Education sessions for 2011 Credit Congress opened with a handful of three-hour offerings on Tuesday that highlighted some of the best speakers in NACM's network of colleagues and members. It also marked the kick-off of a sprawling two-day, five-part series developed by FCIB on international business with Doing Business in Canada, presented by Hubert Sibre, of Davis LLP.

Greg Powelson, director of NACM's Mechanic's Lien & Bond Services (MLBS), walked attendees through the various trappings of using these tools in the session Mechanic's Liens & Bonds: Critical Elements for Every Construction Credit Manager. Recurring, overarching messages of the session centered around the ideas of due diligence and pinpoint accuracy to keep out of trouble when making an official filing. Powelson recalled one situation where a client pushed hard for filing a $1 million lien on a project. However, he noted, the dollar figure actually represented the total owed on 12 different projects by the debtor, not one, that the client tried to roll into one filing, which is illegal. Powelson said mechanic's liens are nothing with which to be messed around.

"When we're talking about mechanic's liens, you must be professional and accurate. You have to be very serious about this because mechanic's liens expose you to perjury charges [if you're lying/stretching the truth], and that's felony," Powelson said.

Powelson also touched on the need to be dead accurate before signing documents such as an unconditional waiver. If you've signed on the dotted line and, all of the sudden, a change order comes in, "game over...final is final." In essence, you can't lien the change. "Make sure everything has been billed before you sign and that all shipments and payments are ‘through today.'" Additionally, have all details in immaculate order and don't wait until the last minute when filing a claim against a bond. As for public construction, Powelson warned credit professionals to remember this all-important detail: "Bonding companies are in the business of collecting premiums, not paying out claims."

Meanwhile, Tuesday marked the first of several sessions conducted by David Osburn, David Osburn & Associates LLC, with Leadership vs. ‘Managership.' Therein, Osburn noted the importance of looking at different factors, such as expectations between differing generations and cultures, when dealing with training, problems, policy and the like. Osburn also drew a large, interactive crowd to Wednesday's How to Collect the Debt and Keep the Customer.

During that session, Osburn talked about a recurring issue for many credit managers: dealing with debtors who lie. Call it a product of the downturn and slow recovery. "People are lying to credit professionals a lot more now than they were five years ago," said Osburn. "It's a good times, bad times thing. He noted some debtors even stoop to the morally bankrupt level of playing off of natural disasters, like the recent floods and tornados, even if they weren't actually affected to get some kind of leniency in terms.

Of course, combating that, to a point, is largely dependent on a tried-and-true approach in credit: "Knowing your customers." He believes knowing the customer helps credit professionals spot bumps in the road, so to speak, such as inconsistent stories that don't match with their industries or usual way of doing business and the oft-used random mailing or technologic problem excuses.

Osburn noted that, perhaps counter-intuitively, once a company enters Chapter 11 bankruptcy reorganization, they're actually a bit more trustworthy. "Promises are more valid, believable when in Chapter 11...they, by law, have to be accountable," he quipped. "Before the suppliers were saying ‘Are they going to make it?' Now, the cat's out of the bag, and they know they are financially."

The final day of sessions also featured a panel led by United TranzAction's Rudet Fountain. In FAQ On Credit Card Processing, Fountain, along with panelists Dan Garrett, Fifth Third Processing Solutions LLC, and Tom Sacher, CCE, Watsco Inc., gave attendees a 360-degree view of what merchants need to know when accepting credit cards. "You can have a lot of different players," said Fountain. "You have the acquirers which would be the Fifth Thirds of the world," he added, indicating Garrett. "They're actually acquiring the transactions," said Fountain. "They participate as well and you can't complete a transaction without them."

The panel format of the session allowed for plenty of questions from the audience, including attendees eager to find ways to reduce the costs they have to pay to accept a credit card payment. When one audience member asked if they could accept credit cards for payment, but only at the point of sale, Garrett responded quickly, saying "Absolutely." He added some important caveats, however: "That has to be a policy that goes across your entire customer base. If you have a company policy that says ‘we accept credit cards, but only at point of sale,' then you can deny terms. But that has to apply to everybody, so if you get that customer that's 30, 60, 90 days out and you just want to get the payment, and you accept the credit card, not only have you violated company policy at that time, you've also violated the card rules."

Veteran bankruptcy expert Hal Schaefer, CCE, CEW, led A Best Practice Guide to Managing Bankruptcies - Before and After the Filing. His relaxed, conversational presentation stressed the importance of consistency in successfully navigating any debtor's bankruptcy filing. "A policies and procedures manual is so important because it will come back to that," said Schaefer.

