eNews July 2
In the News
July 2, 2020
NACM’s June Credit Managers’ Index
Supports Predictions of V-Shaped Recovery
—Michael Miller, managing editor
Despite recent spikes in COVID-19 cases, NACM’s June Credit Managers’ Index (CMI) data supports the predictions of a V-shaped recovery. The June CMI shows that the economy is on the road to recovery, with many sectors doing a 180 by jumping back into expansion territory (a score above 50). The manufacturing and service sectors each went from an overall score of 44.1 in May to 51 in June, with 51 only slightly lower than data from July 2019. “This makes two months in a row with strong numbers, and in the favorable categories where the future is starting to take shape,” said NACM Economist Chris Kuehl, Ph.D.
All four combined favorable factors returned to expansion territory climbing from 39.5 to 55.3. Sales jumped from 28.6 to 54.1, while new credit applications increased from 43.3 to 57.9. June’s dollar collections at 53.9 and amount of credit extended at 55.2 each improved by more than 10 points.
Meanwhile, the unfavorables increased by less than a point to 48.1. “The sudden nature of the lockdown recession caught the business and credit community by surprise,” said Kuehl. “Prior to the recession of 2008, there was the usual warning that something threatening was starting to build and most credit managers started to behave more cautiously. They were not offering generous terms to any but their best clients, and new applications were carefully scrutinized. This time, there was abundant confidence at the start of 2020, but there was no time to exercise much caution.”
Rejections of credit applications and disputes each declined in June, just shy of staying in expansion territory. Accounts placed for collection was the only factor to decline further into contraction. Dollar amount beyond terms improved by 12 points to 44.4. Dollar amount of customer deductions fell modestly but stayed in expansion territory at 50.6. Filings for bankruptcies remained under 50 but improved slightly to 47.7.
In the manufacturing sector, the sales numbers jumped from 27.5 to 57.8. On the unfavorables side, “the negative activity doesn’t show up right away given that actions taken by credit managers are triggered by distress,” Kuehl said. “In a more normal recession, there would have been warning signs that would have provoked some caution, but the signs were missing this time.” Rejections of credit applications, accounts placed for collection, disputes and dollar amount of customer deductions each slipped into contraction territory in June.
The service sector favorables followed a similar pattern. Sales, new credit applications, dollar collections and amount of credit extended all returned to the 50s. Sales was the low point at 50.4, but it started at 18.6 in April and 29.7 in May. Rejections of credit applications and accounts placed for collection each declined in June, but the former remained in expansion territory. Disputes increased slightly, and dollar amount of customer deductions remained the same, both in expansion territory. Filings for bankruptcies improved but stayed below 50, while dollar amount beyond terms improved from 33 to 44.9 in June. “It is still early, and there are still many difficult days ahead,” Kuehl concluded.
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New York Lender Lawsuit Shines Light on
a Different Kind of Fraud
—Andrew Michaels, editorial associate
The phrase, “It can happen to anyone,” often holds a negative connotation. A person is more likely to hear this uttered by a friend when the one embarrasses themselves than hear it when discussing their chances of winning the lottery. In the business credit industry, “it can happen to anyone” can refer to a variety of scenarios, such as receiving the oddball credit application or struggling to get payment from a difficult customer. Yet, there is one experience all credit professionals have in common: fraud.
By now, many credit departments are all too familiar with fraudulent schemes utilizing Business Email Compromise (BEC) or Vendor Email Compromise (VEC). Attempted or actual payments fraud attacks have risen significantly and currently impact more than 80% of organizations, according to the Association for Finance Professionals 2020 Payments Fraud and Control Survey—a 20% increase in less than a decade. Although some criminals get away, others face justice, as is the case in New York City involving three companies and their owners and managers.
The New York State Office of the Attorney General issued a press release on June 10 that detailed a lawsuit against Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding (the Richmond companies) for allegedly cheating “small businesses in New York and across the country out of millions of dollars each year by selling these small business owners ‘merchant cash advances,’ or fraudulent, sky-high interest loans.” The press release states the three companies were charged with “illegally loaning money to small business owners at astronomically-high interest rates, fraudulently charging undisclosed fees, debiting excess amounts from merchants’ bank accounts, and obtaining judgments against merchants by filing false affidavits in New York State courts.”
Additional charges against the companies include harassing and threatening violence and legal action against small business owners in order to get loans paid. After investigating for more than a year, the press release states the companies collected over $75 million on nearly 2,000 loans that were deemed fraudulent and illegal. The Federal Trade Commission filed a similar suit on the same day.
“Small businesses are the backbone of our economy, so it is unconscionable that these modern-day loan sharks not only preyed on hardworking business owners with fake loans, but threatened violence and kidnapping,” said Attorney General Letitia James. “While small businesses may not always have the tools to protect themselves from unscrupulous actors, my office is determined to use every tool at its disposal to protect small businesses from these illegal fraudsters, and will fight to get every penny back.”
