eNews July 30

In the News

July 30, 2020

	I. Investing in eCommerce Increases Credit Productivity
	II. Maintaining DSO with Credit Tech

	III. 6 Reasons Improving This Leadership Skill Should Be Your Top Priority
	IV. Remembering the Notice of Non-Responsibility

While the U.S. continues to try and flatten the curve of the COVID-19 pandemic, businesses are trying to stay ahead of it. Many businesses have disappeared over the last several months—some shut down altogether, while others are just trying to stay afloat, and even less have felt no impacts from the global pandemic. Companies have needed to rely on willpower and the strength of their employees and innovation to pull through during these uncertain times. Businesses have shifted philosophies, workplace environments, etc. to stay relevant and remain a key partner for their customers. Because selling products and services is about one thing: making the customer, whether they’re a consumer or another business, feel welcomed and wanted. Customer service is a vital aspect of this, and it has played an important role for many businesses as they navigate these terrible circumstances. 

The way businesses operate has changed during the first half of 2020 as has the way customers shop. “To thrive in the next normal, B2B companies will need to continue adapting to the new economic reality,” states McKinsey & Company in an article about the changes to B2B sales during COVID-19. The article notes that companies are twice as likely to be chosen as a primary supplier if it provides an outstanding digital experience than those that don’t. 

The shift from brick-and-mortar to online shopping began before COVID-19; however, the pandemic has been the catalyst for some. According to an article from Manatt, Phelps & Phillips LLP in Bloomberg Law, the transition has happened in a big way. It states, “Unilever’s [business-to-consumer] sales now account for 45% of its food service division’s eCommerce sales, compared with 25% pre-pandemic.” They concluded that, “…B2B businesses can leverage the B2C eCommerce model to optimize sales and otherwise meet their business and marketing operations goals both during and after the COVID-19 pandemic…” 

Global bakery ingredient manufacturer Dawn Foods has done just that, which has helped the sales and credit teams provide the best experience for their customers. In June, Dawn launched a new eCommerce platform for customers to streamline orders. “The new eCommerce platform has enhanced and improved the ordering process so that the credit department will see orders quicker”, said Aaron Jones, CBA, senior manager of credit and collections with Dawn. “Customers don’t have to wait anymore for a call or a visit; they can enter their order any time when they are ready. This gives the credit department more time to do any credit checks, they are able to see orders earlier and are able to get credit decisions done faster.” 

While there is no payment portal within the eCommerce tool, Dawn did launch a payment portal in February, and customers can easily navigate from the eCommerce platform to the payment portal. Jones likened the eCommerce platform to an online shopping cart—customer can choose their payment type in the other portal, which has far exceeded expectations. Dawn has almost hit its 12-month goal after just five months after it was launched. 

As far as what the future holds, “We continuously look to evaluate business to meet the needs of customers and team members while we look to strengthen relationships,” Jones said. 

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 31^st, 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.

In the credit world, understanding the importance of days sales outstanding (DSO) is like understanding the value of the ABCs. While the latter guides people through the English language, the former gives credit professionals an insight into their company’s cash flow. While not all fluctuations are bad, a recurring increase in DSO can spell trouble for some companies. However, where there’s a will, there’s a way, and some credit professionals have found success in maintaining DSO.

DSO is the average number of days it takes to collect payment after a sale. One formula of choice is dividing the accounts receivable balance by sales sold on credit (for the period being measured) and then multiplying that number by the number of days in the period.

As a supplier of HVAC, PVF, irrigation, waterworks and plumbing, credit manager Tina Hatfield, CBA, said her company has maintained an above-average DSO for several years. Up until the past few years, she said, their credit and collections process has been very manual. However, they’ve had to employ a team of eight to keep up with credit, collections and receivables in order to do so.

The company’s website now has a live feature connected to its ERP. All changes made to the account by the credit and AR department are in real-time and can be viewed immediately on the website by their customers. Any payment customers make online is automatically applied and updated on the ERP.

“We deposit and post the morning after checks are received and same day on the last day of the month, which has helped with efficiency and our DSO,” she said.

