eNews July 23


In the News

July 23, 2020


Take Action Today: The HEROES Act Will

Impact Commercial Credit

To support the credit community, NACM is asking you to contact your Senator and Congressional Representative about the Health and Economic Recovery Omnibus Emergency Solutions Act (the HEROES Act).

Unless you voice your concern today, Congress will proceed working on the bill that contains overly broad definitions of the words “creditor” and “debt.” The HEROES Act, specifically, Section 110402, will change the long-standing meaning of creditor and debt.

The Fair Credit Reporting Act looks at the intended use of credit and distinguishes between consumer and commercial credit based on the intended use of the credit. One business selling widgets to another business on open, unsecured credit is recognized as a commercial credit transaction.

The Fair Debt Collection Practices Act was always intended to protect consumers from abusive debt collections practices, but it has always acknowledged the difference between consumer debt and business-to-business debt, which is commonly known as business accounts receivables.

If the HEROES Act is adopted as it stands today, U.S. businesses will suffer greatly.

  • Today, businesses are able to make sales using open, unsecured credit. In some cases, businesses may ask for a personal guaranty from an owner to secure the credit which allows credit, on open terms, to freely support the business economy. Personal guaranties help businesses take more risk: if customers do not pay, a guarantee can help a business recover some of what it is rightfully owed.
  • Company business credit departments are able collect their company’s trade receivables, or debt. Sometimes, businesses outsource the collection of trade receivables to third-party commercial collection agencies. Without the ability to collect a business debt or use a confession of judgment to collect an unpaid business receivable or enforce a security interest on a commercial debt, the U.S. business economy will be severely damaged.
  • Businesses will be unable to sell using open, unsecured credit and could be forced to ask for cash in advance, which will not only hamper commerce but place extreme burdens on small businesses, who are already cash strapped.

The U.S. economy needs businesses to thrive. Businesses thrive thanks to the ability to conduct sales on open, unsecured credit.

Please urge Congress to continue to recognize the difference between business credit (or commercial) debt and consumer debt by contacting your Congressional Representatives today.

Below are links to find your Congressional Representatives and Senators as well as a template letter to send them to express your concern.

Find Your House Representative

Find Your House Representative by ZIP Code

Find Your Senators



[Senator / Representative]

Room # [Office Building]


Dear [Senator/Representative]:

On behalf of [name of your Business] and our [# of employees], I am writing to express our concern about the unintended impact that S. 3565, the Small Business and Consumer Debt Collection Emergency Relief Act of 2020, will make to the U.S. business collection process. These changes could jeopardize the U.S. product supply chain and the ability for many small businesses to access the product they need to serve their customers. In particular, provisions like those included in S. 3565, while well-intentioned, would have a negative rippling effect across the U.S. trade and manufacturing industries.

Our business is one of thousands that, collectively, are represented by the National Association of Credit Management (NACM). The vast majority of NACM members are small manufacturing or product-based businesses that provide products—from lumber to toilet paper—to retailers and contractors across the country. These products are commonly sold using open, unsecured credit to businesses. However, we are not debt collectors; we are the backbone of the U.S. economy and our respective businesses. Being swept into the same category as a debt collection agency and into the same category as consumer collections is flawed, which will place business creditors at an unintentional disadvantage to doing business. Business credit professionals sell products and services via unsecured credit to continue stimulating the economy with the intention of being repaid. While these transactions on unsecured credit create debt for the buyer, our business like the thousands of others represented by NACM, is not debt collection. There must be a distinct separation of business credit and consumer credit collection.

The problem for business creditors arises when the borrower's company has inadequate financial strength to secure the credit as requested. In these instances, it is a common practice for the business creditor to ask for a personal guarantee as a safeguard for the extension of business credit. It is the presence of these personal guarantees that blurs the line between consumer credit and business credit. This distinction needs to be clear to all parties.

During this unprecedented pandemic, we have continued to sell unsecured credit in the form of products to support the businesses across the country selling products to the American people. While we take these risks for the benefit of these small businesses, we do so with the expectation that we can recover at least a portion of our assets through the collections process. Provisions like those in S. 3565 would force our business to only sell product to low risk businesses, which will dramatically cut off supply lines to thousands of small retailers across the country.