The Richmond companies’ case may seem farfetched for the average credit professional; however, actual payment fraud was a recurring issue in 2019, with 33% of financial professionals experiencing attempts and/or attacks on ACH payment methods in AFP’s survey. Fraudulent attempts and/or attacks on corporate/commercial credit cards and wire transfers was experienced by 34% and 40%, respectively, while the majority saw attempts and/or attacks on checks.
The Effects of Covid-19 on Credit Management Processes
Over the past few weeks, we’ve surveyed and spoken with FCIB members regarding their day-to-day credit control processes during the global lockdown. It’s clear from members that global accounts receivable portfolios will continue to pose challenges over the coming months.
In this 60-minute webinar, you will hear from two senior credit managers from different industries, in different world regions (Europe and Asia), as they discuss the everchanging landscape in which they are now working. What are the current effects on risk management? What about innovative technology processes? What has transitioning to a home office meant when managing a global credit team? What lessons have been learned so far and how can credit managers prepare for the next global crisis?
Join Faysal Kadi Wahabi of LyondellBasell and Sam Robert of Juniper Networks Inc as they talk together. Adam Wood of GCS Group, Australia will moderate the session. Register today!
Dealing With FX Issues During Covid-19
The global pandemic has created great uncertainty for various economies across the world. This webinar will consider strategies for collecting cash when a country has particular cash restrictions. How do you verify if one of your customers is having FX issues? Which countries are currently experiencing FX issues during the Covid-19 pandemic? Can you learn to predict FX issues? And, how do you manage these problems?
Our speaker, Fred Dons of Deutsche Bank has worked in trade finance for more than 25 years and has previously delivered FCIB webinars over the past few years. During this webinar, Fred will examine the most topical issues related to FX. Register today!
Construction Impacted by Coronavirus?
Know Your Lien Rights in Colorado
—Andrew Clauss, Esq.
The current coronavirus crisis has created unprecedented challenges for those in the construction industry. As a result, contractors, subcontractors, and suppliers must be vigilant to protect their ability to receive payment on projects where cash flow might become problematic. One such way to ensure payment is by availing oneself of the various states’ mechanics’ lien laws. Mechanics’ lien laws vary from state to state but often have rigid requirements. Subtle differences in notice, service, and filing requirements can make or break one’s ability to preserve their lien rights.
Dinsmore’s construction law practice group is prepared to navigate industry members through these turbulent times. Our group members’ practices span the United States, and we have an intricate understanding of the mechanics’ lien laws in a variety of jurisdictions. NACM will be publishing each state covered individually.
COLORADO
Who Can File a Lien?
“Every person who furnishes or supplies laborers, machinery, tools, or equipment in the prosecution of the work, and mechanics, materialmen, contractors, subcontractors, builders, and all persons of every class performing labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used in construction, alteration, improvement, addition to, or repair, either in whole or in part…” C.R.S. § 38-22-101(1).
Pre-Lien Notice?
Required. Anyone wishing to preserve a lien must serve a written Notice of Intent to File a Lien Statement. C.R.S. § 38-22-109(3).
Pre-Lien Notice: To Whom Must It Be Served?
The Notice of intent to lien must be served “upon the owner or reputed owner of the property or the owner's agent and the principal or prime contractor or his or her agent.” C.R.S. § 38-22-109(3).
Pre-Lien Notice: Time to Serve
Notice must be given at least 10 days before the time of filing the lien statement with the county clerk and recorder. C.R.S. § 38-22-109(3).
Time to File Lien
- Lien statements for labor and work by the day or piece, but without furnishing laborers or materials:
- After the last labor for which the lien claimed has been performed but before the expiration of two months after the completion of the building, structure, or other improvement. C.R.S. § 38-22-109(4)
- All other lien claimants
- Within four months after the day on which the last labor is performed or the last laborers or materials are furnished. C.R.S. § 38-22-109(5).
Period can be extended by filing a notice of lien identifying the property by legal description, address, or other means; the name of the person with whom the claimant has contracted; and the claimant’s name, address and telephone number. Filing of the notice extends the deadline to file a lien statement until four months after the completion of the structure or other improvement or six months after the date of filing the notice, whichever occurs first. C.R.S. § 38-22-109(10).
Information Required To File Lien
A lien statement must include:
1. Name of the owner or reputed owner of the property (if the name is not known to the claimant, it must include a statement stating such);
2. Names of the persons claiming the lien, who furnished laborers or materials or performed labor for which the lien is claimed, and the contractor when the lien is claimed by a subcontractor;
3. A description of the property to be charged with lien in sufficient detail to identify the property; and
4. A statement of the amount due or owing to the claimant. The lien statement must be signed and sworn to by the claimant. C.R.S. § 38-22-109(1).
When Must Lien Be Served?
