April 2011 Business Credit Journal

7931 NE Halsey, Suite 200, Portland, Oregon 97213 Tel 503.257.0802 or 800.622.6985 • Fax 503.257.0247 • www.nacmoregon.org

Business Credit JournalApril 2011

NACM Oregon

...continue on page 15

In This Issue

Escheatment ..................... Cover

SB 890 .....................................2

President's Message ..................2

International Corner ..................3

Testimonials and New Members .4

Legal Corner .............................5

Member Profile .........................6

Red Flags Clarification ...............8

NOF Scholarship Funds and Recipient ................................10

Education ...............................12

Webinars ................................13

Contacts .................................18

Escheatment in the Spotlight as State Budget Deficits Continue: What a Credit Executive Needs to ConsiderBy Scott Blakeley

The prolonged downturn of the U.S. economy reminds vendors of the financial challenges that customers face to be profitable. States, too, are

finding it more difficult to meet their budgets as a result of declines in corporate and sales tax revenue, increased foreclosures and weak consumer spending. Indeed, 25 states are projecting budget deficits. States are reacting to these considering massive budget cuts, including cuts with public education. States are also looking for untapped revenue sources to close the budget gaps. In this setting, states are looking for sources of revenue, and abandoned property, as the press reports, may be that untapped source for states. It is expected that states may have a line item in their annual budget for escheatment may be a step to ease this budget crisis. Escheatment revenue is an appealing source from the states’ view as it does not require raising taxes, such as on tobacco and alcohol, or increasing lottery ticket sales. Given the budget crisis many states are facing, many are more aggressive in their collection of escheat dollars. Underscoring this, several private firms are working on behalf of states on a contingency fee basis to locate abandoned property that should have been turned over to the state. Given this environment, how does a state’s focus in abandoned property as revenue source affect the credit department? What is considered unclaimed property as to the credit department that may fall under the escheat laws? Does a credit balance qualify? What may be the consequence if the vendor declares the unclaimed property as income and applies it to the bottom line, as the vendor views it as a windfall to offset losses from unrelated delinquent accounts?



NACM Oregon

Message from the President

On May 5, Barry Elms will return to Portland for an NACM Oregon seminar. More information is provided in this issue of the BCJ. Space is limited – register today!

Clara Nemeth has joined the NACM Oregon staff as a Collection Account Executive. If you need help with delinquent accounts, please

give Clara a call (971-230-1144) to learn more about NACM Oregon collection services.

Best wishes for a prosperous 2011!

Rod Wheeland, CCE, CAE Direct: 971.230.1158 [email protected]

Northeast Office Space

Flexible space (932 to 3,066 square feet) to meet diverse needs. Quick access to I-84 and one block from the MAX. Building facilities include free parking and classroom.

Available immediately (see attached flyer). For more information, contact Tom Becic at Melvin Mark Companies at 503.223.9203.

SB 890 “Pay When Paid Bill The Oregon legislature is considering a bill (SB 890) which will make “Pay when paid” a legal right for contractors and subcontractors working public jobs. It will also give contractors the right to postpone payment by disputing the work or product, but does not provide for partial payment for that portion of work or product that is undisputed. If a contractor disputes a subcontractor’s work, and does not pay him, the subcon-tractor will still be able to invoke his “pay when paid” rights with his material suppliers.

Material suppliers that sell on credit to any contractor or subcontractor working public construction jobs could be facing extensive delays in payment that will impact their credit rating and their cash flow. You can read the bill at http://www.leg.state.or.us/11reg/measpdf/sb0800.dir/sb0890.intro.pdf.

NACM Oregon’s lobbyist, Cindy Robert, would like to hear from suppliers regarding this bill. We encourage you to contact her at [email protected] regarding your viewpoint and your willingness to testify before the legislature.

Thank you.



NACM Oregon

On March 10 my family and I landed on the big island of Hawaii just in time for the tsunami. From 11 p.m. until 4 a.m., it was hurry up and

wait. First it was hurry up and pack because we were going to be evacuated. Then it was hurry up and gather water and flashlights because they were going to turn off the water, power, and gas. Then it was wait, wait, wait, wait until finally it was decided that since we were on the second floor we would not have to evacuate and they would not shut off the utilities! Friday morning everything seemed fine until we got out and around and realized that there had been some serious damage to many areas of the island. Why all the confusion? Timing is everything. Decisions were being made based on assumptions and not all the facts. This is often the case when things happen quickly. Hindsight is often 20/20 but events are distorted when all the relevant facts are not known. Recently the term “Black Swan” has been used to describe certain events. This term was coined by Nassim Nicholas Taleb, an economist, and re-fers to an event that is a surprise and has a major impact. In most cases, the event itself is not a total surprise but the timing is. We often partially

