Best Practices Wanted: Credit & Collections

CSA needs your help. We are compiling a "catch all" Best Practices Manual for A/R, COLLECTIONS AND CREDIT POLICIES. We are combining this information into a single source guide available to members.

Please take 10 minutes and help answer the following questions:

1. Do you have a credit policy? If so, please send in along with your credit application
2. How do you handle marginal accounts? Do you have a separate policy for marginal accounts?
3. Do you use a collection agency or attorney to collect debts?
4. When do you write off your accounts?
5. Do you use personal guarantees or joint check agreements?
6. Do you have a credit manager?
7. Do you have a call report system for A/R?
8. How do you track jobs that could be subject to liens? Do you include a policy for filing liens in a timely manner?

We're also looking for samples of the forms and form letters you use regarding credit and collections. Please submit electronically to lisagolden@gocsa.com or fax to the CSA office at 770-752-9726.

All samples will be stripped of identifying information before they are added to the guide.

Webinar: Navigating Bankruptcy: Protecting Yourself When a Customer Files

W E B I N A R
Navigating Bankruptcy: Protecting Yourself When a Customer Files for Bankruptcy
Thursday, June 4, 2009 from 3:00 p.m. to 4:00 p.m. (Eastern Time)
$139 per logged on computer

When faced with a customer’s bankruptcy it is important to understand not only your rights and remedies under the bankruptcy laws, but also the potential limitations on those rights and remedies. Knowing your rights will help improve the likelihood of a meaningful recovery on your claim in the bankruptcy.

Topics that will be covered in this one hour:
1) How to timely preserve a supplier claim against a bankrupt customer.
2) How to “perfect” your supplier lien without running afoul of the bankruptcy “automatic stay.”
3) How to assess whether a supplier’s claim is entitled to full payment under bankruptcy law (as opposed to pro rata payment with other creditors).
4) The advantages and disadvantages of participating in a court appointed committee of unsecured creditors.
5) When to expect, and how to respond to, a bankruptcy trustee’s demand for return of a customer’s pre-bankruptcy payments to a supplier.
6) Before a customer files bankruptcy, what steps, if any, can be taken to reduce the odds of receiving a bankruptcy trustee demand letter (or of actually getting sued by the bankruptcy trustee) for return of customer payments.

The presenter, Annie Catmull, of Walker, Wilcox and Matousek (located in Houston, TX and Chicago, Illinois) has considerable experience in the area of corporate reorganizations, on behalf of creditors and bankrupt companies. Her nationwide practice includes the representation of creditors ranging from “mom and pop shops”, to Fortune 500 companies, to the Enron Employee Committee. She was a speaker at the NLBMDA ProSales Industry Summit in 2008 on the subject of bankruptcy and the homebuilding industry.

Bankruptcy is a federal statutory scheme set forth in Title 11 of the United States Code.

Bankruptcy cases cannot be filed in state court. As such, this webinar will contain information useful to LBM dealers across the U.S.

The webinar is being hosted by Turnkey Programming. Prior to the webinar, you’ll be contacted by them with the webinar phone number and password, as well as instructions for logging onto the website to view the webinar live.


Click the registration form to enlarge, print and use it to register.

News You Can Use

Gov't expands housing plan, off to slow start
Source: Associated Press/AP OnlinePublication date: May 14, 2009
By ALAN ZIBEL

For the past two months Rose Inman hoped she could benefit from President Barack Obama's plan to help homeowners avoid foreclosure. Now it appears to be too late.
Aurora Loan Services is set to foreclose on her home overlooking Seattle's Puget Sound on Friday. Despite numerous calls, e-mails and letters, she says she's only been able to have one phone conversation with a company representative. Read more.



75% in Survey Think Worst is Over in Housing Slump
Source: The Dallas Morning NewsPublication date: May 14, 2009
By Steve Brown, The Dallas Morning News

Three out of four U.S. homeowners think the worst is over in the housing market.
And half of the homeowners in Southern states -- including Texas -- say home prices will stabilize in their areas in the next six months, according to a new survey by Zillow.com.
Researchers for the Internet real estate marketing company quizzed almost 1,400 homeowners around the country in early April about where they thought the housing market was headed. Read more.