The lien statement must be served with the written Notice of Intent to File a Lien Statement at least 10 days before filing the lien statement with the county clerk and recorder. C.R.S. § 38-22-109(3).
To Whom Must Lien be Served?
The lien statement must be served “upon the owner or reputed owner of the property or the owner's agent and the principal or prime contractor or his or her agent.” C.R.S. § 38-22-109(3).
Comments
A lien claimant must file suit within six months after the last work or labor is performed, or laborers or materials are furnished, or after completion of the project. The claimant must also file with the county clerk and recorder a notice stating an action has been commenced. C.R.S. § 38-22-110.
A construction defect claim does not prevent the filing of any lien statement or postpone the time within a lien statement should be filed. Colorado considers abandonment of “all labor, work, services, and furnishing of laborers or materials under any unfinished contract” to be “equivalent to a completion thereof” for the purposes of filing a lien. C.R.S. § 38-22-109(7).
Reprinted with permission.
Andrew Clauss, Esq., is a partner in Denver office of Dinsmore & Shohl LLP.
What do I have to do? When do I have to do it?
The STS Lien Navigator has the answers and will guide you through the entire process!
Credit professionals can rely on the Navigator to determine when and how action needs to be taken to protect lien rights across the 50 states, DC and Canada. The real-time Navigator ensures that you’ll always have the current information.
Specific questions are also answered for subscribers through the Navigator Answer Line. The Navigator is a web-based service, accessed through our website and available from any computer with internet access.
Navigating the Way—On Time, Every Time
For more information, call Chris Ring at 410-302-0767 or visit www.nacmsts.com.
Fiserv’s SnapPay Makes Payments a Snap
—Andrew Michaels, editorial associate
What is faster than a click of a button? A snap of a finger, of course! And what better way to demonstrate this feat than with Fiserv’s SnapPay® Accounts Payable cloud-based payment solution. A global leader in financial technology solutions, Fiserv brings this automated, multi-channel enterprise payments solution to the table to streamline reconciliation across all payment channels.
According to a Fiserv client case study, SnapPay not only led to a 20% reduction in processing costs, but also a 50% improvement of time-to-service with increase in revenues and a 25% decrease in the number of routine calls. The solution also brought Days Sales Outstanding down by 1.5 days, resulting in $100,000 annual savings, and increase productivity by 30%, resulting in $150,000 in annual savings.
“SnapPay, our enterprise payments solution, integrates seamlessly with major ERP systems, including SAP, Oracle E-Business Suite, and Oracle JD Edwards EnterpriseOne to provide frictionless B2B payment processing,” Fiserv’s website states.
However, the solution’s offerings don’t stop there. Fiserv shared the following benefits of engaging with SnapPay:
- eCommerce Payment Integration: Create your eCommerce site with direct EIPP integration.
- Electronic Invoice Presentment: Reduce paper clutter by electronically invoicing and engaging your customers.
- Invoice Print and Mail Services: Send personalized physical invoices outsourced via print solutions from Fiserv.
- API-based Payments Engine: Integrated gateway and enterprise payments solution with credit cards and ACH.
- Secure Credit Card Acceptance: Designed to reduce PCI scope by enabling B2B payment processing for credit card orders on secure devices.
- AI-Driven, Multi-Channel Receivables Matching: Automatically reconcile any check, wire, or lockbox payments made outside the EIPP portal.
“[SnapPay will also] give your suppliers a secure, self-service portal that digitalizes file transfers, protects bank information, and eliminates manual remittance,” Fiserv noted. This includes:
- Integrate with ERPs: Tight integration with ERP systems means digital B2B payment processing is automatically executed once approved.
- Pay on Your Schedule: Mass payments are scheduled and executed across different methods, currencies, and countries — all from one enterprise payment processing platform.
- Reduce Supplier Payment Workload: Real-time payment reconciliation and updates can help eliminate layers of spreadsheets to free up your AP team to focus on higher-value activities.
- Secure Supplier Portal: Give suppliers an easy-to-use, self-service portal to input their bank information securely and view incoming payments with real-time updates.
Fiserv was named to Fortune® 500 for the fifth year in a row in May 2020, ranking 311th this year—a rise of 177 places from 2019.
“Our recognition on the 2020 Fortune 500 is a result of the partnership between Fiserv and its clients,” Jeffery Yabuki, Chairman and Chief Executive Officer of Fiserv, said in a press release. “The commitment of our associates to deliver excellence for our clients is even more important as we jointly navigate the unchartered waters of COVID-19. I thank our associates for their unwavering focus on moving Fiserv forward every day.”
July 7
Best Practices: The effects of Covid-19 on Credit Management Processes
July 8
Responding To Questions About Taking Enough Risk
July 9
Best Practices: Dealing with FX Issues During Covid-19
July 13
Export Credit Management In 2020
NACM/FCIB Webinars—Information, Ideas and Innovation
Without the Inconvenience