International Cornerby Alice Knight

prepare for a sometime/maybe event but are seldom prepared when it happens suddenly. Last month, I suggested ways to help your company react quickly to outside changes. Now let’s consider how to help your company react ef-fectively if you are suddenly unavail-able. All of us would like to believe that we are irreplaceable but the truth is we are or at best will have to be under certain conditions. Again, timing changes the perspective. Most of us think about and/or plan to change po-sitions, change jobs, relocate, or retire sometime. This is a potential guaranteed event. It is the timing that can make the event a mini black swan. Think about the effect if you were suddenly indefinitely unavailable. What processes are in place to cover your position efficiently? Although every company knows that they need good job descriptions for every position most of us know that they often are not reality. Does someone else know what you do daily, weekly, monthly, quarterly and annually? Information flow can be formal or informal. Who do you get information from for various tasks or decisions? Who depends on information from you to do their own job effectively? Have you discussed with your staff or peers how you use the information provided to make decisions and how you rate the quality of the information? For example there is a rush order for a new country and a new customer. Which are you most concerned with the country risk or the customer risk? Which country risk analysis would you accept at face value and which would you want additional verification before using? Many of us do this

automatically with experience. Periodically run through your decision-making process with others in your area. Do you have locked file cabinets or key computer files that are password protected? Be sure that someone can get access if needed. Are you a signer on various documents or authorizations? Be sure that someone else can sign if needed. It is often more efficient to authorize signers by title rather than name. Updated current contact information with name, company, position, phone, fax, and email are vital for a smooth transition. The same information can put your company in a very poor light when someone uses the list to contact a freight forwarder and is told “your company fired us six months ago!” Some people still have the mentality that job secrecy is job security. If no one knows what I do or how I do it the company can never do without me. The key today is teamwork and adding value to your company in any way you can. Change happens, life happens. Don’t let sudden events become black swans.

Alice Knight is Vice President of Finance & Administration for Paper Products Marketing, Inc. Ms. Knight has more than 45 years' of experience in International Finance and is an active member of ICTF and NACM. She has served as Co-chair, Panel Member and Presenter at Annual Global Conferences, as President of FCIB Forest Products Group, and participated in FCIB Conferences in Mexico, Puerto Rico, Munich, and Brussels.



NACM Oregon

Kendra Nelson, ControllerStack Metallurgical Services

I wanted to pass on to you the new changes we have made in some of our policies based on our association with NACM.

We had not updated our credit application in years; after attending the webinar series on credit we were able to incorporate most of the suggestions and have just mailed out to all of our customers new credit applications, terms of sale, and updated limited liability statement. The packet looks very professional and I feel that it is a critical piece of business to have an updated, signed credit application on file.

We also used the collection services for a delinquent account. We had been reluctant to use a collection service in the past, just unsure of the whole process. I must say, the collection was handled promptly and professionally on all levels I was exposed to. Hopefully, this is not a service we will have need of often, but if we do I won’t hesitate to contact NACM.

I have been very impressed with the exposure to NACM and will, without reservation, recommend membership to my business associates.

Testimonials

Michael Kuchler Finance Manager Korkers Products, LLC

I want to express my gratitude to the NACM Oregon collection department for their ongoing support of our account. Thank you very much for your efforts. They have paid off!

Linda Wilmes-Smith Credit CoordinatorFoodguys

NACM has provided me valuable credit information. I utilize their services by pulling credit reports, being part of an industry group, and having access to a staff with a great deal of credit experience. I am new to the credit function and the NACM staff provides support and networking as questions arise. They direct me to someone I can call to get a quick question answered.

New MembersD S Associates, Inc., supplier to the telecommunications and power electric industries.Laurie Canney503.640.8188PO Box 790Hillsboro OR 97123

Daitron, Inc., electronic parts and equipment.Valishia Hollenbeck503.682.7560PO Box 3500Wilsonville OR 97070

Hudson Clothing, LLC, an apparel manufacturer.Jon Jenks323.890.18006409 Gayhart St.Commerce CA 90040

Obsidian Finance Group, LLC, a financing firm.Kevin Brown503.245.88005 Centerpointe Dr., Ste. 590Lake Oswego OR 97035

Peterson Pacific Corp., a manufacturer of grinder, chipper, and heavy equipment.Kim Morrison541.689.6520PO Box 40490Eugene OR 97404

TVT Die Casting & Mfg., Inc., zinc and aluminum die casting.Jan Boettcher503.639.38507330 SW Landmark LanePortland OR 97224



NACM Oregon

Legal Cornerby Michael C. Dennis

How to Handle Post Audit Claims More Effectively

A post audit claim is a demand for a refund or payment which is made

by a third party on behalf of one of your customers. These third-party post audit firms work on a contingent fee meaning the more problems they find, the more money they receive from your customer. This gives post audit firms an incentive to be somewhat creative in their efforts to uncover problems. Typically, post audit claims involve assertions that your customer:

• Overpaid certain invoices • Did not receive credits owed • Did not use credits issued to them

In my experience, this is the best process to address post audit claims:

