CMA Industry Credit Groups, Your Best Search Engine, by Larry Convoy

Larry Convoy, lead group facilitator

My kids find it hard to believe that when I was in school, the place you went to find answers to your homework or to gather information for a paper was the Encyclopedia Britannica. This was several thick books with information on anything you needed, although the accuracy depended on what edition you had. My edition claimed the US had only 48 states.

The current generation has it much easier since Google came along, just enter, click and multiple results appeared with everything you needed.

Your membership in CMA and an Industry Credit Group makes it just as easy. Have a question on Chapter 11 BK; call Molly Froschauer in the Adjustment Bureau. Need an effective Demand Letter, go to the Encyclopedia of Credit. If it is the most current trade information on a customer, draw an anscers report or enter an RFI. Looking for accounts receivable software that is credit friendly, poll your group. Need to further your credit education, CMA has that covered.

If you utilize CMA and the Industry Credit Group as your primary search engine for all credit related issues, the results will reduce your time and expenses.

It will not be necessary to pay your corporate attorney an hourly fee for researching Bankruptcy questions that CMA can answer for free. Whose recommendation means more, salesmen trying to sell you a $100K computer system or someone in your group performing the same job as you using the system? Need to file Lien, get a D&B, place an account for collection, take a financial statement class, start your search with CMA.

You have the support of a Business Association that has been around for over 130 years. Behind each tab on the anscers home page are people waiting to assist you.

Whether you have been in credit for 30 years or 30 days, there are laws and procedures that are changing daily. CMA membership guarantees you the most current edition.

A Member Success Story, by Mike Mitchell

At CMA, we often hear stories about how credit group membership can save your company THOUSANDS of dollars by providing critical information that helps you avoid extending too much credit on high-risk accounts. Here’s a real example of how a multi-national company avoided a costly disruption when a long-standing critical supplier filed for bankruptcy.

CMA President and CEO Mike Mitchell

The member regularly attends credit group meetings, and at a recent meeting, he was surprised to learn that one of his company’s critical suppliers had recently filed for bankruptcy. He was surprised by the news because his company subscribes to various monitoring services that should have alerted him and his department to the bankruptcy filing. When he contacted his procurement department, he was further surprised to learn that the department responsible for the relationship with the supplier was not even aware of the bankruptcy filing. The member had sufficient time take the necessary steps to source the critical supplies from a different supplier so that production was not interrupted. Supply chain disruptions potentially can cause more damage to a company’s business model and reputation than the failure of customers to pay their bills, so this was a big deal.

Once the member had mitigated the risks of the potential supply chain disruption for his company, he contacted his supervisor, the Director of Corporate Credit, and let him know that the critical piece of information came from a discussion at a CMA credit group meeting. He gave CMA credit for providing the information that potentially saved his company millions of dollars in lost production time and goods.

We hear these stories all the time at credit group meetings. The real value of regular participation in credit groups is the money and time you save in getting the critical information you need in order to get out in front of situations that could cause significant losses to your company. The member whose story I highlighted above feels confident that the time and money his company spends to have him participate in credit groups is well worth the investment.

Chairman’s Blog: Sharing is Caring, by Tracy Rosenbach, CCE

With Valentine’s Day coming up, I can’t help but think of how we teach our children the concept that “sharing is caring” as they are growing up. We hope over time this lesson fosters acts of generosity and kindness, and it turns our kids into quality adults. In our profession, sharing information is crucial to our success. Attending industry credit group meetings gives us that bit of real-time information that often we cannot get from a credit reporting service or the internet.

There is nothing like being able to speak with another credit professional in your industry to find out about a mutual customer. Of course, there are guidelines which we need to follow when discussing customers (past activity only).

The group my company belongs to has an attorney present during all discussions and social activities as a precaution. In addition to obtaining customer information, Industry Credit Groups encourage networking, which is an important aspect of growing in a profession. By talking to others, we find out more about our particular industry, educational opportunities and ways in which we can expand our own knowledge base and ultimately better help our companies make sound credit decisions.

If you are not already a member of a Credit Group, I strongly encourage you to contact CMA to find out about an industry credit group that would be appropriate for your company. If you are a member of an Industry Credit Group, fully participate and help it to grow. Look out for other companies that would benefit from being a member of your group. There is a real strength to an industry group that has high participation, plenty of members and solid leadership.