We realize these are extraordinary times, and we do not wish to bring about any additional hardship to businesses impacted by COVID-19. We also acknowledge that certain limitations on credit collection, particularly protecting consumers, may be necessary and appropriate to deal with this crisis. Despite this, we urge the utmost caution as Congress tackles this complex issue. Eliminating business-to-business collections would only serve to shift the burden from one business onto another. Rather than create a system of winners and losers in the collections industry, we request that you support proposals that keep small business afloat so that the collections process can be avoided altogether.

Thank you for your time and consideration.


Online Courses

NACM’s Credit Congress & Expo Online Showcase brings world-class education to everyone’s desktop. Sessions can be viewed from the comfort of the home or office. Delegates can filter sessions by topic, e.g., construction, technology, legal, and search by session titles and speakers to find the best educational track. Credit Congress educational sessions are available 24/7 through August 31st, which means there’s still time to register and not only access over fifty sessions but also enjoy live, bonus content.

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.

The Expo Online Showcase brings 30 exhibitors into the digital realm. Each exhibitor’s digital booth is available at the click of a button, not only maintaining networking opportunities with company representatives, but also providing highlights and video demonstrations of the latest goods and services that benefit any credit professional. New content is added continually and companies even offer prize giveaways so visit often. There is no registration required to browse the Expo booths.


Material Suppliers Best Prepare for

Additional Costs During

Construction Projects


—Andrew Michaels, editorial associate

If the first half of 2020 has proven anything, it is that the pandemic will leave a lasting impact on how society goes about day-to-day living. Many are working from home, stores are cleaning checkout counters after every customer, and masks are a common wardrobe choice. Several companies are adapting their operations within their existing structures, but how might the same concerns be addressed midway through the construction of a new building, and what will this mean for the construction industry’s material suppliers?

Chicago will be one of the first cities to put these questions to the test later this summer when the city unveils a $26 million office building that was purposefully designed with COVID-19 in mind, according to Construction Dive. This project differs from most as the construction of Fulton East was already underway prior to the outbreak. Changes were soon made by developer Parkside Realty, Inc., and design-builder Clayco who modified the building’s design in real time—quite a challenge for a 90,000-square-foot, 12-story building.

New impressive features include a touch-free thermal scanning system in the lobby for temperature checks, touch-free building access as well as a touch-free intercom and elevator system. Outdoor balconies and a rooftop garden were also added to allow for more social distancing, while restroom walls were coated with a paint that kills “greater than 99.9% of Staph, MRSA, E. coli and other pathogens within two hours of exposure.”

Bob Wislow, chairman and CEO of Parkside Realty, Inc., said the modifications required “extensive research” on today’s health, safety and wellness features, a timely process that not all construction companies can afford.

“We believe we have entered a new era where many firms will be less inclined to pursue large floor plate buildings filled with a huge number of employees or multiple companies on each floor sharing washrooms, corridors and public areas or high-rise buildings with crowded lobbies and long waits for the elevators,” Wislow said in the company’s press release.

An engineering feat nonetheless, sudden changes to a project of this scale can raise concerns for material suppliers, said Chris Ring, of NACM’s Secured Transaction Services. In a perfect world, he said, the additional costs to the project would have been contractually modified in the general contract, subcontracts and purchase orders up and down the ladder of supply. However, in the case of this Chicago project, it is likely the original general contract price did not include the costs associated with COVID-19 safety concerns.

“If the change orders had not been contractually modified, disputes can arise causing payment issues down the ladder of supply,” Ring said. “Material suppliers could still file a lien; however, terms and conditions of contracts come in to play if a lawsuit needs to be filed, i.e., battle of the forms. If contract modifications cannot be verified, the material supplier can suggest selling to the general contractor, property owner, etc.”

It is still too soon to tell just how many companies will take the same avenue as Fulton East, but there is no time like the present for material suppliers to address any additional cost clauses in their contracts should the need arise.