• Reject the post auditor’s timeline since it is invariably too short to conduct a careful review of the claims being made. • Provide your customer [not the auditor] with an estimate of the time it will take you to review the post audit claims. • Warn your customer that based on the age, number, and complexity of the transactions that must be reviewed, it may take longer than your original estimate. • Make it clear from the beginning that any post audit deduction taken unilaterally and based on an

unrealistic timeline will result in the account being placed on credit hold. • Prepare a specific, detailed, and comprehensive list of the documents that you require from the auditors in order to begin your analysis. • Reject certain types of post audit claims immediately. For example, if the auditor demands proof of delivery but the window for requesting that documentation has closed, immediately reject that type of claim and explain to your customer why it is not possible to provide the required documentation. • Make it clear to your customer that until you receive the required supporting documentation from them, you cannot begin your research. • As your research the claims made by the third party, continue to request additional documents from your customer as needed. Remember to submit all such requests for supporting documentation in writing to your accounts payable contact. Copy your customer’s CFO or Controller on such correspondence as well as on any correspondence with their post auditors. • Once the research is complete, communicate your findings with your customer, not with their auditors.

The post audit process works only if

your customer is convinced that taking an unauthorized deduction will not result in the account being placed on credit hold. To the extent that you can dispel the idea that a deduction can be taken with impunity, you will put your company, the customer, and the post audit firm on equal footing. Once this is accomplished, you can review the audit issues in a systematic and professional manner.

© 2011. Michael C. Dennis. All Rights Reserved



NACM Oregon

Member ProfileMarsha Johnson, CCE Corporate Credit Manager TEC Equipment

Marsha Johnson’s career in credit began when she was a 22-year-old University of Washington graduate. “When I graduated from college we were in a recession like we are now,” Johnson says. She knew finding a job would be tough, and was happy to find not only an open position at Household Finance, but a position with a career path. “The management position at Household Finance was one of the few options available,” she continues. Amidst the natural competition in the job market, Johnson found herself hired as one of the first female manager trainees. As a consumer finance company, Household Finance offered small loans to folks with low salaries, spotty credit history, or a combination of risk factors. While working there Johnson could see the real-world cause and effect of the economic forces she had studied. At the same time she began picking up the skills of a credit professional. Johnson continued building on her professional skills when she was hired by Industrial Leasing, where she was eventually placed in charge of the Active Collection Portfolio. When Industrial Leasing eventually ceased to do business, Marsha took a job with NACM Oregon where she worked off and on as a sales rep and class instructor. When her son, Stephen,

continued on page 7

entered high school, Marsha wanted to be able to watch his participation in sporting events and left NACM to work as a teacher’s assistant while Stephen attended high school. By 2003, Stephen had graduated and Marsha felt like it was time to get back into the credit business and

returned to NACM Oregon. In January 2004, she was hired by TEC Equipment—a trucking and transportation services company—as Assistant Credit Manager. After just a few years in the credit department, TEC promoted Johnson to her current



NACM Oregon

Member Profile...continued from page 6

position as Credit Manager. It was in 1976, when David Thompson created what would become one of the largest Oregon companies most Oregonians have never heard. He was a college grad and ex-Army officer with ambitions focused on the horizon, not the past. However, in reminiscing about his college truck driving, Thompson did recall the challenge, skill, and accomplishment it took to buy and sell big rig trucks. Soon Thompson had two trucks for sale in front of the iconic Jubitz truck stop. He had an office on four wheels and TEC Equipment was born. Just thirty-five years later TEC Equipment is the largest trucking services company in the Western United States, with 14 retail centers stretching from Las Vegas to the Pacific Ocean and Chehalis, Washington, to San Diego, California. Across that impressive swath of America, TEC sells new Volvo and Mack heavy-duty trucks through their dealerships, along with GM and Isuzu light- and medium-duty. Yet it is looking behind these brands and storefronts that one starts to see the shear scope of Thompson’s vision. Unsatisfied with merely selling trucking companies more trucks, he is constantly improving TEC’s network of services. Years of building such a network means that TEC can now

offer comprehensive support, including leasing, factory-certified maintenance, parts, insurance, and transportation equipment, along with other essentials, to their customers. Keeping his company on the trajectory that it has been over the past three decades has taken both vision and a gift for spotting talented managers. Because fleet sales and financing are a large part of TEC’s behind-the-scenes services, having a gifted credit professional like Marsha Johnson at the helm of the credit management department is a benefit to the company as a whole. Talking to Thompson you get the sense that he enjoys illuminating the success of his management team. He modestly brings up TEC’s record of growth through the economic downturn, yet continues proudly, “Our good receivables have climbed substantially.” As Johnson admits, managing credit in a company as dynamic and diverse as TEC is a challenging job, but that it’s the hard work of Traci Drew and

Michelle Strickland that lie behind her department’s accomplishments. “Fortunately I’m lucky,” Johnson says. “I have very good staff. I’m thankful for them every day.”