From the National Association of Credit Managers (NACM)
FTC Releases "Red Flags" Template for Entities That Have Low-risk of Identity Theft
To help entities that have a low risk of identity theft – such as businesses that know their customers personally – the Federal Trade Commission has created a template that guides such businesses and organizations in developing written identity theft prevention programs to comply with the Red Flags Rule. “Create Your Own Identity Theft Prevention Program: A Guided 4-Step Process,” is available at www.ftc.gov/bcp/edu/microsites/redflagsrule/get-started.shtm. The template has guidance and instructions that enable companies to complete and print the fill-in-the-blank form online. Under the Fair and Accurate Credit Transactions Act of 2003, the Rule requires many businesses and organizations to implement a written Identity Theft Prevention Program to detect the warning signs (“red flags”) of identity theft. By identifying red flags, these entities will be in a better position to spot an imposter trying to defraud them by using someone else’s identity to get products and services.

Find templates here.

Impressions from Roundtables

By: Jim Moody, CAE
President

We’ve just concluded roundtable season at CSA, and I’m left with a few nuggets I’d like to share with the full membership.

- While 2008 was a horribly bad year for many people, there are a handful of folks who actually showed a profit.
- Cash is king.
- The more leveraged your business, the greater the likelihood that you will not be around to see the housing recovery.
- People who maintained a heavy retail presence even when Lowes and Home Depot entered their marketplaces bucked conventional wisdom, and some people mocked them. Of course, Noah was mocked by his townspeople when he started building the ark, too. Now who’s laughing? It’s pretty clear that those who have a good retail presence are the winners in this economy.
- Receivables continue to be a problem for a majority of dealers. Many people, however, seem to have come through their own credit crisis and are now seeing improvement. They’ve written off the debt that is uncollectable and tightened up their policies to ensure they don’t get in the same situation again. I know of at least one dealer who cuts off credit for any customer who hits the 30-day mark. Your head is in the sand if you think this will go away on its own. If you have a growing receivables problem, your business has a terminal illness. I’ve heard people say that tightening credit will run off what little business you have, but if you are delivering material and not being paid, you don’t really have any business to begin with.
- I don’t think I ran across any dealer who hadn’t reduced their employee count, but I did run across several who had eye-opening experiences at their roundtables. They thought they had cut all the fat out of their employee ranks until they looked at the numbers from their peers and realized they could indeed cut more. If your employment cost is more than 60% of your total expenses, that’s a red flag that you need to consider making further reductions.

The staffing issue makes a good transition to another item I’d like to mention. I get a newsletter from Ruth Kellick-Grubbs. Ruth is a consultant in the industry and a good friend of CSA. She made a point recently that I thought was really important.

Many dealers are “holding on” during the storm, just waiting for the recovery. But none of us really know when the storm will abate. Yes, it does appear that the general economy is in the midst of turning around, but all of us understand that new home construction will lag the rest of the economy. Further, we don’t really know just how much boom there will be on the other side of the recession. Ruth suggests that you consider today’s market the new normal. You have to find a way to be profitable in today’s economy.

That’s easier said than done, but cutting payroll is a good place to start. It seems to me that for many dealers, there is still room to cut.

And that leads me to my final item this week. Since this column was such a downer, I thought I’d end on a humorous note, even though it does deal with staff reductions. I found this in Donald Cooper’s newsletter (http://www.donaldcooper.com/). Here, he relates a story about how NOT to lay people off:

"At 4 p.m. one day last week, the fire alarm rang at a large office building in Singapore. All 5,000 employees rushed out of the building onto the street. A
loud speaker made the following announcement….

Dear Employees, with melting heart I am making this announcement that for many of you this will be your last evacuation drill. Due to the recession, we are laying off almost 50% of employees.