Online Courses

Give Your Job Performance and Prospects a Boost with Continuing Online Education

Choose among the many educational courses available to you:


Accounting: Aug. 31–Dec. 11, 2020

Business Credit Principles: Available 24/7 on the CLC

Financial Statement Analysis 1: Available 24/7 on the CLC


Business Law: Available 24/7 on the CLC

Credit Law: Available 24/7 on the CLC


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


3 Essential Skills for Resolving Conflict

—Marlene Chism

Unresolved conflict affects almost every area of business, from productivity, safety, turnover and absenteeism to the culture itself. Leaders in today’s turbulent times need more than technical experience, seniority and authority. Leaders at every level need specific skills to initiate difficult conversations, resolve conflict and inspire behavioral change. Here are three essential skills that improve leadership competency:

1. Radical listening

As a leader, you are going to be criticized and challenged. You’re going to be misunderstood, and you won’t feel like listening when these things happen. The precise time when listening is your best defense is when every fiber in your body wants to argue, defend, be right and educate the other person about how to think.

Here are two quick tips about how to listen radically:

First, take a deep breath and invite more conversation. Say, “I want to understand.” Or you can say, “That’s interesting. I want to know more.” Become a witness to the conversation instead of a participant. It will feel like slow motion if you are doing it right.

But what if you are totally caught off guard?

Buy some time. Instead of coming up with your facts or research, say, “That’s an interesting viewpoint, but I’m surprised. Let’s schedule time to talk tomorrow at 2.” Teach yourself to expand space between stimulus and response.

2. Name the observable behavior

Conflict is inevitable when you lead by assumption. Here are some examples of assumptions:

  • They don’t care about the culture;
  • He isn’t engaged;
  • She is a terrible worker; or
  • He is inconsiderate

An assumption is simply an interpretation and is not grounded in fact. To stop assuming, identify and articulate the observed behavior. The formula is this: What is he/she/they doing or not doing? That answer gives you the observed behavior. Let’s translate assumptions into observed behavior.

“He doesn’t care about the culture,” translates to, “He wears flip-flops when the policy clearly states dress shoes.” You can’t make someone care about culture, but you can ask them to change their shoes. If they refuse, you can then determine next steps.

“He isn’t engaged,” translates to, “He has not signed up to work overtime.” Now that you have an observed behavior to work with, you can get curious or make a request about overtime, instead of assuming there’s no engagement. You might learn that he’s a widower taking care of small children or realize that he didn’t know the overtime opportunity existed. Naming the observable behavior opens a door for shared understanding instead of judgment.

As a leader, identifying and articulating the observable behavior shaves hours off of unproductive conversations that result from judgments and misunderstandings.

3. Take ownership

There’s nothing so perplexing to a manager than to have to course-correct a behavior that’s been going on for years. Sometimes the manager inherited the problem and, at other times, the disruptive behavior has been allowed and has become the standard. For example, let’s say the entire team has been gathering at the coffee shop before work hours, but coffee time has leaked into productivity time, contributing to lateness and missed client calls. Start by calling a meeting and setting the intention. “The intention of our meeting is to talk about productivity and how we can get on the same page regarding start times.”

Next, speak to the observed behaviors. “I’ve noticed a habit of clocking in and then gathering at the shop next door for coffee and, as a result, there’s been some missed calls and lowered productivity.

Next, take ownership. “I realize that I’m partly to blame. I was so pleased with your team camaraderie that I didn’t want to spoil anything. I realize now if I had spoken sooner, we would all be on the same page. I’m considering this a fresh start. It’s fine to go for coffee together. I hope you continue that, but you need to attend to personal business before clocking in. Meet any time you want, but if you are on the clock, you are expected to be ready for work. Does that make sense?”

Since you have “owned” part of the problem and offered a fresh start, most employees will not feel threatened, and they’ll agree.


Today, more than ever, leaders need the skills to minimize unproductive conflicts that arise due to misinterpretations, lack of critical thinking and assumption making. Radical listening, naming the observable behavior, and owning the part you played keeps your focus and promotes better performance.

Reprinted with permission. Originally published by SmartBrief.