NACM Oregon

Federal Trade Commission (FTC) Attorney Tiffany George, in a recent discussion with representatives of NACM, offered the clearest guidance yet on the extent to which the “Red Flags” Rules apply to business to business (B2B) transactions involving trade creditors. The comments by Ms. George are Informal Staff Opinions. The discussion included NACM staff along with NACM lobbyist Jim Wise, and Bruce Nathan, Esq., and Wanda Borges, Esq., both of whom have lectured extensively on the “Red Flags” Rules and their application to trade creditors. The entire meeting was geared toward gathering definitive answers for trade creditors still uncertain about how the “Red Flags” Rules apply to them. Ms. George addressed these concerns by noting that the process of determining whether or not a trade creditor has to comply with the Rules requires two steps: first, a trade creditor must determine whether or not it is a “creditor” and second, if it is a “creditor,” it must then determine whether it has covered accounts that are subject to reasonably foreseeable risk of identity theft. Ms. George added that the Red Flag Program Clarification Act of 2010, signed into law at the end of the year, limits the applicability of the “Red Flags” Rules to a creditor, as defined in the Equal Credit Opportunity Act (ECOA), that regularly, and in the ordinary course of business:

(i) obtains or uses consumer reports in connection with a credit

FTC Official Offers “Red Flags” Clarification to Trade Creditors transaction; (ii) furnishes information to consumer reporting agencies in connection with a credit transaction; or (iii) advances funds to or on behalf of a person based on that person’s obligation to repay the funds or repayable from specific property pledged by or on behalf of that person.

A trade creditor that does not fall into any one of these categories is not a “creditor” under the “Red Flags” Rules.

Ms. George was also very clear that should a trade creditor regularly obtain and rely on an individual credit report in making credit decisions, whether the report is on the principal of a small business or a personal guarantor or a noncorporate entity like a mom-and-pop store or sole proprietorship, then the trade creditor is subject to the “Red Flags” Rules, meaning that, if it has covered accounts based on an analysis of its risk level, it must create its own written program for fighting identity theft. During the discussion, Ms. George further explained that the terms “advances funds” in the above third category for the definition of “creditor” refers to money, rather than goods or services, narrowing this remaining category of “creditor” only to entities making loans. If a trade creditor does not meet the definition of “creditor” because,

for example, it only deals with established corporate entities and does not rely on personal consumer credit reports or furnish information to consumer reporting agencies or make loans, then the Rules do not apply. A scenario pertaining to fraud was also described during the discussion, wherein a company was selling to a buyer company whose purchase order form was stolen. The buyer’s identity had been stolen, a fraudulent order was submitted to the seller and the seller sold goods according to the false purchase order. According to Ms. George, the seller in this instance, who accepted a fraudulent order from a corporate buyer whose identity and purchase order form had been stolen, does not have to comply with the “Red Flags” Rules. Ultimately, if a company sells on a purely B2B basis, and does not fall into any of the defined categories of creditor, then it does not have to comply with the “Red Flags” Rules. If you have any lingering questions about the FTC’s “Red Flags” Rules, please contact Jacob Barron at [email protected].

Jacob Barron, NACM staff writer



NACM Oregon

Welcome all!

Whether it’s the twang of old country melting into the unique beat of rockabilly or the soulful pulse of jazz, Nashville embraces it all. In May 2011, Nashville, known for its hospitality and charm, welcomes NACM and the 115th Credit Congress & Expo to the Gaylord Opryland Hotel.

We invite you to join us as we savor the distinct and rich rhythms of Nashville.

Uniting, educating, and empowering the business credit community, Credit Congress is the largest gathering of credit professionals in the country. Don’t miss this once-a-year opportunity!

Let us wow you in the Music City, May 22-25, 2011.

2011 Credit Congress & Expo

Join us in Nashville—Gaylord Opryland May 22-25!

The NACM Oregon delegation will meet for dinner on Sunday, May 22, after the Opening Reception. Please plan to join us!

Rod Wheeland, CCE, CAE

2011 Pacific NWCredit Conference

“Rainy Days and Credit Ways”

September 21 - 24, 2011

Doubletree Suites Tukwi la, Washington

Get ready for the ...



NACM Oregon

2011 NACM-Oregon Foundation Scholarship Funds

Submit applications to:

Lourdes (Lou) A. Rice NOF Scholarship Chair Pacific Metal Co., 10700 SW Manhasset Dr., Tualatin, Oregon 97062p: 503.454.1051, f: 503.454.1065, e: [email protected]

The NACM-Oregon Foundation grants scholarships to credit professionals for continuing education, professional designations, and conference expenses. To apply for scholarship funds, or for more information, contact Lourdes (Lou) Rice, NOF Scholarship Committee Chair, Pacific Metal Company at 503.454.1051 or [email protected]. The categories are as follows.

CFDD Credit Conferences—Pacific Northwest Credit Confer-ence September 21-24 Tukwila, Washington Seven (7), $350 scholarships for the general membership.