The company exhausts all collection efforts, gives a final demand and turns the account over to their in-house attorney. Hatfield said she believes keeping it on their desk has yielded the best results with less cost to both the company and their customers.

“A good chunk of our customer demographic is farmers and... they pay upfront for out-of-pocket purchases,” she said. “They can also be our biggest culprit of aged balances as many large projects are government funded, so we have to wait for funds to be released—sometimes, this can take over a year.”

To avoid this, she noted, they offer discounts for any upfront payment on a project when paid with a check.

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

Choose among the many educational courses available to you:

CBA COURSES

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

CBF COURSES

Business Law: Available 24/7 on the CLC
Credit Law: Available 24/7 on the CLC

INTERNATIONAL CREDIT

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

Originally published in Inc. The full article can be read here.

In today's climate, it's an essential skill that can drive real business benefits.

As a leader, directing and delegating may come naturally, but listening has become a lost art. Perhaps it's because we're all running in high gear, productivity is paramount, and we simply don't take the time to slow down and truly hear what's going on around us.

For leaders, this can be risky, because it could mean missing out on vital cues that impact performance, and even your own effectiveness and career growth.

There's immense value in listening to those around you, especially in today's climate. And while it can be hard to slow down and dial in, it's an essential skill that can drive real business benefits.

Here are six reasons becoming a better listener should be on your to-do list.

1. Build trust with employees.

Listening to and acting on the feedback you receive shows employees you care about what they have to say. This sets the tone that if they come to you with issues or concerns, they'll be heard, taken seriously, and addressed appropriately.

"We have adopted a variety of feedback tools, including employee surveys, and I frequently ask the team to submit questions that I answer in a weekly Q&A email to the company," explains Jason VandeBoom, CEO of ActiveCampaign, a leader in customer experience automation (CXA). "It's important to communicate that you are listening and willing to answer tough questions honestly and transparently."

2. Become more relatable.

"Real listeners aren't afraid to bring up tough topics, from race to sexual harassment to pay inequity," says Deb Muller, CEO of HR Acuity, a leading provider of employee relations and investigations management technology. "And don't be afraid to lead the conversation."

Muller says leaders who are great listeners show vulnerability and demonstrate that they're human, not just a boss. She suggests using real-world examples, even from your own experiences. "This creates common ground, unites teams, and encourages everyone to listen more intently," she says.

3. Demonstrate empathy.

Taking the time to truly understand your team's needs and concerns builds empathy and shows that you care about them as individuals, not just employees.

"For a long time, I made a point to do one-on-one lunches with employees, and it's been a great way to build empathy," says Aytekin Tank, CEO at online form-building platform JotForm. "It's become more challenging as our head count balloons, but I still have these lunches when I can."

These one-on-ones allow you to focus on one individual at a time and demonstrate that you're tuned in to what employees have to say right now, with no distractions.

4. Show employees they're valued.

"Today's employees aren't looking for perks like free food; they're looking for transparency, trust, and workplaces where they feel safe and valued, even more so after the pandemic, when the workplace for many has become virtual," says Muller.

Listening intently sends the message you appreciate employees' contributions and care about their input. This is especially important in the face of uncertainty, as it sends a message that your company cares not only about employees' work, but also how outside forces (like health concerns, work at home, homeschooling, etc.) affect their well-being.

5. Gain different perspectives.

It's easy to assume that how you see the organization, its processes, challenges, and opportunities, is the reality for everyone. But that's not always the case, and gaining outside perspective from customers can help drive innovation.

"Spending time getting to know customers, how they're using the product, and what we as a company could be doing better has been an incredible catalyst for spawning new innovations," Tank explains. "This insight is one of your greatest assets when it comes to building and updating products."

6. Enhance customer experiences.

"Listening is the most powerful tool you have in the pursuit of incredible customer experiences," VandeBoom says. "I start every morning by reading every single customer survey response we received the day prior."

VandeBoom says reading the reviews individually, rather than a summary, is critical, because "it's the nuances of the individual reviews that help me understand the tone." This helps him stay close to the key issues his customers face, which in turn makes it easier to connect with them on a human level.