"You will find that you may be in the position where you have opened yourself wide open for a preference action," he said, adding that the timing of certain security measures that creditors take to protect themselves from a debtor default and subsequent preference action could raise some eyebrows. "Timing is a major factor. If you get a standby letter of credit and you get it nine months prior to the filing, it's fine," said Schaefer. "If you get it during the 90-day preference period, some red flags are going to go up." Securitizing certain sales during that 90-day period will make it harder for creditors to eventually use the ordinary course of business defense, should a preference action come up.

Schaefer also noted that he greatly encourages credit professionals to serve on creditors' committees, but he added that they should be prepared for some upper management pushback. "Always remember you have a fiduciary responsibility to all trade creditors, not just your company," he cautioned. "The strangest thing can happen when you're sitting on the creditors' committee and someone asks if we should go after preferences," he noted, saying that often times some companies will want to avoid chasing these items if possible. "It does not make you a hero of the company, and it's a tough call; but it's well worth it."

A/R Credits: The Recent Target for Unclaimed Property Auditors, led by resident unclaimed property expert Valerie Jundt, Keane Consulting & Advisory Services, touched on a topic that's frequently overlooked by many credit professionals. But a thorough knowledge of the governing unclaimed property laws has become essential in today's economy, when state budgets are suffering and lawmakers lack the political will to raise taxes on constituents. "When you can't raise taxes anymore, then that person goes after unclaimed property," said Jundt. "It's not your money; it's not your company's money. The states are looking for extra revenues and the states are going after it."

Jundt took listeners through a thorough look at just what's expected of them under the various states' unclaimed property laws. "You have a duty to file the [unclaimed property] report timely," she said. "If you're a public company, you need to make sure you're filing in every district that you have shareholders." She noted too that companies must perform due diligence even on unclaimed property amounts that seem negligible. "If I'm pulling a credit for $100, and I‘ve not been able to get that resolved, I have a legal obligation to reach out to them saying ‘I still have a credit for $100, what should I do?'" she noted. Jundt added that most states require this due diligence for amounts worth $50 or greater. "In some states, it's $25. In some states you're required to send [reports] by certified mail. It's all over the map."

In other legal realms, a two-part Bulletproofing Your Credit Department session was led by Val Venable, CCE, Bruce Nathan, Esq. and Wanda Borges, Esq. The trio made a solid case for why "be prepared" should be the motto for credit professionals, not just Boy Scouts.

Venable and her attorney panelists offered a look at what signals a creditor can look for in a potential bankruptcy. That's not simply the signals that predict bankruptcy in a month or two, but those that can be found years in advance. "If you suddenly start getting trade references from your customers, it could mean that they've been cut off and could be looking for other suppliers," said Venable. Another tip for spotting a potential filing down the road relates back to the advent of companies holding secured debt. "Multiple tranches of secured debt is now becoming the norm," said Nathan. "You look at the bond debt or their bank debt and a warning signal could be an upcoming bond maturity date. These warning signals are not warning signals of a bankruptcy two months from now, but a bankruptcy two years from now."

And, not to be forgotten were the typically well-attended sessions feature Chris Kuehl, PhD of Armada Corporate Intelligence. Kuehl, who is also NACM's economic advisor, led a packed house for his traditional talk about the economy, this year dubbed Party Time: Surely the Economy is Recovering by Now, which played off newfound fears of inflation and high gas prices stymieing an already lackluster economic rebound. He also mixed it up a bit in a new session, Hijacking the Global Economy: Terrorism, Corruption and Traffickers. Therein, Kuehl discussed how international trade, especially when shipping moves through areas near Northern Africa and the Middle East, was perpetually going to have to worry about high-seas piracy; as many young adults in places like Somalia have very limited employment opportunities other than said criminal activity. He likened it to many if Afghanistan, even family members of high-ranking officials, running poppy fields specifically needed for production of illegal drugs. Talking from their position, Kuehl quipped, "Yeah, we'll get rid of the poppy fields as soon as you [the United States] help us find a way to replace that revenue." Kuehl also noted that higher-valued international shipments are at times employing armed agencies like Blackwater to fend off the would-be thieves. He noted trying to arm a bunch of untrained sailors to do battle with pirates has been and will continue to be a horrible idea with dangerous, often fatal consequences for otherwise law-abiding sailors.