Deadline: July 22, 2011

Phylliss Clark ScholarshipsThree (3) $350 scholarships. Applicants must be a CFDD member of the respective chapter and a first-time attendee to the Pacific Northwest Credit Conference. Each CFDD Chapter—Eugene/Springfield, Portland, and Salem/Albany is allowed one scholarship funding.

Deadline: July 22, 2011

Phylliss Clark Memorial Fund The Phylliss Clark Memorial Fund was established in honor of the well-known and respected manager of the NACM Oregon education/communications department, who died in an auto accident Memorial Day weekend in 1993. Because of Phylliss Clark’s strong interest in and commitment to education, and her dedicated service to NACM and CFDD, it was determined that a fitting memorial would be to establish an endowment in her name, the earnings of which would be used to promote education of deserving credit professionals. Each year, earnings from the endowment are distributed as scholarships to selected members of the three Oregon-area Credit & Financial Development Division (CFDD) chapters to offset registration and attendance costs to the Pacific Northwest Credit Conference. In selecting these yearly scholarship recipients, special recognition is given to first-time attendees of the conference.

Professional Certification FeesTo establish your file with NACM Na-tional; reimbursement of exams fees after a passing grade; recertifications (NOF pays for 50% of the fee)—$1,500 total.

Congratulations are in order to the following recipient of the NACM-Oregon Foundation scholarship, Steve Porter, CCE, First Aid Only. Steve was awarded a scholarship to the 2011 NACM Credit Congress & Exposition.



NACM Oregon

During a speaking career that spans over 20 years, Barry has given over 2,000 presentations worldwide. His energetic style and dynamic message will keep you on the edge of your seat.

Barry’s entertaining and inspiring material is appreciated by a portfolio of clients that includes, General motors, Ford Motor Credit, American Express, Verizon, Dell Computers, Shell Oil, The Federal Reserve, and many other leading companies.

To register go to www.nacmoregon.org/events or contact Elizabeth Heintz at [email protected], 971.230.1120.

Don’t Miss the 2011 NACM Oregon Annual Meeting Thursday, April 28, 2011 Doubletree Portland Lloyd Center

Join us all day or part of the day while Wanda Borges and Chris Kuehl review current issues in today’s world of credit and economics. Over lunch, we will bring you up-to-date on the business of NACM Oregon including the election of new Board members.

8:30 - 11:30 a.m. “Bankruptcy Update: The Good, the Bad, and the Ugly” Presenter: Wanda Borges, Esq., Borges & Associates

11:30 a.m. - 1 p.m. Annual Meeting and “Time for the Next Panic” Special Guest Speaker: NACM Economist, Chris Kuehl

1:30 - 3:30 p.m. “Belt and Suspenders for the Credit Department” Presenter: Wanda Borges, Esq., Borges & Associates

$40 Lunch only $95 Lunch and morning session $95 Lunch and afternoon session $195 All day

Additional person from same firm: $150 for full-day; $75 for half-day

Sign up today! For complete session descriptions and to register please visit www.nacmoregon.org/events or contact Elizabeth Heintz at [email protected], 971.230.1120.

Barry Elms Is Back In Town!Join us May 5, 2011, Doubletree Hotel Portland 8:30 a.m. - 4 p.m., with a “NEW” presentation by Barry—

“10 Habits of Successful Credit Professionals”

Barry Elms, president of Strategic Negotiations International, is acclaimed by many as America’s business coach on negotiation skills.



NACM Oregon

NACM Oregon Annual MeetingApril 28, 2011, 8:30 a.m. - 4:30 p.m.Location Doubletree Portland Lloyd Center$40/lunch only $95/lunch and morning session $95/lunch and afternoon session $195 all day Additional person from same firm: $150 for full-day; $75 for half-day

Morning Educational Session 8:30 - 11:30 a.m. “Bankruptcy Update,” presented by Wanda Borges, Esq., Borges & Associates

Lunch 12 - 1 p.m. “Time for the Next Panic” Special Guest Speaker: NACM Economist, Chris Kuehl

Afternoon Educational Session 1:30 - 4:30 p.m. “Legal Environment of Credit,” presented by Wanda Borges, Esq., Borges & Associates

Barry Elms - 10 Habits of Successful Credit Professionals (New!!)May 5, 2011, 8:30 a.m. - 4 p.m.Location Doubletree Hotel PortlandCEU: .65, Course Level: I$195/member, $275/nonmember

Improving Collection ResultsJune 28, 2011, 8:30 a.m. - 4 p.m.NACM Oregon Classroom CEU: .65 $195/member, $275/nonmember Speakers: Rod Wheeland, CCE, CAE, NACM Oregon and Brenda Terreault, JD, CBA, NACM Oregon

Certification Roadmap IntroductionMay 12, 2011, 11:30 a.m. - 1 p.m.NACM Oregon ClassroomFREE! Lunch includedSpeaker: Marilyn Rea, CCE, Pacific Architectural Wood Products

International Business DayAugust 24, 2011, 8:30 a.m. - 4 p.m.NACM Oregon ClassroomCEU: .65, Course Level: I$169/member, $199/nonmember

