Lonely No More
republished from Credit & Collection Manager's Letter
by Wayne Muller
In the 40 years we’ve published this newsletter, we’ve had innumerable calls from readers who are unaware of even the existence of the National Association of Credit Management (NACM). That’s as unfortunate as it is surprising.
NACM, with which we have no business affiliation, may be the best source of information and professional guidance and development opportunities available to any credit manager.
In this article, we look at one of its biggest and most dynamic state affiliates.
The customer had stopped paying and Katie Rider, accounts receivables supervisor for Deep Outdoors (Poway, CA), had sent the salesman out to get a check. He returned without a check, but with the most bizarre excuse either of them had ever heard. The customer’s dog had burned down his house and he was temporarily but completely out of money.What do you do, besides stopping all shipments and calling your attorney,when you get a story like that?
Rider mentioned it a few days later at the monthly meeting of the Underwater Sports Group of her chapter of the California Credit Management Association, and, to her amazement, learned that it was true.“One of the other credit managers there confirmed that it happened,”she says. “This guy’s dog somehow actually did burn down his house.”She tells this story to illustrate the value she’s discovered in association membership.“Managing credit can be really lonely,” she points out. “Often, you don’t know who or what to believe. What the association gives you is the opportunity to make acquaintance and develop rapport withother people who are going through exactly the same thing.”She says, “Obviously, there are many things you can’t disclose. However, those things we can talk about are really helpful.”
No Sale
Last year, one credit fraudster showed up to “buy” truck parts at LA Freightliner (Whittier, CA) and left in handcuffs, thanks to an information exchange that had taken place at a Truck, Trailer, and Tire Credit Group meeting.
“Another group member reported that one of its customers was passing fraudulent checks and I remembered that information when a gentleman showed up at our company,”says Assistant Credit Manager Lupe Arzate. “His check was fraudulent, and not only did we not release the parts order to him, but we blocked his vehicle at the loading dock, called the police, and had him arrested.”
She continues:We sent out an email alert to our group members,and sure enough, the gentleman’s partner was at another member company trying to buy truck parts with a fraudulent check. The partner was also arrested by police.All in all, the information from the credit group saved a total of $29,000 from those two transactions alone, and other group members saved untold thousandsof dollars in losses that could have been perpetratedb y the fraudsters. I realized that all it takes is one situation like that and the credit group pays foritself forever.
Unofficial Creditors’ Committee
Carmella Morales, who is national credit manager for Al’s Garden Art (Colton, CA) and chairman of theWestern States Landscapers and Nursery Group, cites a situation that occurred several years ago as “the best example of the intangible and ever apparent force of a credit group.”
“Many of our group members reported that they were experiencing late payments, broken promises, and non-sufficient funds (NSF) checks from the same large nursery company,”she recalls. “The principal of the nursery was stringing everyone along and demanding releases, and based on our collective experience, the suppliers in our group placed all of the nursery’s accounts on hold, with aggregate claims exceeding $700,000.”Subsequently, the group learned that the CEO planned on selling his company’s assets to another nursery company.The group also learned that the CEO was to receive $600,000 for consulting fees and a non-compete agreement. Morales says, “To prevent the impending sale of the debtor company, the six creditors in the group (including my company) formed an unofficial creditors committee.”
She continues: With the help of CMA’s Adjustment Bureau, our creditors committee was successful in preventing the sale (although not the bankruptcy), which would have given to the CEO what rightly belonged to his creditors.The credit group acted as an invisible cloak to help us take corrective action against a common debtor.This situation was a tribute to the strength of a credit group, and I say this with a great amount of pride, not just because I am now the chairman of the credit group, but because our group stays true to its purpose of helping group members protect their interests while adhering strictly to antitrust policies.
Meeting on the Web
One major challenge facing all of the groups is their busy members’ lack of time to attend meetings.“Most credit group members we talk to say that the information they get is still very valuable, but that increased demands on their time often prevents them from attending and/or contributing to every meeting,” says Mike Mitchell, director of marketing for CMA Business Credit Services(CMA). CMA has changed the focus of its online credit group services from monthly data contribution and reporting to on-demand requests for information.
So, CMA has adapted to these changing needs with “heavy development” in Web-based technology. “This allows credit group members to exchange critical trade data in real time conveniently from their computers by accessing CMA’s interactive Web site, anscers.com(www.anscers.com),” says Mitchell. “Furthermore, CMA has changed the focus of its online credit group services from monthly data contribution and reporting to on-demand requests for information. Now credit managers do not have to wait until the account discussion at the next monthly credit group meeting to request and receive the information they need to clear accounts.”
[PRINTER FRIENDLY VERSION]
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