The Tuesday and Wednesday educational sessions offered a variety of focused topics to full rooms of Credit Congress attendees.

Construction creditors received a whirlwind rundown of the issues currently facing their industry with Greg Powelson's presentation: "Mechanic's Liens & Bonds-The 25 Critical Elements Every Successful Construction Credit Manager Needs to Know." As director of NACM's Mechanic's Lien & Bond Services (MLBS), Powelson provided a rousing presentation filled with the unique state-by-state detail that construction creditors need.

"Your customers really don't have the kind of assets for the credit lines they want," said Powelson. "You're being asked to extend lines of credit greater than the net worth of your customers. A lot of the good prime contractors are not good primes anymore; same thing with owners. They can create and wreak havoc all down the ladder of supply as well."

"You're basically the last domino," he added.

Powelson noted that while construction creditors are aware of their unique situation, their upper management might not be, and making sure they're aware of the situation can reduce much of the hassle associated with extending credit to such risky customers. "Your credit approval process has nothing to do with what most of the folks in this conference are doing. Even if you could get audited financials, all you could determine is that you can't make the sale," he said. "Establishing terms and conditions up front is so unbelievably critical, and the foundation of all of this is by getting the best job information available. It requires your bosses to recognize that you're under-collateralized, by definition, going in. The rest of your organization needs to recognize that too."

A panel of top attorneys and credit/financial professionals led a session on Creditors' Committees. One of the top takeaways was that ensuring communication among all members of the committee, especially with hired financial professionals and early in the process, can be crucial for unsecured debtors to maximize their returns in reorganization. Panelists William Lenhart, CPA, of BDO Seidman, and Bruce Nathan Esq., of Lowenstein Sandler PC, both talked about the difficult and lack of quality communication present in the unsuccessful Circuit City reorganization. "Years ago, they would have figured out a way to reorganize...They lost confidence and liquidated," Lenhart said.

Former NACM-National Chairman Val Venable, CCE, SABIC Innovative Plastics, suggested the first move of a creditors' committee is establishing its unofficial "Bill of Rights" that addresses issues such as conduct, frequency of meetings and who can call meetings, among other things. "They provide an understanding of what is expected from everyone, and they clearly articulate that so there are not big surprises. Everybody has to know everybody else's expectations for a successful reorganization."

Attendees looking for a management perspective on credit management found just that in "A Conversation With a CFO," presented by D. Duane Wardle, CCE, CFO for Young Electric Sign Company. Wardle offered his own unique insights into how the credit department is viewed by a company's top tier, and described what he believed went into making the perfect credit manager. "You can't stay everyday in the office and be a great credit manager," he said. "You've got to get out there. You never turn an account over to collections without looking the customer in the eye." Wardle acknowledged that while economic realities sometimes make this a difficult rule to live by, it's still important for credit staff to make every effort to build relationships with their customers and collect directly from them whenever possible. "You have to be trusted," he noted. "Once you are no longer trusted, you're finished."

Much of what goes into being a good credit manager comes down to attitude, and the way the credit professional sees the customer. "Don't deny credit, propose terms," said Wardle, noting that an adversarial attitude with customers can only hurt the company, and the credit department.

Wardle also offered tips on how best to make an impression on a customer's CFO when it comes time for the credit professional to collect on their account. "Don't leave a voicemail saying ‘call me,'" he noted. "And no long emails. As a CFO, if I get a letter longer than a page, this is what I do with it: I say ‘I'll deal with that later," and put it aside. I don't have time for that."

"We see countries as tourists," said Geert-Jan Van Haastrecht, CCE, CICP, Cisco Systems International B.V., in his session, International Etiquette: Balancing Business and Behavior. Indeed, many international business ventures have gone awry due to simple, surface misunderstandings about a country's cultural mores and attitudes. In his session, Haastrecht, using his extensive experience in the world of global business, gave listeners the tools they needed to avoid cultural mishaps and advocated approaching international business on a country-by-country basis. For example, Haastrecht described the unique business culture of Europe's largest economy. "The Germans are so result driven it's unbelievable," he said. "They don't say ‘let's see if we can,' they say, ‘we are going to do that.'" This attitude permeates even simple business meetings in Germany as well, said Haastrecht. "If you have a business meeting with your German counterparts, it's business, nothing else," he noted. "If there's something you want to discuss, that's the topic you're going to discuss. There's no socializing, no private information. It's only business." Haastrecht noted that credit professionals must keep this in mind when entering the German market, and remember that things might not be the same elsewhere in Europe.

Keeping the tone as lively as it was informative, Haastrecht punctuated his points with jokes, personal experiences, and even giveaways, at one point awarding an attendee a pair of wooden shoes from his native Netherlands.

Panelists in The Inevitable Change-A Panel Discussion of the Ever-changing Payments Environment discussed the possibility of offsetting or avoiding interchange/"swipe" fees. As long as fees passed onto the debtor/customer are worded as "convenience fees" and are applied as consistent, standard operating procedures, it's legal. Setting this up can be difficult though, as credit card issuers are not fans of the practice, said Tom Sacher, CCE, CEW, of Watsco Inc.: "I would caution you about doing it on an informal basis. Mastercard and Visa do not like it and set up hurdles. It has to be a bona fide convenience outside of normal means of payment...You can't do it for some and not others."

Other panelists, like 2010 NACM award recipient Barbara Condit, CCE, SPS Companies Inc., suggested strategies like adjusting pricing based on customer payment patterns to avoid absorbing interchange costs or price offering discounts for those using cash.

Meanwhile, panelists in Pragmatic Approaches to Quickly Analyze Large Credit Risks suggested that landing a business relationship with a large company could pay many dividends for a vendor, but it could become a double-edged sword. Dealing with big business can include different dangers and require varying levels of credit analysis, and such accounts can begin to represent too large a percentage of total revenue.

During the session, Ed Bell, Ph.D., CBA, CICP, W.W. Grainger Inc., touched upon the importance of looking out for key warning signs that the large company is in some level of distress-both when just starting the business relationship and once it is firmly established. Bells' top 10 watch topics are as follows:

• Changing payment patterns
  
• Changing buying or selling habits (such as loading up on inventory from you)
  
• Shrinking cash flow
  
• Sudden high customer demands (e.g., asking for discounts or terms)
  
• Large accruals
  
• Withholding financial information
  
• High DSO with your company or others
  
• Changes in management, especially sudden ones
  
• Persistent negative rumors
  
• Tax Liens

Another speaker offering a helpful top 10 list for attendees was Buddy Baker, of Fifth Third Bank, during his Standby Letters of Credit session. Baker offered the following "Tips, Tricks and Facts" when using standbys:

• L/Cs are payable against documents (they can include modalities)
  
• A letter of credit can be called a guarantee
  
• Contract guarantees are not independent
  
• U.S. banks cannot issue contract guarantees and foreign banks generally don't
  
• Avoid foreign laws
  
• Use ICC rules
  
• Avoid using counter-guarantees
  
• Realize banks do not check the veracity of documents
  
• Do not try to put terms in L/Cs that belong in contracts
  
• Work to get L/Cs cancelled when they are no longer needed

Read more coverage in the Executive Exchange Sessions section!