eNews July 16


In the News

July 16, 2020


Stepping into Leadership: Developing the Mindset

—Andrew Michaels, editorial associate

There’s a lot to think about before taking on a leadership role. Although it may seem as simple as Googling, “How to be a leader?” and diving in headfirst, the individual who wants to step into leadership must ask themselves a series of questions: What kind of leader do I want to be? Why do I want to be a leader? And finally, how do I get there? Over the course of several articles, NACM will share the leadership process as discussed by credit professionals from across the country, addressing topics such as leadership mentality, education, skillsets, benefits, and more.

As silly as it may sound, becoming a leader doesn’t begin with a textbook, manual or seminar, but rather an understanding of what it means to be a leader in the credit profession. Outside of looking up the meaning of “leadership” in a dictionary, not one person will give you the same word-for-word definition because everyone has a different perspective based on their background in credit. For example, despite years of credit experience under his belt Darrell Horton, ICCE, global director of credit and accounts receivable, said a leader is someone who is always a student.

“A leader is someone who can take their experiences in the past—both failures and successes—and use it to make a better future for both themselves and those around them, but [they’re] still willing to make a mistake going forward because it is a learning opportunity.”

Before you can learn how to be a leader, Horton said, credit professionals need to develop “leadership mentality.” You need to have the mental capability to understand all points of view and make your best decision based on that, not just your own point of view.

“You need to be a fighter, but a smart fighter,” he said. “You cannot be a bull in a china shop. You have to be a team player.”

An article in Entrepreneur magazine reiterates Horton’s comments, specifically that you don’t have to be a CEO, CFO, manager, etc. to be a leader.

“People should follow you because they believe in your mission,” the article noted.

Horton said while anyone can be a leader, many do not want to take on the challenges of the job. The person who dislikes confrontations, defending their own and their team’s actions, or convincing others to do something they may or may not want to do or agree with is not going to enjoy this job. They could do it, he added, but they would surely struggle with it, particularly internally.

So, ask yourself, “How do I define ‘leadership’?” and, “Do I have the mindset of a leader?” If you can answer these questions, you’re one step closer to your goal.

Be sure to check in next week for the next article in the Stepping into Leadership series.


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International Credit & Risk Management: Aug. 31–Dec. 4, 2020


Bankruptcies Increase; Predicted

to Continue Through 2021


—Michael Miller, managing editor

Businesses across the world have struggled for the past six-plus months as the threat of COVID-19 spread from China to other countries, eventually with the U.S. transforming into a new epicenter for the pandemic. Companies up and down supply chains have been impacted—businesses receiving products and services from other businesses, and in turn leaving the supplying businesses in a hole with nonpayment. Now two businesses, the seller and the buyer, are in trouble; however, supply chains are much larger than just two businesses conducting a simple transaction. Some businesses have been prepared enough to withstand these impacts but some businesses have not, and more businesses are sitting on the threshold of success and destruction.

The economic recovery in the U.S. has begun after an almost complete shut down during the spring. However, the underlying effects of the pandemic are still being felt, e.g., nonpayments. These nonpayments that began in March and April as still-with-a-chance-to-be-paid-on-time payments have turned to slow payments and/or payment plan options and onto discounted payments and extended term plans before eventually ending up as no payment altogether.

Now, enough time has passed to start to see a fuller extent of the payment issue caused by COVID-19. In early June, slightly more than half of the nearly 300 credit and business professionals surveyed by NACM reported having zero customers who filed for bankruptcy.

Bankruptcies have started to pile up in recent weeks as businesses stopped paying or were unable to pay down debt. Chesapeake Energy, 24 Hour Fitness, Brooks Brothers are only a few of the businesses to file bankruptcy due to the pandemic. According to the American Bankruptcy Institute, commercial Chapter 11 filings increased 26% during the first half of 2020 compared to the same period last year. Commercial Chapter 11 filings jumped 44% in June 2020 compared to June 2019.