And while we’re in the giving spirit, I encourage you to nominate individuals who you believe are moving the credit function forward with one of the honors and awards categories that CMA will be recognizing at its Annual Meeting in April. It’s really easy to nominate someone, and it’s a great way to show your appreciation for a fellow credit professional who constantly leads positive discussions at your Group meetings or consistently helps other credit managers. CMA is an association made up of an amazing group of people like you who are dedicated to helping the other credit professionals in our areas.

Thanks for reading!

Best regards,

Tracy Rosenbach
CMA Chairperson 2016/2017

CMA Hosts Joint Construction Meeting in Los Angeles

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On October 13, CMA held its first ever joint construction credit meeting, allowing CMA member companies from different vertical industries who sell to the construction industry to get together to talk about common job accounts. In addition, Chris Ng, Esq., spoke to the group on a series of construction law related topics, including the legalities related to job accounts. Amongst the activities at the event included a discussion of best and worst practices, which really hit home with many of the companies who participated. Thanks to all who attended.

When a Group Can Safely Say “We Should Do This,” by Larry Convoy

The first word all Industry Credit Group facilitators are taught to listen for at a group meeting is WE, as in WE should all stop selling or WE should all put him on COD. This is the most severe of the Anti-Trust violations, and collusion like this can cost companies millions in lawsuits and fines.

However, there is a circumstance where the group can invoke the WE word as in WE, the members of the CMA Industry Credit Group, would like the CMA Adjustment Bureau to contact our mutual customer to assist them in dealing with creditors during a rough period. In this circumstance, the role of the Adjustment Bureau, group members and other creditors is to keep this business operational while it works on a plan to resolve the issues that caused the problem and propose a repayment schedule.

Under this arrangement, creditors put off any legal demands for payment, agree to keep selling the customer and with a CMA staff member supervising, monitor the affairs of the business to insure that everything possible is being done to satisfy all parties. The cost to the group is ZERO.

Sounds too good to be true? In some cases it is and there is no solution to save the business. CMA’s Adjustment Bureau can provide a service to liquidate the company and make sure that ALL creditors receive their pro-rata share of the proceeds.

Sometimes, through no fault of their own, good companies have rough times. You can choose to deal with them by revoking terms, placing them for collection and if enough do, guarantee that this business will fold and you will receive pennies on the dollar or you can work with CMA and the debtor to save the business, recover all or a significant portion of your old debt and continue to have a customer for years to come.

If you group has a situation like this or if you want further information on this process, call Molly Froschauer at 818-972-5315.

We can make a difference.

Twenty five good reasons to join an Industry Credit Group, by Patrick Spargur

AssociatedProduce CMA Party

Why do your competitors know of “high risk” accounts months before your company does? Perhaps they are in an Industry Credit Group!

Credit Management Association’s Industry Credit Groups offer unique opportunities to network with leading credit professionals in your specific industry. Group members exchange valuable trade data and experiences on existing and prospective customers.

CMA offers more than 50 industry credit groups and networks at the local and national level; including food and beverage, construction, health care equipment and many more.

As a former Credit & Collections Manager who was responsible for managing risk, I valued and relied on my Industry Credit Group so much that I decided to share 25 good reasons why credit professionals need to consider joining an Industry Credit Group.

  • Industry Credit Groups mitigate your company’s commercial risk
  • Industry Credit Groups provide immediate resources to check trade references quickly with similar companies in your vertical industry
  • Industry Credit Groups allow like companies to compare customer payment trends and payment methods
  • Industry Credit Groups help similar companies compare customer dispute reasons and trends
  • Industry Credit Groups proactively identify business deterioration and closures
  • Industry Credit Groups facilitate the reduction of bad debt expense (In 2012, Credit Today estimated that ICG participants saved approximately $205,000 per year)
  • Industry Credit Groups proactively identify problematic accounts
  • Industry Credit Groups help uncover industry trends & challenges
  • Industry Credit Groups identify best practices
  • Industry Credit Group members receive bankruptcy alerts and updates via CMA’s interactive website, anscers.com
  • Industry Credit Group members receive change of ownership notifications
  • Industry Credit Group members identify change of key personnel or location
  • Industry Credit Group members receive timely NSF alerts
  • Industry Credit Groups increase the credit manager’s value to your organization
  • Industry Credit Groups identify payment portal issues
  • Industry Credit Groups identify customers who are skipping invoices
  • Industry Credit Groups identify mergers & acquisitions and corporate linkage
  • Industry Credit Groups identify sources of funding
  • Industry Credit Groups identify best-in-class resources (software, credit reports, legal, vendors)
  • Industry Credit Groups offer the opportunity to find a mentor (I found several)
  • Industry Credit Groups offer the opportunity to be a mentor
  • Industry Credit Groups help you expand industry knowledge
  • Industry Credit Groups help you understand your competitors better
  • Industry Credit Groups help you expand professional network
  • Industry Credit Groups help you differentiate yourself as a skilled and much sought after credit professional
  • Industry Credit Groups help expand your company’s brand awareness

