eNews August 6


In the News

August 6, 2020


Every factor of the combined July Credit Managers’ Index (CMI) from NACM increased—some more than others—returning to pre-pandemic levels. This steady increase over the past few months has now arrived at data levels last seen in early 2020 and late 2019. The combined CMI increased 4.7 points in July to 55.6, roughly where it was in November 2019. The CMI has now climbed more than 15 points in the past three months. 

“The recovery from the depths of the lockdown recession has been impressive, but now the primary question is whether it can be sustained,” said NACM Economist Chris Kuehl, Ph.D. “There has been a slowing of the process when it comes to ending the lockdown, and some states have resumed these shutdowns. Will that drag these numbers back down? It is too early to tell at this juncture.” 

Sales, once down in the dumps in April, climbed to its highest number (64.3) since August 2019. New credit applications and dollar collections were both above 62 in the same CMI for the first time since August 2018. Amount of credit extended improved about two points to 57.3 in July. The overall favorable factor score improved to 61.6, the same as it was in November 2019. 

The unfavorables also saw a number of improvements—five of the six categories were above or at the expansion threshold of 50. “There was some expectation that there would be a decline in the unfavorable numbers by this point, but that has not yet been the case,” noted Kuehl. One factor that usually sits in contraction territory, dollar amount of customer deductions, improved to 52.4, the highest level since November 2013 and just slightly better than this past January. After four straight months of declines, filings for bankruptcies has now seen back-to-back increases to sit at 48.8 in July. 

The manufacturing sector was led by another strong showing in the sales category, which is now more than three times higher (66.3) than it was in April (21.4). New credit applications and dollar collections each jumped back into the 60s, while amount of credit extended improved under two points. The overall favorables increased to 62.2 in July from 55.7. Only two of the unfavorables stepped over into expansion territory—dollar amount beyond terms (53.7) and dollar amount of customer deductions (52) in July. The other four are within striking distance, all under a point away. 

The service sector reported vast improvement as well in July, notably in dollar amount beyond terms, which hit its second-highest score ever at 60.9. Also, within the unfavorables was accounts placed for collection improving to 52.2 from 46.4 as well as a noticeable improvement in filings for bankruptcies to 48.3 from 46.5. In the favorables, sales saw a 12-point jump, and dollar collections improved by 8.5 points. Overall, the service sector improved five points to 56.1 in July. 

“The service sector is immensely diverse, and that has been apparent as the pandemic crisis has unfolded,” said Kuehl. “The data that is collected for the CMI is heavily weighted toward the retail sector as opposed to some of those areas that sustained the biggest economic blows. The recovery in retail has been substantial and that has allowed the progress in the CMI numbers as well.”


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Bringing Email Etiquette into

the Credit Department


—Andrew Michaels, editorial associate

From a young age, many parents teach their children the proper etiquette that is expected as a member of today’s society. Say, “Please,” and, “Thank you.” Introduce yourself with a polite greeting such as, “Hello,” followed by your name. And—even more relevant nowadays—wash your hands when necessary. When those children become older and enter the workforce, societal etiquette still applies, however, the learning process must continue with workplace etiquette.

Communication plays a significant role in workplace etiquette, whether it means speaking with a coworker directly or through email. The latter is especially important in the credit industry, where credit professionals are constantly using the electronic medium to communicate. According to a 2019 “Adobe Email Usage Study,” employees spend more than three hours a day checking their work email, 10% saying they constantly check their email. This being the case, Business Insider shared some important elements of an email using proper etiquette.

No. 1: Make Your Subject Line Clear and Direct

If your email is the “article,” your subject line is the “headline.” Campaign Monitor states that subject lines should not exceed 41 characters, while Backlinko founder Brian Dean said subject lines with 16 or fewer characters have higher open rates. Before writing the subject line, ask yourself, “What information am I sharing or needing?” For credit professionals, this could mean sending a credit application for a customer to complete or credit approval letter with the subject line, “[Company name] credit application,” or “Credit approved,” respectively. The subject line informs the reader what the email entails.

No. 2: Include Your Information

Similar to the way you include your return address on an envelope mailed through the postal service, make sure you have your name, job title, company name, phone number and email address in a signature block located below your written email. In the Business Insider article, career coach Barbara Pachter said the font, type size and color should remain the same as that already used in the email.