While it may not be listed in the formal job description, engaging in meaningful conversations is one of the most important roles and responsibilities of leaders across all facets of the organization. Taking the time to really listen to people's needs and perspectives is essential, not only for your company's growth and success but also for your own as an effective leader.

Marcel Schwantes, Founder and Chief Human Officer, Leadership From the Core.

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

For so long, a hot economy and commercial leasing market meant that concerns over unpaid tenant improvement construction and related mechanic’s liens were closeted like winter clothes in the heat of the summer. In the current “pandemiconomy,” many commercial businesses are planning their return to the office. Some tenants need to complete build-outs, while others must reconfigure their space to address the new requirement of doing business under state and local Shelter in Place orders. As a result, tenant improvement construction projects are on the rise. Unfortunately, confidence in the ability to fund those projects has softened. Landlords must be cognizant of mechanic’s lien claims by contractors and suppliers who are not paid for their labor, services and/or materials on a tenant’s project. 

The mechanic’s lien is the vehicle, created by California law, for general contractors, subcontractors, material suppliers and labor forces to receive payment from a property owner when the tenant who hired them fails to pay for their work. Payment for these professionals is so important that California’s Constitution protects their right to be paid. Moreover, California courts have ruled that contract provisions which seek to waive or impair mechanic’s lien rights are unenforceable. 

To assert valid mechanic’s lien claims, contractors and suppliers, generally, must serve a 20-day preliminary notice in the form prescribed by statute. This document puts the owner and tenant on notice that the party giving notice will provide labor and/or materials to the project, and that they will have the right to record a mechanic’s lien if they are not paid. 

Given the substantial rights afforded to ensure contractors and suppliers are paid for their work, it is essential for landlords to understand their exposure to liability when a tenant fails to pay for its construction work. At the same time, landlords must understand available protections from this liability. While the landlord has several tools to avoid being subject to mechanic’s liens, each must be utilized in a timely and proper manner. 

Landlords seeking to avoid mechanic’s lien claims can post on the job site and record a “notice of non-responsibility.” These notices must be posted and recorded within 10 days of the landlord’s knowledge of the construction activity. A landlord who timely records and posts this notice, subject to the exceptions below, shields/protects its interest in the property from the mechanic’s liens of contractors and suppliers working on a tenant improvement project. However, the notice is not a bulletproof shield for the landlord. If the landlord “participates” in the improvements, e.g., via lease provisions that require the tenant to make the improvements at issue, the notice will have no effect. In addition, some conduct by the landlord, such as review and approval of plans and specifications, approving the contractors and substantially benefiting from the improvements also may prevent the notice of non-responsibility from having any effect. Regardless of the potential limitations, as a general rule, landlords are well advised to timely post and record the notice of non-responsibility instead of presuming it will be later deemed ineffective. 

Even if the notice of non-responsibility is ineffective, the landlord has other protections from mechanic’s lien claims. For example, landlords should require that all contractors and suppliers (particularly those who have served preliminary 20 day notices) sign conditional and unconditional lien waivers in exchange for payment. That way, the landlord and tenant can be assured that all parties with potential lien rights are paid and relinquish their lien rights as they receive payment. Additionally, landlords can include lease provisions requiring deposits/additional deposits to satisfy potential mechanic’s lien claims as part of tenant improvement or alterations authorizations. Leases also can include language, as they typically do, requiring that the tenant immediately remove mechanic’s liens by paying the claim or obtaining a mechanic’s lien release bond. Additional lease language requiring the tenant to defend and indemnify the landlord from mechanic’s lien foreclosure lawsuits also would be helpful. While these are powerful tools, the landlord must be proactive and have them in place before any tenant improvement work begins. 

Matthew James is a Shareholder in Hopkins & Carley’s Real Estate Practice. Matt has extensive experience in all phases of construction and real estate matters, including contract negotiation, alternative dispute resolution, and trial. 

Jay Ross is a Shareholder in Hopkins & Carley’s Litigation Department and handles contract, business, and payment disputes as well as real estate disputes, including construction, purchase and sale transactions, commercial landlord-tenant disputes, easements, and land use.