Credit insurer Coface predicts bankruptcies in the U.S. will increase 43% between end-2019 and end-2021. In its recent report, Coface also states “zombie” companies barely staying afloat have increased and could fall into bankruptcy soon. This increase in bankruptcies began before the spread of COVID-19 as “2019 saw the first annual increase in bankruptcies since 2009,” states Coface. “The double economic shock of supply and demand has already resulted in a sharp drop in companies’ revenues, pressuring their cash flow. This situation should lead to an increase in the number of companies unable to meet their financial obligations, pushing them into bankruptcy.”

Bankruptcies should always be on the watch list for every credit professional and even more so during this volatile time. Every business and case is different, so giving advice such as, “No, our company never sells to businesses in bankruptcy,” or something similar can be troublesome. But some sort of caution should be taken.


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After successful completion of the course and final exam, you will receive the FCIB’s Certified International Credit Professional (CICP) designation. Early rate good until April 10. For more information and to register, please visit FCIB.

After successful completion of the course and final exam, you will receive the FCIB’s Certified International Credit Professional (CICP) designation. For more information and to register, please visit the FCIB website.


Advocating for Your Mentee: Dos and Don'ts

—Ashley Neal

Stepping into the role of mentor means more than just giving advice. It means taking interest in the goals of your mentee and using your skills and experience to help them achieve these goals. In many cases, the relationship between mentor and mentee grows to become not only a source for professional advancement, but also a place for personal growth.

The National Mentoring Resource Center explains that “good mentoring may frequently be as much about instrumental support and providing access to opportunities as it is about giving advice or offering emotional support, and programs that use their mentors in a formal advocate role are well positioned to bring a balanced approach to the mentor’s role.”

Do – Encourage your mentee to take initiative.

The National Mentoring Resource Center suggests “mentors must remember to ‘share power’ when it comes to advocating for the mentee and make sure that the youth is driving the action and learning to advocate for themselves too.”

Don’t – Make decisions for or overpower your mentee.

“Optimally, advocacy means that mentors help find solutions and expand possibilities, not inappropriately take control of situations or narrow options,” adds the National Mentoring Resource Center.

Do – Open doors.

Use your network to make connections between your mentee and others they could benefit from. The more, the merrier when it comes to having relationships within your industry or trade.

Don’t – Impose your bias.

Avoid letting negative experiences with another professional or organization dissuade you from introducing your mentee. Your experience may not be their experience and could benefit your mentee.

Do – Get personal.

To know how to advocate for your mentee requires a personal and professional relationship. Not only will you have the ability to speak up for your mentee on a professional level, but you will also be able to make more educated decisions based on what fits their personality, lifestyle, goals or dedications.

Don’t – Take it personal.

There is a fine line between becoming emotionally invested in your mentee’s triumphs or failures and feeling as though you are personally responsible for their career. As a mentor, you are there to guide and encourage; what your mentee does or does not do has no reflection on your professional success.

A mentor is a beneficial and highly respected status in professional environments. For a mentee to feel comfortable coming to you for guidance means they trust you to use your voice, network and power to advocate for them. Putting in the work and standing up for your mentee could mean the difference between a mediocre and a spectacular professional relationship.

Ashley Neal is a content writer for AssociationSuccess.org, which provides education and professional development for association professionals.


Online Courses

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Notice Your Lien or Kiss it Goodbye in Minnesota

—Aman Kahlon Esq. and David Pugh Esq.  

Like many states, Minnesota requires subcontractors and suppliers to send pre-lien notices to owners to perfect mechanic’s lien rights. Failure to comply with the pre-lien notice statute can prove fatal to a lien enforcement action as one masonry supplier recently learned. In Timberwall Land & Masonry Products, Inc., the Minnesota Court of Appeals affirmed the lower court’s summary judgment dismissing a masonry supplier’s lien enforcement action against a homeowner.

