respective geographic regions.
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.
Proposed New York City Legislation Aims to Reduce Late Payments to City Contractors
A bill to amend New York City’s contracting process to improve the promptness of city agency payments to contractors has been introduced in the New York City Council. The bill’s sponsors introduced the measure following a news report on the city’s history of late payments to some social service vendors.
Intro 1067 would require the Procurement Policy Board to create a process for city agencies to inform vendors of the reason for any late payments on contracts. Additionally, agencies would have to provide the Mayor’s Office of Contract Services (MOCS) reports on any such late payments.
The information collected by MOCS would be reported to the Mayor and City Council every six months. The report would include information on late payments from all city agencies.
History of Lateness
The bill is in response to a clearly documented history of late payments by city agencies to social service not-for-profits. For example, according to the New York Post, the Department of Homeless Services (DHS) has been late in registering and paying 78% of its contracts since 2013. Worse, only 5% of DHS contracts reportedly were registered on time in 2017 and nearly half, 43%, were more than 100 days late. The New York Post estimated that, overall, 59% of all city contracts are paid late.
Such delays leave providers in a difficult position as they are required to provide the services regardless of timely payment, while the city is not penalized for being late in making its payments.
Intro 1067 directs the Procurement Policy Board to promulgate rules for the expeditious processing of payment by city agencies and departments. The rules will include:
The maximum amount of time allowed for the processing and payment of such vouchers from the later of (a) the date such vouchers are received by the agency, or (b) the date on which the goods, services or construction to which the voucher relates have been received and accepted by the agency;
A program for the payment of interest, at a uniform rate, to vendors on vouchers not paid within the maximum amount of time pursuant to the time established in section 1;
A process for the allocation and charging of any such interest payments to the budget of the agency responsible for the delay leading to the interest payments; and
A process for the agency to inform vendors of the reason for the lack of prompt payment on vouchers not paid within the maximum amount of time pursuant to section 1.
Intro 1067 was introduced by New York City Council Members Rory Lancman (D-Queens) and Justin Brannan (D-Brooklyn) on Aug. 8, 2018. Lancman said, “If we’re going to rely on the nonprofit community to provide as many social functions as we do, we need to make sure they’re paid on time.” He also said, “When we find out they haven’t gotten paid in many months and they need to go out and make a loan to make payroll, that’s what really got my attention.” Brannan added that nonprofits “perform really vital, critical services for our city, but are really hung out to dry and take out loans just to provide what they’ve been contracted to do.” He said it is “just outrageous” that some groups are still waiting to get paid for services they performed years ago. No hearing has been scheduled on Intro 1067 at this time.
Reprinted with permission from Jackson Lewis PC.
Ellen M. Gustafson, Esq., is a government relations director in the Albany and New York City offices of Jackson Lewis PC. Jonathan L. Bing, Esq., is a principal in the New York City and Albany offices of Jackson Lewis PC. He is also co-leader of the firm's Government Relations Practice Group.
The Jackson Lewis government relations practice monitors and tracks all legislation introduced in New York and advocates for client positions at all levels of city and state government.
Please contact Jackson Lewis with any questions about Intro 1067, compliance, or government relations.
CLC 2.0 is Here
The Credit Learning Center has been upgraded with improved capabilities and security, including:
- Ability to watch your modules on tablets and smart phones
- Download and print course material without having to view it first
- Better organization and access to courses ordered, viewed and completed
- Automatic reminders of purchases
As always, choose the modules and courses you need to improve job performance and complete them at your convenience, any time, anywhere!
Michigan Roadwork Halted by Labor Dispute
Payments in the construction industry are already an issue for many material suppliers and others lower on a project’s supply chain without any help from outside factors. Weather is a major player in the construction sector, and it will likely rear its ugly head in the coming days and weeks with Hurricane Florence; however, there’s another aspect affecting construction payments and the industry as a whole: labor.
It is no secret there is a labor shortage in construction, not only in the U.S. but around the world. Currently, in Michigan, it is not that there are not enough workers—there are—but a union lockout has hampered construction in the southeast portion of the state.
More than 160 state and local road projects are beset with delays or complete stoppages due to a labor lockout between the Michigan Infrastructure & Transportation Association and Operating Engineers Local 324, according to Crain’s Detroit Business. More than 1,000 workers have not reported to jobsites since the lockout started earlier this month. A five-year contract between the two sides ended June 1.
More than half of the projects are the Michigan Department of Transportation’s, but the MDOT is not involved in the dispute. Others are part of local road agencies. Projects along Interstates 696, 75 and 96 are also being affected by the dispute.
When construction disputes arise, Chris Ring, of NACM’s Secured Transaction Services (STS), said, “It’s time for creditors to batten down the hatches.”
“Creditors should let management know this [union dispute] is happening and potential delays in payments are on the horizon. It is not uncommon for this to happen.” Unfortunately, factors such as a labor dispute or weather are outside a creditor’s control, and there is not much they can do to make the union workers go back to work. Ring also suggested to “get paperwork done and out as soon as possible.” This will help with liens, and in this case, bond claims. It is important to remember statutory deadlines do not change.
The principal contractor must still receive a written notice from the unpaid bond claimant within 30 days after first furnishing of materials or labor in Michigan. A written bond claim notice to the principal contractor and the government unit must also be given within 90 days of last furnishing. Specific for Michigan highway projects, the MDOT must give notice with 60 days of last furnishing.
One caveat of this is not all public projects are bonded, so knowing information about the project is vital. Contracts less than $50,000 are excluded from statutory bond requirements as laid out in the Michigan Compiled Laws.
—Michael Miller, managing editor
Essential Tools for Doing Business Abroad
FCIB Worldwide Credit Reports
FCIB Credit Reports go beyond the numbers, providing in-depth, personal and operational information about your customers and prospects that is vetted, validated and verified. FCIB adds value by using multiple providers—in fact, the best provider, on-the-ground in a region. FCIB checks to see that the subject is who they say they are. The more you know, the better your credit decision will be.
PRS Country Reports
PRS Country Reports help you manage the risk from global market uncertainty by digging beyond the headlines to give you a comprehensive, fact-based view of the economic and political risk of doing business in a particular country. Each report provides 18-month and five-year forecasts for turmoil, investment, transfer and export risk in 100 countries, plus in-depth coverage of relevant political and country risk events, country conditions and independently back-tested methodology sourced by the IMF.
Political Risk Newsletter
The “best in class” monthly Political Risk Newsletter, written by the PRS Group and available to members through FCIB, provides concise, easy-to-digest briefs on up to 10 countries, with additional recaps updating prior month’s reports. Each month’s Political and Economic Forecasts Table covers 100 countries, with 18-month and five-year forecasts for KPIs, such as turmoil, financial transfer and export market risk. You’ll also find rating changes, providing an excellent method of tracking ratings and risk, for the countries you’re exporting to.
FCIB and NACM members receive a 10% discount on PRS Country Reports and the Political Risk Newsletter.
To learn more, visit www.fcibglobal.com.