Sales into which country this week presents the greatest credit or political risk to your company?   Answer Here!

What We're Reading:

G20 leaders to confront energy prices, other economic woes. Leaders of the Group of 20 countries gathering for their first in-person summit since the pandemic took hold will confront a global recovery hampered by a series of stumbling blocks: an energy crunch spurring higher fuel and utility prices, new COVID-19 outbreaks, and logjams in the supply chains that keep the economy humming and goods headed to consumers. (AP NEWS)

No end in sight for labor shortages as U.S. companies fight high costs. Labor shortages may be the most intractable of the cost risks that U.S. companies faced in the latest quarter, and as the earnings season moves into its peak there are signs the problem will persist, some strategists say. (HSN)

Germany: Supply chain crisis slows economic growth. Consumer demand is driving continued recovery, but Europe's largest economy grew by a less-than-expected 1.8% in the third quarter. Supply chain hold-ups prevented some manufacturers from producing at full capacity. (DW)

Chinese companies blame “misinformation” for difficult political climate in EU. 62% of Chinese companies in Europe believe that the political climate has deteriorated for them. In a recent survey, they blame “media disinformation” among other factors, a line commonly used by the Chinese Communist Party to discredit criticism. (EurActiv)

Thai Finance Ministry cuts GDP outlook after deadly Covid wave. Thailand’s economy is set to expand more slowly than previously expected this year as the country emerges from its deadliest Covid-19 outbreak, the Finance Ministry said.  (Business Mirror)

Brazil bank delinquency trends promising, negative outlook remains. The financial performance of Brazil’s banking system has stabilized. However, the rapid rise of debt levels and consumer leverage combined with high inflationary pressures and anemic job recovery is negative for long-term credit conditions and business volumes. (Fitch)

US issues new Iran-related sanctions. The United States has issued a fresh round of Iran-related sanctions targeting four individuals and two entities linked to Tehran's Islamic Revolutionary Guard Corps, a notice posted on the US Treasury Department's website showed Friday. (MeMo)

France threatens harbor ban on UK ships from next week as fishing row deepens. France will ban UK fishing boats from its harbors from next week as part of a series of tough sanctions on Britain unless London moves to resolve a long-running dispute over licenses for French fishing vessels. (EurActiv)

South Africa gears up for hotly contested local elections. Economy and COVID-19 pandemic dominate campaigns ahead of November 1 polls. (Aljazeera)

Ecuador: Protesters block roads over gasoline price hikes. Ecuadorian President Guillermo Lasso is under fire for increasing the price of gas even as unions and other groups have called for lower rates and an exemption for sectors hit hard by the COVID pandemic. (DW)

US, China, and Russia join Asia summit amid regional disputes. President Joe Biden and China’s Premier Li Keqiang will join an annual summit of 18 Asia-Pacific nations by video Wednesday in a region where the world powers have dueled over trade, Taiwan, democracy, human rights and Beijing’s increasingly assertive actions in disputed territories. (Business Mirror)

Flow of goods through Panama Canal hits record. The Panama Canal moved more than a half a billion tonnes of goods over the last year, the canal's top official said on Thursday, marking a record high for the key global waterway as international trade picked up. (US News & World Report)

Getting back to the basics of human connection. While some of us may be eager to share our experiences with old and new coworkers when returning to the office, others may not be ready to talk about the emotionally searing experiences we’ve been through over the past year and a half. (Harvard Business Review)

The uselessness of useful knowledge. Today’s powerful but little-understood artificial intelligence breakthroughs echo past examples of unexpected scientific progress. (Quanta)

The legislative elections held on May 23 were a carefully orchestrated exercise that produced the anticipated result, with all but 15 of the 500 seats in the National Assembly filled by members of the ruling CPV. Another 14 were won by nominally independent but government-aligned (and hand-picked) candidates, and one seat is vacant. The elections were followed by the rubber-stamp approval of leaders chosen at the CPV Congress held back in February.  

Several military and subordinate government figures were shifted around, but top leaders of the CPV took care to avoid any potentially destabilizing moves, which will likely remain a guiding objective as officials struggle to get on top of a surge in COVID-19 infections that is largely attributable to the very slow rollout of a national vaccination program, as delays in obtaining donated doses have contributed to persistent shortages of vaccines.  

