In this fast-paced hour devoted entirely to the legal aspects that affect the daily operations of the successful credit and collection department, we will discuss the numerous day-to-day legal occurrences that credit professionals deal with that can affect productivity, success, and failures.

You will learn the difference between Credit Agreements and Credit Applications and why Credit Applications are becoming obsolete; Learn the importance of knowing your customer’s correct legal name; Learn about the pitfalls of personal and corporate guarantees and how to make them effective; Learn when the customer’s purchase order terms is a valid reason for the customer to pay beyond your terms of sale and how to avoid it; Learn how and the importance of being a secured creditor and easy it is to become one; Learn about the Unclaimed Property Act and its requirements..

New Association Representative

Amber Russ ~ TIDI Products

Katie Ostrenga ~ Volm Companies Inc

Erin Silkey ~ Trek USA

Stephanie Krause ~ Design Air LLC

Kim Kiesow, CPA ~ Appvion LLC

New Industry Group Representative

Plumbing & Heating Industry Group

Stephanie Krause ~ Design Air LLC

Construction Industry Group

Stephanie Krause ~ Design Air LLC

If you have something you would like us to announce please send an email to

admin@wcacredit.org

Abstract

The problems in the U.S. economy are structural, not cyclical. This is not to say that the economy will avoid the impacts of cyclical change. Rather, the impact of cyclical change will be exacerbated by the underlying structural problem. Long-term overall output growth has slowed due to restructuring that goes back to the 1970s and which has been accelerated by accompanying technology transformation. The U.S. economy has become increasingly dependent on infusions of cash, the overexpansion of which led to increasing inflation through the pandemic period. The U.S. economy is no longer driven by manufacturing, even though it is the second largest manufacturing country in the world. Rising interest rates intended to curb inflation are currently threatening to reduce investment and output levels which had already been subject to slow long-term growth. These factors have combined to change the structure of the labor markets, as there are fewer jobs in manufacturing and technology has reduced the demand for labor to accomplish many traditional business processing tasks. Government and overall indebtedness are reaching unsustainable levels, creating an additional drag on economic growth potential and increasing systemic economic risk. As of today, the U.S. economy is most likely headed for a recession in which the landing will be hard. Trade credit managers can expect increasing DSO, delinquency and bankruptcy activity. 

Introduction

What you are about to read is not another piece on the impact of the COVID pandemic on the current state of the U.S. economy and its opportunities for making a “full recovery” from the disruption that it caused. While we cannot ignore the impact of COVID, the monetary creation that led to the inflation that it caused, and the effect of the Fed’s interest rate increases in response, there is a much longer-term trend at work, and we need to understand it if we are going to be able to see where the economy is headed and what to do about it. In fact, if we had to assign the label “key event” to a particular point in time, it might better be given over to the 9/11 attacks, which coincidentally corresponded to the end of the technology market boom of the late 1990s. This was then accentuated by the advent of the monetization of the economy that followed the financial market meltdown of 2008. It appears, however, that structural changes had been underway prior to the meltdown. The major force behind the change has been technology transformation and the restructuring that has accompanied it.  

Aggregate Demand and Gross Domestic Product

Aggregate demand is a measure of the total value of purchases of final goods and services within an economy. Its measure includes personal consumption expenditures, gross private fixed investment and consumption expenditures, and gross investment by the government. This also amounts to gross purchases less the change in private inventories.  

Aggregate demand tracks the gross domestic product very closely, but the major difference is captured by the propensity of the economy to consume imported goods. GDP is an output measure, while purchases is a more accurate measure of consumption in the household, business and government sectors. Over time, it is apparent that the relationship between the two measures has been subtly changing.

The major point of change in the behavior of final purchases relative to the GDP is apparent in the early 1980s. As can be seen in Exhibit 1, the ratio of final purchases to GDP went above 100% in 1981. Although it has risen and fallen over two cycles, it remains consistently above 100%, meaning that the U.S. economy has had a propensity to consume more than it produces.  The rising elements of the cycles correspond to the periods 1981-1987 and 1997-2008. It is interesting to note that the two points at which the trend turned down corresponded to the financial market disruption of 1987 and the collapse of 2008. There is also within the pattern a noticeable change corresponding to the COVID pandemic. Overall, the ratio has been trending up since the late 1960s. 