In 2018, a homeowner hired a contractor to build a single-family residence. The contractor hired Timberwall to provide materials for a retaining wall at the home. Timberwall did not send a pre-lien notice to the homeowner until 72 days after it started supplying materials to the project. Under Minnesota law, Timberwall should have provided such notice within 45 days.

The homeowner paid the contractor for Timberwall’s work, but the contractor did not pay Timberwall. As a result, Timberwall filed a lien and brought a foreclosure action against the homeowner. The homeowner counterclaimed for slander of title and to quiet title to the property. At trial, the homeowner moved for summary judgment to dismiss the lien enforcement action for failure to comply with Minnesota’s pre-lien notice statute. The trial court agreed with the homeowner and rejected Timberwall’s arguments that (1) it qualified for a good-faith exception to the pre-lien notice requirement and (2) the pre-lien notice was not required because the homeowner acted as its own general contractor.

Timberwall then appealed this partial summary judgment, but the court of appeals also rejected its arguments for an exception to the pre-lien notice requirement. Per the court, Minnesota’s good-faith exception “applies if the lien-claimant first shows that a good-faith effort to comply with the pre-lien notice requirements was made, and the owner or another lien claimant fails to establish damages based on failure to comply.” Because Timberwall did not provide evidence that it made any attempt to serve the pre-lien notice within the 45-day statutory period, it could show no good-faith effort at compliance, so the exception was not applicable.

As in some other states, Minnesota law also provides a lien claimant may be exempt from the pre-lien notice requirement if it can show the owner acted as the general contractor on the project. The pre-lien notice statute is intended to protect unsuspecting owners from hidden liens from suppliers and vendors that are unknown and often unascertainable by the owner. But if an owner is acting as a general contractor for the project those concerns are moot, and in certain circumstances, a supplier may be forgiven for not sending the pre-lien notice.

Timberwall relied on the building permit being issued to the homeowner as a basis for classifying the homeowner as a general contractor. The court of appeals disagreed. The permit only listed the homeowner as a point of contact and not as the general contractor for the residence. There was no evidence the homeowner had any experience acting as a contractor or supervising a building project. Per the court, recognizing the homeowner as a general contractor “would be inconsistent with the purpose of the pre-lien notice.” The court, therefore, denied the appeal, and the parties returned to trial for resolution of the homeowner’s counterclaims.

Lessons from This Decision

Lien statutes are generally strictly construed, so compliance with notice, form, filing, and other requirements is critical. The Minnesota case shows what can happen to subcontractors and suppliers who fail to comply with statutory requirements. Timberwall lost its claim against the owner and probably cannot recover from an insolvent contractor. Moreover, Timberwall likely incurred substantial legal expense to get to this poor outcome. Now it faces further liability from the homeowner’s slander of title counterclaim.

Timberwall appears to have compounded the consequences of its non-compliance by pursuing a meritless lawsuit. It may have been better off writing off the loss before filing the defective lien and accompanying enforcement action. The result in this case underscores the importance of diligent contract administration prior to and during project execution and careful litigation risk assessment once a default or breach occurs under a contract.

This blog post, “Notice Your Lien or Kiss it Goodbye,” was originally published on June 26, 2020, by Bradley Arant Boult Cummings on the Construction Practice Group blog, BuildSmart.

Aman Kahlon represents owners, general contractors, and subcontractors. His experience ranges over a wide variety of disputes. He advises clients on delay, interference, defective design, and negligence claims. Aman also devotes a significant portion of his practice to contract review, drafting and negotiation; contract and claims administration; and lien and bond law issues.

David Pugh represents owners, general contractors, subcontractors, engineers, architects, insurance companies and sureties throughout the United States. He advises clients at every stage of a construction project: conception, planning, performance and closeout. David drafts and negotiates contracts for several large scale projects, and he participates in trials, hearings, appellate arguments, mediations and arbitrations in Alabama, Georgia, Florida, Mississippi, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Mexico, among others.