CMA professionals facilitate all group meetings and information exchanges in strict compliance with U.S. antitrust laws. Industry Credit Groups give you the proprietary information you need to make fast, accurate credit decisions. If you have any questions please don’t hesitate to contact me (or any of CMA’s other representatives). I look forward to your participation in CMA’s Industry Credit Groups!

Patrick Spargur, CICP, is a business development executive with Credit Management Association. He can be reached at 800-841-5793 or by email at pspargur@emailcma.org.

You Make the Call, by Larry Convoy

We are just barely into the year 2016 and already I am hearing excuses as to why the credit manager cannot attend the industry credit group meetings to which they belong. They range from the receptionist is out to my controller wants me to stay and call customers.

Attending credit meetings provide your best Return on Investment by reducing bad debt loss, identifying slow paying accounts, and lowering your financial dependence on credit reports I contend that blindly calling a number in your system is more time consuming and less efficient.

Calling for dollars requires preparation

  1. Are you calling a specific person or a/p?
  2. Who is the person who controls the checkbook?
  3. Is there a gatekeeper blocking you?
  4. Have you previously left voicemails?
  5. Who does that person report to?
  6. How often do they cut checks?
  7. Are there orders in house or on hold?

A good group can identify numbers 1, 2 and 5 & 6. And supply a direct extension to avoid # 3. Number 4 tells you how important you are to them and you know #7.

I say it every month. Group Meetings are not social events for the credit manager, they are an attempt to maximize your company’s revenue. If you bring the names of past-due accounts that you will be calling for money to a meeting, I guarantee you that the information you receive will increase your percentage of recovery significantly.

You are now ready to call for dollars. You have all the facts you need and this should be resolved in one call. Feel free to contact me at lconvoy@emailcma.org if you’re not in a group and I’ll help you identify one that might be a good fit for you.

CMA’s Supplier Risk Credit Group to Establish Procedures for Vetting Vendors

Last year, under the leadership of Alvin Moreno of Nestle Inc., CMA launched the Supplier Risk Credit Group, a Best Practices industry exchange group for those who have been assigned the task of vetting their vendors or for those credit managers who wished to enhance their position at their company by learning this job. Who better than a credit manager to evaluate RISK from the vendor side of the chain?

The Group has had four informative discussions and has attracted members such as PepsiCo to the meetings.

On Wednesday, January 27, we are taking the information gathered at these meetings and beginning to build the platform establishing policies and procedures for those assigned this task.

If you have an interest in this or would like to pass it on to the appropriate person at your company, we would be delighted to have them join us in person in Burbank or through web conferencing.

Here is a partial agenda for the meeting:

REVIEW OF LAST MEETING
1. Members describe any enhancements they have made to their vetting process or roadblocks encountered
2. Groundwork and Decisions Required Prior to Establishing Process (including 80/20 Rule-Which vendors will you include in your process?, Has a budget been discussed and approved?, Has Staffing been arranged?, Identify critical vendors, single, sole source vendors outside of 80/20 rule, Has an acceptable chain of command been established?, Has a workable timeline to roll out, review and assess been established?)

VENDOR ONBOARDING PROCESS BEGINS
1. Receive request for NEW vendor investigation
2. Vendor fills out company questionnaire (Provide quality, safety and financial information)
3. Initiate Vendor Qualification process
4. Vendor Financial Information uploaded
5. Evaluation Process Begins (Credit investigation; Relationship: Critical, single, sole; Demographic, government, industry)
6. Vendor Approval, review schedule set
7. Q & A

Please let us know if you would like to be a guest at this meeting by contacting Larry Convoy at lconvoy@emailcma.org.

Welcome Back, by Larry Convoy

To some, January 1st is like the first day of school. Everything starts out fresh and clean (even though I know many of your fiscal years start at different times of the year). For those group members who attend and contribute regularly, the beginning of the year is just a continuation of what you have done in the past.

However, some of you have not attended your Industry Credit Group meetings in months (and for others years) and you may feel a bit embarrassed showing up. Others may not be in an Industry Credit Group at all.