Every credit department relies on outside sources for credit and financial information on new and existing customers. Most orders to cash departments subscribe to one credit reporting service or another but, that may not work or be your best option. Are you aware you can be smart and have access to ten (10) different sources of credit information? We can provide that to you together with value and flexibility with our umbrella WCA Credit Report Subscriptions starting as low as $199. A WCA Report Subscription gives you access to all the above credit reporting sources. Companies do not need to subscribe to only one credit report provider. 

Consumer reports, international business credit reports, domestic trade reports, reports on small companies and their ownership we have them all.  If you are not sure what you are going to need, or which is best, why not elect to have access to them all? The Association created its WCA Report Subscription program that includes access to ten (10) databases including Experian, Coface, Equifax, Creditreform, Dun & Bradstreet, and others in one never expiring subscription for you. Sounds simple? It is! Our current subscribers enjoy that flexibility and can consult with us, on a case-by-case basis, to select which report may be best for a particular situation. Other benefits of our subscription are: no annual contracts, no premiums for supplements, no “use-em” or “lose-em” problems and we provide monthly usage reports showing your subscription status so you can determine if it’s time to purchase more now or later.

If interested in saving time and money by managing your order to cash team’s reporting costs, a WCA Credit Report Subscription may be your answer.  Call today for more information or for a personal consultation.

CLICK HERE TO LEARN MORE ABOUT THE DATABASE OPTIONS!



TO REQUEST A CREDIT REPORT ONLINE, CLICK HERE or send your email request to creditreports@wcacredit.org. If you have questions, please contact our Credit Reporting team, Gail or Chrys, at 888-546-2880.

Opportunities abound for you and your staff to take advantage of scholarship grant dollars available to eligible members! The application and guidelines are available for download below. Wisconsin Credit Association would like to thank the volunteer committee members for maintaining the goals, objectives and health of the fund; Chairperson Diane Zancanaro CCP CPC, and Chaz Heckman

WCA Education Scholarship Application

WCA Education Scholarship Fund Guidelines

WCA Education Awards Committee Rules & Guidelines

*Only email submissions will be accepted. Please print out a copy for your records. If you have any questions, please feel free to contact us.

“How To Become A More Successful Collector “ 

November 15, 2023

9:00 – 10:00 AM CDT

In this interactive program, we will discuss the do's and don't of Debt Collection; the Ideas for accelerating cash inflows; how to handle belligerent customers and antagonistic salespeople; how to prioritize the collection process to maximize your return on investment; and Tips to Becoming a Proactive rather than Reactive Debt Collector. 

We will examine the most important financial ratios for conducting a comprehensive credit risk analysis and learn how to use them effectively. We will review a number of real-life examples and improve your skills.

In this 90-minute interactive program, Michael Dennis will discuss:

The common ratios used and why

• Efficiency ratios, Profitability ratios, Liquidity ratios and Leverage ratios including:
• Current ratio
• Return on assets formula
• Quick ratio
• Return on equity
• Gross profit margin
• The debt to equity ratio
• Operating profit margin
• Inventory turnover ratio
• The long term debt to equity ratio
• After tax profit margin
• Accounts receivable turnover ratio
• Evaluating ratios – historical/comparative
• Ways to avoid mistakes when using financial ratios

"Financial Ratios and Credit Risk Analysis”

December 20, 2023

9:00 – 10:30 AM CDT

Why should business credit and collection professionals apply for Credentialing Standards Board (CSB) accreditation as soon as the opportunity is available? The answer is this. By having accreditation in place, Certificate holders are more valuable to their employers. Because they have invested in their own professional development in order to strengthen specific skills needed on the job. Individuals with professional credentials are also more respected by their colleagues and peers in the industry.

To learn more and an application, click here.

Credit Professional Alliance

Credit Management Association 

The Business Credit Management Association Wisconsin

Business Credit Intelligence

Mountain States Commercial

NACS Credit Services, Inc.

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