Marlene Chism is a consultant, international speaker and the author of "Stop Workplace Drama" (Wiley 2011), "No-Drama Leadership" (Bibliomotion 2015) and "7 Ways to Stop Drama in Your Healthcare Practice" (Greenbranch 2018) and an advanced practitioner of Narrative Coaching. Connect with Chism via LinkedInFacebook and Twitter and at MarleneChism.com


Online Courses

Generally accepted accounting principles vary from one country to another. Join Johnson Controls Inc.’s Craig Simpkins, CCE, CICP, as he provides an overview of the differences between GAAP and IFRS and the financial ratios that help make sense of them. Craig will also identify warning signs that there may be a problem with a company’s financial statements and commonly used credit and payment terms in a variety of countries. Other topics covered in this webinar include:

  • Country Economic Indicators
  • Credit and Payment Terms
  • Signs of Troubled Customers
  • European Payment Trends



Joint Check Agreements: No Two Are Alike

—Michael Miller, managing editor

Nothing is ever carved in stone, so business credit professionals should always sleep with one eye open when expecting payments on construction projects. Finding a way to become more secure is always in the best interest for creditors, even if it only slightly improves the odds of being paid and being paid on time. Each security mechanism works a little different—liens, bonds, UCC filings, etc. Another avenue for creditors to improve their standing is with a joint check agreement (JCA). However, there are several important factors to understand when working with JCAs.

The recent NACM webinar, “Joint Check Agreements: Security, Guaranty & Trust Fund Options,” presented by James D. Fullerton, Esq., with Fullerton & Knowles, P.C., in Northern Virginia went over a number of ways to properly use JCAs as an advantage for a creditor. “The most important thing to remember is there’s no such thing as standard joint check agreement,” Fullerton said.

What is important is who wrote the JCA and what is their objective. If a general contractor (GC) is building the JCA, they will do everything to have zero obligations, so it’s vital to read and evaluate JCAs. Creditors/suppliers need to understand who is the “end user” and who is really buying and paying for materials and services. GCs will place JCAs in a light as an accommodation and a favor to the creditor/supplier; that it’s a method to administer payment. Creditors must make sure there’s some type of obligation by the end user and that the JCA doesn’t do anything along the lines of waiving lien and bond rights.

The creditor will be enforcing the JCA—seeking a judgment against the owner and GC to try and make them pay twice for materials. Judges often view this as unfair, noted Fullerton, because there’s no clear law unlike lien and bond laws. In reality, a JCA is a contract, but if there’s no obligation for the GC and owner, it’s not even a contract. Often, judges won’t know what to do with JCAs and will tell creditors they should have still enforced lien and bond rights, said Fullerton.

JCAs need to have some contractual obligation for the end user to do something—at least write checks jointly. “A guarantee of payment is the single loftiest goal; it is something you want more than anything else,” Fullerton said.

There are ways to have priority over other secured creditors, e.g., have a security interest or trust fund agreement. However, these are limited to the amount of debt, i.e., if the GC doesn’t owe anything then the security interest is worth nothing. Another option is an escrow arrangement, which is an enhanced trust fund—less likely for mistakes, and if there’s funds there, you’re going to get paid. With this, there are higher transaction costs, and they are harder to get owners and GCs to agree to.

In what Fullerton calls his JCAs for creditors, “project security agreements,” payments “shall” be made jointly with checks delivered to the seller. This puts an obligation on the end user. To take away the GC or owner’s “accommodation” to the creditor, added in the agreement is language to make it so the materials will only be supplied if the document is agreed to. It’s a consideration to supply rather than a favor to have the JCA.

Some states have trust fund statutes, making the GC and subcontractor a trustee of the payment for the creditor/supplier. This and trust fund agreements can make the life of a creditor a lot easier during bankruptcy because the allotted money is in the trust and is not the debtor’s money who is now in bankruptcy proceedings. It’s a terrific advantage in bankruptcy preference, said Fullerton. There’s also no additional risk or cost to the GC or owner. It can be tricky to trace the money and show where it’s coming from—what account and what project is the money in trust for? A trust fund agreement can be in any contract, proposals, credit agreements, subcontracts, JCAs, etc., said Fullerton. Language to keep the funds separate should be installed as well.