As someone who has facilitated meetings longer than many of you have been alive, let me inform you that nothing could be further from the truth. Your contributions and attendance will be welcomed by all, whether it is at a meeting or joining a conference call. By including your trade data and credit knowledge, the other members have more information to make informed credit decisions. The real embarrassment would be you opening an account that the other group members have previously discussed and determined individually to be risky.

There are two ways to increase the value of an Industry Credit Group; bring in new members and bring back current members who have for whatever reason, have gone astray. Either way, EVERYONE WINS.

As we begin a new year, we ask you on behalf of the other members of your group, to commit to attending each meeting/call, to contribute daily through alerts, RFIs and monthly if your group has a report. Take your calendar and mark off the meeting days for the entire year so nothing else can be scheduled during that time period. Prepare the accounts you wish to discuss prior to the meeting and any topic you would like to bring up. Let’s make 2016 the Year of the Group.

Happy New Year!

It’s a Wonderful Credit Group, by Larry Convoy

Some of you remember the great Jimmy Stewart movie, “It’s a Wonderful Life,” in which he envisions what life would have been like if he wasn’t born and its effect on his loved ones. At the conclusion, he is thrilled that it was only a dream and realized how good he actually had it.

Consider what your life would be if Industry Credit Groups did not exist and its effect on your company’s bottom line. You can put any music or special effect to signify that a dream sequence is next.

Without an Industry Credit Group, how would you know?

• If your new customer came to you because of your product and not because everyone else in the industry has taken him legal
• If there was changes in management or key personnel
• If they are ignoring phone calls from other suppliers or passing bad checks
• How high in dollars and far in days are they are extended with others in your industry
• Who controls the checkbook, or who to really contact for payment,
• Recommendations for software, service providers, legal experts
• If they filed BK, had liens placed, or worse, if they are GONE

You can relax. If you are a member of a credit group, you have access to all this information. You can enter alerts and respond to RFIs (or contribute your A/R). You can network with your peers and exchange the latest Best Practices. Hopefully, your management’s support allows attending the meeting/conference call a priority.

Relax, This was just a dream.

Larry Convoy
Credit Management Association
Lead Group Facilitator

March Madness, 12 months a year, by Larry Convoy

Larry Convoy, lead group facilitator
Larry Convoy, lead group facilitator

It occurred to me while watching Kentucky annihilate another opponent on their way to a possible NCAA title, that there are many similarities between a championship basketball team and a successful Industry Credit Group.

Both need a strong point guard, someone to lead the meeting, keep it focused and moving forward and keep all players or attendees engaged and contributing. This person must be able to bring the topic back when it gets off track yet not dominate the ball or conversation.

Each must have a big man or major company to go to when the offense is sputtering. This person has all the tools and resources to take the pressure off the other members simply because of the size of their company and their customer base. Just like LeBron James can take control of a game for an extended period of time, this credit representative can go on a run during the account and Best Practices discussion.

Teams and groups need veterans to remind us of the past and to not repeat mistakes. Most groups have a historian who remembers the risky accounts from when they stuck a member 3 Businesses ago. When the pressure is on, they come through.

Both also need a strong bench, role players who will do their job every game or meeting. For a group, it means contributing, entering alerts, RFI’s and attending every meeting prepared and willing to play any position required. Over the years, I have seen many role players develop into stars.

And finally, they both need a coach or facilitator to make sure they are organized, in their correct spot on the court at the appropriate time and work as a team

For in credit like sports, you are expected to win, and losing or LOSSES are not acceptable.

Let’s adopt the Postman’s credo; neither rain nor sleet…, by Larry Convoy

Larry Convoy, lead group facilitator
Larry Convoy, lead group facilitator

I have often wondered how industry groups are able to hold meetings in the winter in the Middle and Northeast parts of the country. Last month, I experienced this when one of my National groups met in Nashville. The temperature went from a high of 18* to a low of -3* with the wind-chill and ice making it much worse. Even under these conditions we had 7 out of 11 members attend. We would have had 9 at the meeting but extremely dangerous road conditions prevented the members from Kentucky and Alabama from driving there.

I bring this up because every month I received emails from members informing me that they will not be able to make a local meeting and conference call for reasons that most would consider trivial. The excuses given that amazes me most was for the conference call. What could be easier to attend, you do not even have to stand up. Yet, statistics show that less than 50% of the members are on the call. Can a group meeting be made any easier?