Certification Roadmap IntroductionSeptember 8, 2011, 11:30 a.m. - 1 p.m.NACM Oregon ClassroomFREE! Lunch includedSpeaker: Marilyn Rea, CCE, Pacific Architectural Wood Products

Credit Management BootcampSeptember 15, 8:30 a.m. - 4 p.m.NACM Oregon ClassroomCEU: .65, Course Level: C$195/member, $275/nonmemberSpeakers: Rod Wheeland, CCE, CAE, NACM Oregon and Brenda Terreault, JD, CBA, NACM Oregon

NACM Oregon Member Appreciation BreakfastOctober 26 2011, 7:30 - 9 a.m.CEU: .15, Course Level: I Location TBD$35/member, $65/nonmemberEducational Session: Economic UpdateSpecial Guest Speaker: John Mitchell, Economist

2011 Education Class Schedule

Course Levels

C (core) – Classes that focus on credit concepts, techniques, and practical tips. They are designed for the newer credit department employee and the more experienced credit professional looking for a review;

I (intermediate) – Classes assume basic knowledge of credit concepts and address specific issues and approaches to resolution;

A (advanced) – Classes that assume significant knowledge and experience and address complete topics of interest to credit and financial professionals.

Other Activities

Credit CongressMay 22-25, 2011 Nashville, TN

PNWCCSeptember 21-24, 2011 Tukwila, WA

Western Region Credit ConferenceOctober 5-7, 2011Las Vegas, NV

NACM Oregon Open HouseDecember 14, 2011, 4 - 7 p.m.NACM Oregon Classroom

Registration

To register for on-site classes, please visit www.nacmoregon.org/events. Go to the current course schedule, then click on “view details” to register. If you have any questions regarding these classes, please call Elizabeth Heintz at 971.230.11820 or email [email protected].



NACM Oregon

2011 Business Credit Learning Webinars

Bulldog Collection Techniques April 21, 2011, 12 - 1 p.m. PT

Idaho Construction Lien Law April 21, 2011, 9 - 10:30 a.m. PT

Valuable Data You Can Find in an Annual Report April 22, 2011, 9 - 10 a.m. PT

The Art of Credit Management April 26, 2011

Defending Preference Claims April 27, 2011, 9 - 10 a.m. PT

Foreclosing Construction Liens in Oregon and Washington April 28, 2011, 9 - 10:30 a.m. PT

The Fair Debt Collection Practice May 3, 2011, 9 - 10 a.m. PT

Enhancing Your Credit Agreements: Security Agreements & UCC Article 9 May 5, 2011, 9 - 10 a.m. PT

Dialing for Dollars May 10, 2011, 9 - 10 a.m. PT

The Business Credit Learning Center is offering more than 100 webinars throughout the year. Take advantage of ANY two webinars each member receives with their Basic Membership Package whether produced by NACM Oregon, CMA, or any other provider.

NACM Oregon is offering a Business Credit Learning Center Season Pass for $475. This means the holder can register for any BCLC webinar and the charge will be waived.

The pass is not transferable, although it can be used by any employee of the member company. For more information contact your account executive at 503.257.0802.

Webinar fee: $79 each - member; $109 each - nonmember

Don’t have time to view the webinar “live?” You can still register and watch the webinar at your convenience as many times as you’d like for up to 60 days after the scheduled event!

No credit card? No problem! Simply logon to www.businesscreditlearningcenter.com to create your user profile and to read complete webinar descriptions. When you are finished, return to www.nacmoregon.org/events to signup for the webinar(s) of your choice and we will bill you on your next invoice!

If you have any questions on any of the webinars, call Elizabeth Heintz at 971.230.1120, or [email protected].

The Business Credit Learning Center Season Pass for $475!

Learning How to Let Go May 12, 2011, 9 - 10 a.m. PT

Antitrust: The Mine Fields Every Trade Supplier Must Cross May 13, 2011, 9 - 10 a.m. PT

Using Security Instruments: Tools for Profits May 17, 2011, 9 - 10 a.m. PT

Effectively Dialing for Dollars—How to Make the Point, Get the Money, and keep the Customer May 19, 2011, 9 - 10 a.m. PT

The Balance Sheet & Income Statement May 20, 2011, 9 - 10 a.m. PT

Creating a Practical Credit Application May 24, 2011, 9 - 10 a.m. PT

A First Place Finish with Purchase Money Security Interests May 26, 2011, 9 - 10 a.m. PT



NACM Oregon

Member Referral Rewards Is there another company that would be a good addition to your industry credit group? Do you have a customer who is struggling to collect on its past-due accounts, or is having trouble making payments to you? Do you interact with other credit representatives who may be interested in professional development?

Every day you come in contact with businesses like this that could use NACM Oregon’s products and services. Whether a business needs access to credit reports, collection services, industry groups, or education, referring them to NACM Oregon is one of the best things you can do.