“You also can add a little publicity for yourself, but don't go overboard with any sayings or artwork,” Pachter noted.

The following is an example of a credit professional’s signature block: 

Christopher Credit, CCE

Credit manager | My Company, Inc.

123.456.7890 | This email address is being protected from spambots. You need JavaScript enabled to view it. 

No. 3: Less is More

A New York Times (NYT) article said it best: “The less we write, the more valuable our writing becomes.” When comprising an email, it is not necessary to write pages and pages of text, as the recipient will most likely skim the email with little to no takeaways. As with conversation, begin with a polite greeting, such as, “Hello,” or, “Good morning/afternoon/evening.” Then, share the information.

“When we discover issues or problems, we tend to compose an email with a long explanation, our opinion on the matter and what we want people to do,” Liz Wiseman, author of “Multipliers: How the Best Leaders Make Everyone Smarter,” said in the NYT article. “As our word count grows, co-workers’ ownership of the situation declines and our implied ownership of the situation increases.”

Instead, Wiseman said, write one or two sentences describing the situation and then ask a question. From a credit perspective, perhaps there is an issue of cybersecurity. If there was a breach, the head of the credit department might address what happened, share some potential solutions and then ask others how they believe it can be prevented.

“If they don’t respond,” Wiseman added, “I jump in. Not with a reply, but with clarification that I’m looking to them to jump in.”

There may not be such a thing as “the perfect email,” but with the tactics listed above, credit professionals can properly communicate using the technological medium.

For more on proper email etiquette, please visit the Credit Congress Showcase session 29077: This is How You Do It - Proven Secrets to Email Etiquette with speaker Karen E. Purves, M.A., innovative impact.


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B2B Payments: Moving from

High Touch to High Tech

—Scott Schlange

Over the past few months, our workplaces have changed tremendously. Offices that were once full of people are now nearly empty. Work that was once done in person is now being done at home. With so many now working remotely, COVID-19 has forced many companies to rethink the way they do business and transition from a high touch environment to a high-tech environment.  

Even before COVID-19, recent technological advancements have spurred the development of solutions that address increasingly specific business-to-business (B2B) pain points. B2B payments, in particular, have begun to see the early benefits of this specialization in what Deloitte referred to as a “tectonic shift underway” in the landscape. With Goldman Sachs recently estimating the B2B payments market to reach $200 trillion by 2028, over 5x the volume of the retail payments market, we know the potential impact of technology on the facilitation of B2B payments is significant.

Many businesses still run with manual back-office operations. According to the same Goldman report, 70% of small and medium-sized business (SMB) payment volume is still paid through paper check, and companies currently spend $2.7 trillion globally on manual, paper-based processing. While the increase in payment volume is beneficial for the broader economy, that cumulative cost will rise in correlation with the influx of payments that need processing. But it doesn’t have to. To stay competitive and poised for growth amid this external evolution, forward-thinking financial leaders are re-evaluating their internal operations for areas of inefficiency. Departments like Accounts Payable (AP) are top of mind for many, as 64% of controllers surveyed by the Institute of Finance and Management (IOFM) identified AP as a priority for improvement. The majority of these controllers also believe AP will receive additional investment for improvements, so it’s no surprise that they rate their AP departments as being “high-value” and a “critical component of their business.”

Leading organizations are turning to innovative technology, like AP automation software, to transform historically time-consuming, tactical processes. The resulting improvements enable AP teams to contribute to businesses’ broader goals of greater flexibility, stronger financial positions, and healthier bottom lines by providing cost savings, increased visibility, and greater control.

Organizations that have chosen to automate their AP processes have seen results. Reduction in paper invoice volume and invoice approval timelines are the two most commonly stated improvements since implementing an AP management solution. But in addition, these companies also reported seeing strategic benefits after automating their AP process. These include research and visibility into historical invoices, improved visibility into unpaid invoices and increased employee productivity. These benefits contribute to increased business control, lower financial risk, and greater accuracy in financial forecasting. Not only does automation help teams eliminate their identified inefficiencies, it affords the AP staff the opportunity to proactively provide additional value to the company.