While moving back into the building, if your ID card does not work, then you are among those laid off and all your belongings will be couriered to you tomorrow. We followed this approach as we didn’t want to fill e-mail boxes with layoff mails and good-bye mails in thousands… and also to avoid any fight inside the office.

Hope you have a nice career ahead. Now, please move in and try your luck.”

Dream Again

CSA is partnering with lumber dealer associations nationwide in an effort to promote home ownership, construction and remodeling. As published in the March 20, 2009, Random Lengths report, the following positive market conditions illustrate why we believe that now is the perfect time for the American public to DREAM AGAIN.

1. Affordability of both homes and building materials are now at an all-time high
2. Existing home sales are rising
3. There is an abundant supply of homes from which buyers can choose
4. There are some amazing incentive programs now available federally and through various local and state governments
5. Interest rates are at all-time lows

We believe lumber dealers and suppliers can play a vital part in educating the public that now would be a terrific time to build a new home, buy a home that is on the market, or finally build that long-desired room addition or garage.

> An electronic version of the DREAM AGAIN poster for reproduction
> Sample editorials that you can personalize and send to your local paper
> Sample display advertisements for local newspapers and publications
> Sample bill-stuffers that can be copied, cut, and used with invoices.
> Suggestions on how to have the posters printed

CSA is providing your company with this free DREAM AGAIN kit. Included in the kit are:

Starting May 15, and running through the summer of 2009, the campaign will be nationwide and anticipates that every local lumber yard and their suppliers will take part in just a small way. Because we have dealer-members and associate- members in every significant city in the United States, we corporately possess amazing public relations strength if we all act together towards the same end.

It is our hope that each of you will participate by doing the following in your local communities:

> Print and display the poster in your stores and in your cities
> Personalize the editorial and/or display ads for use in your local newspapers and publications
> Print, cut, and include the statement stuffers in all your mailings over the summer
> Consider placing the poster or display ad on billboards or advertising on buses, benches, etc.

As your association we will, of course, be available to help you with this promotion. Professional printers can create full-color posters using the electronic files that are available with the DREAM AGAIN kit. Posters can be printed and mounted on foam boards for under $40.00 at Kinko’s at http://fedex.com/us/office/.

Sincerely,

Jim Moody, President
Construction Suppliers Association

News You Can Use

Remodeler-Focused Dealer Rises From Ply Mart's Ashes
Georgia's Mahaffey brothers are back in business with PMC Building Materials
Source: PROSALES Information ServicePublication date: May 13, 2009
By Andy Carlo
Have you wondered what ever happened to Randy and Rich Mahaffey, the Georgia brothers who led Ply Mart when it became ProSales' Dealer of the Year in January 2007 and were pretty much out of business 18 months later? Like Atlanta's symbol, the phoenix, the Mahaffeys have returned to the construction supply business as the force behind PMC Building Materials in Marietta, Ga. Read more.

Slide in U.S. Home Prices Slows in March
Integrated Asset Services, LLC, a leading provider of end-to-end mortgage services solutions, today released its latest IAS360™ House Price Index. Based on the timeliest and most granular data available in the industry, the benchmark index showed national house prices falling another 1.0% in March.

The March numbers come on top of a 3.0% drop in February and a 3.5% plunge in January, the index's worst single-month decline ever. On a year-over-year basis, U.S. house prices are now down 13.9%, with a full 10.7% coming since September when the economy began unwinding. IAS360 reports prices down 17.7 % from the height of the real estate bubble in 2006. Read more.

Evidence piling up that worst of recession is over
Source: Associated Press/AP OnlinePublication date: May 8, 2009
By JEANNINE AVERSA

Evidence is piling up that the worst part of the recession has ended. But that doesn't mean the pain is over.

A better-than-expected unemployment report Friday - job losses declined to the lowest level in six months - capped a week of encouraging news, including firmer home sales, a revival in consumer spending and fresh optimism about the biggest U.S. banks. Read more.