Member Referral Rewards NACM Oregon rewards member representatives who refer businesses that become new members.

Prizes for referring new members are as follows:

First new member $100Second new member $150Third new member $200

The member representative with the most referrals for 2011 will receive $500. In case of a tie, winners will split the award.

Ask your group secretary or call customer service for details at 971.230.1220.

New members and those who refer them are listed in each issue of the Business Credit Journal.

© New Yorker Cartoon 2004 Frank Cotham from cartoonbank.com. All Rights Reserved.

The following individual received an award for referring a new member to NACM Oregon:

Brian Davis, True Religion, referred Hudson Clothing, LLC.

You can also win cash for getting companies to join your industry group. Just ask Brian Davis, True Religion, who referred Hudson Clothing, LLC.

Ask you group secretary or call Customer Service for details at 971.230.1220



NACM Oregon

Escheatment...continued from cover

Escheatment Defined Businesses and individuals abandon over a billion dollars of tangible and intangible property annually. Every state has legislation that requires companies to abandon unclaimed property, to the state after some period. Escheatment includes all forms of property, both tangible and intangible. Escheatment laws provide that the state becomes the legal owner of abandoned property, based on the concept of state sovereignty. Escheatable property that may be the accounting and reporting responsibilities of the credit department includes rebates, credit memos, discounts and allowances, customer overpayments, misapplied payments, and unapplied credits to the customer. The last activity with the account is measured from when the credit was issued.

Development of Escheatment Law The origin of escheatment law dates back to British law. Abandoned land was returned to the king. The states within the United States have followed this principle, broadening what qualifies as abandoned property.

Uniform Disposition of Unclaimed Property Act With the growing popularity of state unclaimed property statutes as a new source of state revenue in the 1950’s, uniformity of such laws became a necessity, as controversies between states over conflicting claims to property developed. For example, if a corporation abandons credits it holds based on a trade relationship with a customer, several states might attempt to claim custody of the credits. The credits could be covered under the law of the state where the company was incorporated, or the state where the corporate headquarters was located. In addition, any state that was doing significant business with the corporation might claim the property. In 1954, the Uniform Disposition of Unclaimed Property Act (the “Uniform Act”) was introduced to unify the state statutory scheme of escheatment. The Uniform Act was amended in 1966 and 1981. The Uniform Act attempts to prevent multiple sate claims for property by designating the

last known address of the owner as the basic test of jurisdiction. Thus, under the Uniform Act, if two states claim the same property, the law of the state of the last known address of the owner governs. If property is abandoned, the state must establish its right to the property by proving that the property is located within its territorial limits. Generally, if the property is considered to have a situs within the state, it is subject to escheat. The Uniform Act establishes a period for a presumption of abandonment for most types of property. For example, in California if the property is unclaimed for three years after it becomes payable. Presently, forty-two states (including California, New York, Texas, and Florida) and the District of Columbia have enacted some version of the Uniform Act. Delaware receives a significant portion of escheated property, notwithstanding that its small population. This is because a large percentage of corporations incorporate in Delaware. Under the escheat laws, a party forwards the abandoned property to the company’s state of incorporation, where the address of the owner can no longer be located.

States Interest in Escheatment States are now collecting billions of dollars a year from companies by enforcing their escheatment laws. All states have escheatment laws. Escheatment, as it relates to the credit department, is intended to return unclaimed assets, such as credit balances in the form of customer concessions not taken such as rebates, discounts and allowances, customer overpayments, misapplied payments and unapplied credits to the customer. If the abandoned property is unclaimed by your customer, states have a greater right to the property than the vendor. While the escheatment laws are intended to return property to their rightful owner, it has become a way for states to increase revenue without increasing taxes. States are especially attracted to escheatable property as they are looking to these unclaimed assets to cover their expenses. Vendors are now required businesses to




NACM Oregon

Escheatment...continued from page 15

turnover abandoned property more quickly. States have also strengthened enforcement by hiring private auditors to examine the vendor’s compliance, who may be employed on a contingency basis. By way of example of the windfall inuring to states under the escheatment laws, the Wall Street Journal recently reported that California holds more than $5 billion in unclaimed property, while collectively states hold $35 billion in unclaimed property. Each year states are increasing their abandoned property take, collecting $5.1 billion in 2006, while but three years before $3.6 billion was collected. States regard property as “unclaimed” if the owner hasn’t had contact with the custodian of an asset for a specified period of time. Delaware, the legal home to many big companies, is an aggressive collector of such assets. Delaware uses escheat audits to look for credit balances, and it collected $365 million for its 2007 fiscal year.

Risks of Not Escheating Most states require businesses to review their records to determine whether any property has been unclaimed for the dormancy period and to submit an annual report. State escheat statutes have harsh provisions for parties that fail to timely report or turnover unclaimed property. In addition to interest that runs from the period that the property should have been turned over, a state may assess fines, penalties, and damages.