As the number of new cases soared to more than 13,000 per day in early September (after average less than 30 per day from March 2020 to May 2021), leaders in Hanoi heard a deafening chorus of complaints about the incompetence and corruption of government officials, delays in the payment of wages, unremunerated overtime in the health service, and families struggling to meet their basic needs. A stay-at-home order issued in the coastal city of Da-Nang in July was immediately followed by reports of shortages of food and water caused by panic buying, and strict rules have been imposed in other cities, including Ho Chi Minh City.  

By late September, the number of new cases had fallen below 10,000 per day and the vaccination program was gaining momentum. However, the numbers remained quite low, with only about one-third of adults having received even one dose of the vaccine. In the meantime, the health threat is having a negative impact on the government’s efforts to reboot a stalled privatization agenda and will undermine the near-term economic contribution from tourism and manufacturing.  

The pace of economic growth will decelerate in the second half of the year. While the robust first-half performance creates the potential for an annual figure of 3.5%–4%, a return the average pace of close to 7% recorded in the five years prior to the pandemic is unlikely without the full reopening of the domestic economy and a sustained and strong recovery of global demand.  

The analysis above is taken from the September 2021 Political Risk Letter (PRL). The best-in-class monthly newsletter, written by the PRS Group, provides concise, easy-to-digest briefs on up to 10 countries, with additional recaps updating prior month’s reports. Each month’s Political and Economic Forecasts Table covers 100 countries, with 18-month and five-year forecasts for KPIs such as turmoil, financial transfer and export market risk. It also includes country rating changes, providing an excellent method of tracking ratings and risk for the countries where credit professionals do business. FCIB and NACM members receive a 10% discount on PRS Country Reports and the PRL by subscribing through FCIB.

On Nov. 4, Kyle Freeman, of Dezan Shira & Associates, will present Doing Business in Vietnam. Among other topics, Kyle will provide an economic overview and outlook, as well as discuss how the country fits into the global supply chain.

First the bad news: It will take years for supply chains to return to normal. But the good news: A panel of experts in transportation, logistics and finance told PYMNTS in an interview that this challenge is also an invitation for continued innovation in any technology that can help reduce frictions, expedite global trade or improve cash flow.

Panelists included Truck Pay President and CEO Barry Honig, Yay Pay  CEO Anthony Venus and Fiserv Senior Vice President and Head of Global Enterprise Solutions David Ades.

Ades noted that in terms of high-level trends, “consumer behavior is ‘bleeding’ into business-to-business behavior.” Contactless payments are growing, and people are eschewing using paper checks. It’s natural to assume that commercial payments would follow suit.

For B2B automation trends, noted the panelists, innovation comes in waves. Outsourcing of payroll, for example, can be traced back decades. Automation of back-office functions, once the purview of larger firms, more recently has been filtering down to smaller companies. YayPay’s Venus said that as larger buyers are streamlining and modernizing operations and moving to platforms, smaller suppliers will sign up. “We’re on a train that won’t stop,” said Venus of the pivot toward digital payments.

The Problems on the Ground

To get a sense of the problems on the ground, so to speak, TruckPay’s Honig stated the biggest issue that confronts all manner of firms, no matter their place in the supply chain, is labor. That’s especially true for trucking, a critical component for the flow of goods across states and across borders.

The trends toward a labor shortage were in place well before the pandemic, and now they have been exacerbated. Honig stated that the shortage could be as broad as 60,000 to 100,000 workers.

Several solutions are being bandied about in various quarters, Honig noted, including the idea that the age for commercial drivers’ licenses be lowered to 18 years of age, down from 21, to expand the labor pool. The urgency is there as the current infrastructure legislation on the Hill is likely to increase the demand for drivers.

Another way to help streamline pressures in the logistics sector is to offer more payments optionality, including cryptocurrencies, said Honig. In an announcement at the beginning of this year, the company said that cryptocurrencies, including bitcoin, will be available as payment options on the TruckPay Fleet Management and MyTruckScales platforms. The company’s motivation for doing this was twofold, said Honig: to enable faster cross-border payments so that drivers and other workers could be paid quickly and easily no matter the country, and to bring speedy payments to underbanked individuals.

Fiserv’s Ades said that within cryptos and digital assets, stablecoins are likely to get relatively stronger traction in payments, given the fact that they are pegged to fiat. Beyond the promise and eventual deployment of cryptocurrencies, for now at least, “the pressure point is getting more people into the field,” Honig told the panel.

Against that backdrop, online marketplaces such as TruckPay’s can bring subcontractors, owner-operators and others to match up supply and demand.

And with the platform models in general, as YayPay’s Venus said, digital payments are rapidly being embedded into the interactions between those supply-demand matchups. He noted that his own firm has seen a 300% jump in digital payments on its own platform in the wake of the pandemic.