Let’s compare the time, cost and effort required between the National, Local and Conference Call

  • Time- 2 ½ days vs 2 hours vs 1 hour
  • Cost- $500-$750 vs luncheon fee vs $0
  • Temp- 18* vs Calif/Nevada temp vs your office temp.

Groups only work when everyone participates and contributes. Your company has made a commitment and as its representative, it is your responsibility to fulfill it.

And to those 7 brave souls who agreed with my recommendation to meet in Nashville in February, my sincerest apologies.

Not The Top Ten List You Want To Be On, by Larry Convoy

With due respect to David Letterman and Sports Center’s nightly “Top 10” lists, there are some lists that you would be better off not being on.  One that directly affects you and your company is “The Top 20 Creditors in a Bankruptcy Case,” a document that is easily obtainable by accessing Pacer. No company likes to see their losses published for all to see.

CMA Industry Group Leader Larry Convoy
CMA Industry Group Leader Larry Convoy

However, this document of doom will now be turned into an excellent prospect list for any industry credit group (ICG). Whenever you post an alert of a Chapter 11 in your industry, CMA will run a list of the top 20 creditors. These companies could be competitors of yours, or they are at least selling into the same market as you and have just taken what could be a major hit. A phone call from a group member informing them about the group, and mentioning that the group was aware of the problem and therefore had minimal exposure, could get the group a new member very easily.

Therefore, effective with the next Chapter 11 alert posted on anscers, the ICG department will forward this list of names to the group chairmen and group facilitator. There will probably be some banks, factors or lending companies that would not fit but you should be able to identify some HOT prospects. Tell them that the best way to avoid the next BK is through membership in your credit group.

Thank you for your support throughout 2014, and we wish you and your family a Happy and Healthy Holiday Season and a Prosperous 2015.

Larry Convoy
Lead Group Facilitator
lconvoy@emailcma.org

Wanted: People in Your Niche Market, by Larry Convoy

Industry credit groups and networks offer CMA members a unique opportunity to network with other credit professionals in their industry.

From July 2013 to June 2014, credit groups exchanged information on transactions in excess of $3.5B. More than 8,680 companies were discussed with advanced notice on $104.5M in total balances greater than 91 days past due.

Credit Management Association offers more than 60 industry credit groups and networks at the local and national level; including food and beverage, construction, health care equipment and more. Active participation in these groups is rated as a top benefit that the association offers.

CMA has been approached by its members to investigate the viability of forming several new credit networks. Here are the proposed new networks we are researching and developing:

  • Fuel Credit Network: Wholesale Fuel, Seiberts Oil, Boyett Petroleum and Robert V Jensen are looking to expand their credit network of fuel jobbers and distributors selling to stations, farmers and business accounts.
  • Animal Feed and Supply Store Network: With champions from Western Milling and Associated Feed behind the formation of this network, it should fill the void of information on retail feed and supply stores.
  • Supply Chain Management Network: Vendor analysis has become a greater priority with many companies. Two experts in the field are leading the push for this CMA network, we hope to start a Best Practices Bulletin Board in the next 60 days.

In all cases, contact me at lconvoy@emailcma.org or 818-972-5323 if you’re interested in joining these groups (or have any ideas of other ones you think we should form.

Thanks for your consideration!

My Favorite (Hidden) Advantage to Joining an Industry Credit Group, by Michael C. Dennis

There are many benefits associated with joining an industry credit group. In my opinion, one of the best reasons to do so is to make certain that your company’s tolerance for credit risk is similar to other companies selling to common customers.

I am all in favor of leading rather than following, and I fully support the idea that credit decisions need to be made independently and in a manner that does not violate antitrust rules. However, I assume and expect that I will benefit from knowing how other creditor companies have assessed the risk associated with extending credit to a common customer.

I think the opportunity to understand how other creditors evaluate/ assess credit risk is probably the most under-appreciated benefit of credit group membership.

Credit Management Association offers more than 40 industry credit reporting groups. In my career, I’ve been in several groups.  As a result of what I have learned from others, I’ve saved my employer tens of thousands of dollars over the years. How have credit groups helped your company? I welcome your feedback.

Michael is the author of the Encyclopedia of Credit (www.encyclopediaofcredit.com), a free, fast, internet resource for credit and collection professionals.  He is a consultant, and the author of “Credit and Collection Forms and Procedures Manual” as well as a frequent instructor at CMA-sponsored educational events.  He can be contacted at 949-584-9685.