Escheatment Audit A state generally enforces its escheatment law through an audit. Audits are usually handled by the state treasurer’s office or controller, although states are employing third parties to assist in collecting escheatable dollars. The scope of the audit usually goes back several years. The auditors usually request the following: (1) chart of accounts; (2) general ledger/trial balance; (3) annual report; (4) journal entries; (5) bank reconciliations; and (6) accounting policies. Under Delaware’s escheatment program, an investigation was undertaken as to whether companies incorporated in

Delaware were submitting required annual reports on unclaimed property. Only a fraction were doing so. Delaware hired outside auditors and was able to double collections of escheatable property to $365 million in five years. With escheatment, Delaware auditors, for example, ask for documentation going back to the early 1980s; if documents aren’t available, the auditors use a sampling of recent records to estimate how much a company owes the state.

Steps to Protect Against Escheatment Claims A credit executive should develop a game plan, and consider the following:

Step One: Determine the Situation

Review past compliance. Has the company ever reported unclaimed property? If so, what, when, and where? Has the company ever been subject to an escheatment audit? If so, what were the results? Are there any subsidiaries to be included? Has the company made any recent acquisitions that should be included?

Step Two: Determine Eligible Property

Does your company have some of the property types covered by most states? For the credit professional these include: • cash • credits, including rebates, discounts, and allowances • overpayments and misapplied payments What states are represented among the names and addresses to be reported? If this is an initial filing? What about years that may not be on the books?

Step Three: Perform the Due Dilignece

What due diligence is required by the state? Specifically, focus on: • the minimum dollar amount, • timing, method and • content




NACM Oregon

Escheatment...continued from page 16

Develop a strategy to minimize unclaimed property liability and review potentially reportable items. Prepare the due diligence letter. This should include: • response deadline • identification number and amount • property type/reason • instructions for claiming

Step Four: Prepare Reports and Remittances

Identify due dates for states Prepare a cover sheet with signature Use the proper media, paper, diskette, etc. Use the proper report format Include the remittance, which might be a check, wire transfer, etc.

Step Five: Filing Reports and Remittances

File on time to avoid penalties and interest If you get an extension, get it in writing. Only some states will grant them.

Step Six: Follow Up and Reconcilement

Reconcile general ledger to detail Reconcile paid items to appropriate accounts/divisions File any necessary holder reimbursement claims with the states Establish a filing system for reports and work papers

Turning Over the Property If your company decides to turnover the unclaimed property to the state, most state statutes provide that the vendor should turn the property over to the state controller. Most legislation requires the vendor to make reasonable efforts to notify the owner of the property by mail that the owner’s property will escheat to the state. The notice should be mailed not less than six months before the property is to be turned over to the state controller. Depending upon the nature of the property, all unclaimed property should either be delivered to the State Treasurer

or Controller. When the unclaimed property is cash, delivery is made to the State Treasury; all other types of personal property go to the Controller. The party delivering the property is relieved and held harmless by the state from all claims regarding the property. No action or lawsuit may be maintained against the holder of the property. Prior to delivery, the holder must furnish notice to the Controller. At a minimum, notice must include the amount of cash, or nature or description of other personal property; the name and last known address of the person entitled to the property; and reference to a specific statutory provision under which the property is being transmitted.

Scott Blakeley, of Blakeley & Blakeley LLP, practices creditors’ rights and bankruptcy law. He can be reached at [email protected].



NACM Oregon

ChairmanSue Hein Rapid Bind, [email protected]

Vice ChairRaeann Binau, CICP Airgas - Norpac, Inc. [email protected]

SecretaryKimi Shelton-Muller, CCE EKC Consulting, [email protected]

TreasurerJohn Hardy Emerson Hardwood [email protected]

CounselorDoug Jacobson, CCE xpedx [email protected]

Customer Service/ Credit Reporting971.230.1220 [email protected]

Data ContributionShannon Abnal 971.230.1166 [email protected]

Member ServicesKristin [email protected]

Denise [email protected]

Collection SalesClara [email protected]

EducationElizabeth [email protected]

Board of Directors

DirectorsLinda Bishop, CCE, CICP Tektronix, [email protected]

Will Campbell Standard Supply [email protected]

Tony Ceniga Industrial Finishes & [email protected]

Paula Cooley, CBA American Steel [email protected]

Marsha Johnson, CCE TEC Equipment, [email protected]

Lori Jones, CCE Eoff Electric Supply [email protected]

Pat Swope, CCE, CICP Pacific Seafood Co., [email protected]

PresidentRod Wheeland, CCE, CAE NACM [email protected]

Industry GroupsRichard Browning 971.230.1188 [email protected]

Kristen McBride 971.230.1176 [email protected]

Collection ServicesBrenda [email protected]

BillingMarmie [email protected]

Meeting Room RentalElizabeth [email protected]

Newsletter EditorBarbara Salazar971.230.1182 [email protected]

NACM Oregon

April 2011 Business Credit Journal

Documents

Transcript of April 2011 Business Credit Journal