That triple-digit jump has come on the heels of the general shift to work-from-home environments, and the general trend of embracing automation to replace manual tasks—everything from processing checks to collecting bank details.

“With the credit crunch that happened at one point, especially during the pandemic, we’ve seen a lot more demand for credit assessment,” said Venus. “That’s led more people onto our platform.”

Fears over inflation have been leading people to find value in getting money into the bank faster. With a nod to the pressures of the supply chain, Venus said that $40 billion in accounts receivable (AR) has flowed through its platform through the past 12 months.

As supply chains are global in scope, and the pandemic has upended firms’ operations, Fiserv’s Ades said the digitization of B2B payments has become ever more pronounced.

“The importance of cross-border payments—the ease for companies to pay thousands and thousands of suppliers across the world in a more effective manner … it’s at the top of the list for anybody in a B2B space right now.”

Most immediate is the desire to cut down on paper-based and manual processes. Honig noted that the trucking vertical has been heavily paper-based, but in recent years there has been a push to digitize tickets and trucking manifests, and even to embed payments within tickets.

With particular emphasis on government-contractor relationships, he said, “if you want to play in this multi-billion-dollar space,” the incentive is for these companies to upgrade and embrace safer, speedier ways of interacting with supply chains.

In this way, we’ll see the continued consumerization of logistics and transportation—an Uber-like experience where, say, one can track (via app) where a driver is, when they’ve picked up cargo, and what documents have been signed electronically (and when).

Said Honig: “You’re going to see a significant amount of integration, where you have platforms like ours talking to various [enterprise resource planning (ERP)] systems, talking to inventory systems, talking to warehouse systems.”

That integration and interoperability is a hallmark of digital payments, said Venus, who stated that his platform takes data from enterprises’ ERP systems and matches it against large swaths of other data in efforts to determine who is creditworthy and most likely to pay back invoice financing.

Looking ahead, said Venus, we’re headed down the (proverbial and literal) road toward seamless, frictionless, automated commerce, where one can click on and finance an invoice with analytics predicting when an enterprise’s cash flow is going to come in within a fraction of accuracy.

“There will be great transparency and great visibility throughout the system,” he predicted.

Reprinted with permission by PYMNTS.

Debt collection can be one of the most difficult jobs for a creditor. However, collections become even more complicated in different countries if you are not prepared for cultural differences. 

Understanding the best debt collection strategies for companies in Mexico is a valuable tool to avoid uncollectables. “The way that we're going to accomplish our goal of becoming better collectors is by learning three things,” said Romelio Hernández, president of HMH Legal (CA), during NACM’s 2021 Credit Congress session Creative and Sound Techniques for Effective Debt Collection in Mexico. 

The first skill for improving collection chances in Mexico is due diligence, Hernández said. You have to do your due diligence on the front end in order to have the tools and knowledge to negotiate a deal. “You have to investigate your data and ask yourself what is the situation,” he explained. “See how many lawsuits [the customer] has.” If your customer has a lot of lawsuits then it's a big risk, and you will want to try and negotiate outside of court if possible.  

Creditors also want to be sure to have the debtor sign a promissory note ahead of time as added protection against bad debt. “When a debtor signs this, they are a lot more concerned,” Hernández said. “They know that if they don’t pay … they will have a court clerk probably knocking on their door trying to seize assets on your behalf.”

Psychology is the next skill that Hernández said is key to debt collection in Mexico because it helps a creditor understand the debtors’ mindset. “There are clever ways to collect even the toughest claims,” he explained. “We can improve our chances by learning a little psychology and applying the arts of persuasion and tactical empathy, under a proven strategy for negotiation.”

You want to remind the debtor of how much time they have invested in the business relationship and growing their reputation within the market. Chances are the debtor will become concerned that if they don’t pay, they won’t be able to do business with others, Hernández said. “If you can convince someone that what they stand to lose by not paying is more important than what they have to gain, you’re going to be more persuasive in your argument,” he added. 

The last skill is having a solid collection strategy in place. “If you really want to solve problem accounts, you have to sit with your debtor,” Hernández said. “There is no other way.” Once you are able to do that, the next part of your strategy should be about building rapport with the debtor. The best way to do this is by being aware of culture and egos. “There are always clever ways to collect even the most challenging of claims.”

 

Week in Review Editorial Team:

Diana Mota, Editor in Chief and David Anderson, Member Relations