While the initial focus of many financial leaders looking to automate is the procedural, office-based pain of paper-based processes, there are economic benefits to consider as well. First, there are hard costs associated with processing paper payments—costs of checks, envelopes, and postage—that add up when processing hundreds, if not thousands, of payments on a monthly basis. Then there are soft cost considerations. Time is money, and companies are paying for hours of employee time dedicated to manual data entry and approval workflows that could be spent on more impactful work. By implementing a more efficient solution, companies can eliminate tens of thousands of dollars in processing costs and reallocate those funds more effectively for sustained growth.

After an improvement in procedural efficiency and cost reduction comes the final phase of strategic transformation as a result of automation: greater goal setting. Organizations that automate and successfully transform their AP departments enjoy the opportunity to set holistic goals that are both tactical and strategic. For example, organizations that have embraced technology report their primary goal over the next year is to increase the productivity of their AP staff, which reflects a more forward-thinking focus on increasing the value of internal resources. Another innovative goal among AP leaders is to improve cash flow management and working capital optimization. Typically, organizations struggling under a manual process only have the bandwidth to focus on tactical improvement goals like reducing paper invoices or manual data entry. In contrast, automated organizations can use more of their time and resources in an analytical capacity to help the company understand ways it an improve its financial position and bottom line.

Now, more than ever, AP departments can grow beyond tactical execution centers into strategic contributors, thanks in large part to technology like automation. To help their teams reach their full potential, financial leaders must recognize the symbiotic relationship between tactical enhancement and strategic development. Companies that identify and prioritize this opportunity to evaluate and enhance their current processes with an eye on the future will have a significant advantage in a business payments landscape that is consistently reinventing itself.


This material is presented for informational purposes only and should not be construed as individual tax or financial advice. Please consult with legal, tax and/or financial advisors. KeyBank does not provide legal advice. KeyBank is Member FDIC.© KeyCorp 2020 CFMA 200629 -827475

Scott Schlange is the Commercial Banking Sales Leader with KeyBank in Idaho. He may be reached at 208-364-8559 or at This email address is being protected from spambots. You need JavaScript enabled to view it..


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Seventh Circuit Court of Appeals Holds

Literal Interpretation of 'Within 90 Days'

Under the Miller Act

—Benjamin A. Johnston

An appeals decision by the Seventh Circuit underscores the importance of strict adherence to the requirements of the Miller Act. A&C Construction & Installation, Co. WLL v. Zurich American Insurance Company and The Insurance Company of the State of Pennsylvania, No. 19-3325, decided June 30, 2020, concerns a Miller Act claim on a payment bond by a subcontractor on a federal construction project. Section 3133 of The Miller Act, 40 U.S.C. §3133(b), requires a payment bond and a performance bond to be posted on construction contracts in excess of $100,000 with the federal government. A&C Construction was a second-tier subcontractor on a project for the U.S. Army Corps of Engineers on a Qatar air base. A&C in turn subcontracted a part of its work to RNC, a third-tier subcontractor. A&C’s work was terminated, at least in part, on December 16, 2015. A&C claimed that it continued work through February 28, 2017, by virtue of its supervision of RNC and the lease of its equipment to complete A&C’s terminated work. The sureties contended that A&C’s work ended no later than May 16, 2016. 

The Miller Act has a strict requirement that subcontractors that do not have a direct contract with the general contractor must provide notice of nonpayment to the general contractor within 90 days and initiate an action to recover within one year “from the date on which the person did or performed the last of the labor or furnished or supplied the last of the material for which the claim is made.” A&C provided its notice on August 16, 2016, and commenced its action on June 7, 2017. 

Appealing the district court’s summary judgment ruling, A&C argued even if its notice was early it was valid for all pre-notice work. The Seventh Circuit decided A&C had not raised the argument before the district court and thus the argument was waived. 

The Appellate Court did not decide the factual issue of the last day of work by A&C, instead finding that even under the last day of work claimed by A&C, February 28, 2017, A&C’s notice was untimely, stating the obvious: “August 16, 2016, is not ‘within 90 days’ of February 28, 2017.” The specific holding that A&C did not provide “its required Miller Act notice within ninety days of the date it claimed for its last day of recoverable work” leaves open whether notice given within 90 days of, but before, the last day of work of work, will suffice. Other courts have found that notice given before the last day of work will suffice for amounts due by the date of the notice, the very argument the Seventh Circuit found A&C had waived by its failure to raise the argument with the district court. 


Benjamin A. Johnston practices in the area of construction law and litigation. He is special counsel in Duane Morris’ Chicago office. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.. 

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.