Professional Remodelers Key To Earning Energy-Efficiency Tax Credits
Homeowners now can claim up to $1,500 in expanded energy-efficiency tax credits for remodeling their principal residence to reduce energy consumption. Available until the end of 2010, the revamped Existing Home Retrofit Tax Credit (25C) tax credit helps consumers save two ways: on their costs and on their ultilty bills.

"Remodelers can help find the best methods of saving energy in your home with an assessment, like a home energy audit," explained NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, CGP, a remodeler from Tucson, Ariz. "Tightening the house to reduce air leakage by adding insulation, fixing ducts, and installing a more efficient heating and air conditioning system can help save on energy bills today while also reducing next year's tax bill." Read more.

There will be wind: Hurricane forecast sees increase in 2009
The upcoming 2009 hurricane season is expected to be more active than average, according to an expert forecast.

The number of named storms from June 1 to Nov. 30 -- the official hurricane season -- is expected to be 12, compared with the average of 9.6. The findings were announced at the Honeywell Generator booth (#33334) during the National Hardware Show.

Of six major measurements of hurricane activity, four are expected to surpass historic averages. The only metric where a decline in activity is forecast is "intense hurricanes," which is forecast at 2, down from 2.3. Read more.

National Geographic Debuts Line Of Energy-Efficient Hybrid Outdoor Lighting
National Geographic has introduced a new line of energy-efficient outdoor lighting, called the Preserve Our Planet Hybrid Lighting Collection. The collection is available exclusively at LAMPS PLUS, the nation's largest specialty lighting retailer. With green features that enhance the quality of the lamps, the collection offers an eco-friendly solution to outdoor lighting, as it promotes energy conservation, home safety and cost-efficiency. Read more.

LP Recalls Composite Decking
Source: PROSALES Information ServicePublication date: May 13, 2009
By Craig Webb

Louisiana-Pacific Corp. (LP) has launched a voluntary recall of 48 million linear feet of composite decking that can deteriorate prematurely and unexpectedly break, the federal Consumer Products Safety Commission (CPSC) announced today. Read more.

Poetry Corner

The old man stood at the Pearly Gates, his face was scared and old
He stood before the man of fate for admission to the fold
“What have you done” Saint Peter said “to gain admission here?”
“I was in the lumber business for many a many a year.”
Saint Peter lifted up his arm and gently rang the bell.
“Come in and choose your harp, you’ve had your share of hell.”

From Brian and Sam your association Credit Card Guys

Hiring Well is Key to Growing Business

By Jim Moody, CAE
CSA President and CEO

Last week I mentioned the importance of hiring well and gave a pretty egregious example of hiring gone wrong. Today, I’d like to shift gears and talk about what it means to hire well.

I’m not talking about the basic HR functions. Things like ensuring you ask only legal questions in the interview, following through with drug tests and background checks, getting them to sign the employee handbook and the like are all important aspects of hiring. The truth is, however, that this is the easy part. You can be compliant and still preside over a band of idiots (and I say that in the nicest possible way). How much thought have you put into ensuring that your staff is as focused as you are on making the business successful?

I recently had an opportunity to listen to Jim Collins talk about “the people issue.” Collins wrote “Built to Last” and “Good to Great” out of research that he and his students at the University of Colorado conducted. Unlike many books written by business professors, these are very readable. I encourage you to read them or at least read the summaries .

Here are some of the points I heard him make that I thought really applied to hiring and managing employees in our industry.

- Hire clock makers, not time-tellers.
- Work is infinite but time is finite. Make sure your folks are know how to determine the important things.
- A great organization is likely to die from indigestion caused by too much opportunity rather than from starvation of too few ideas. It is far better to be great at our foundational tasks than to be always chasing something new.
- First who, then what. Building and developing the right people are the keys to business success. If you are the only person who can “think,” then the business is limited to how hard you can work. Even the greatest workaholic only has 24 hours in the day.
- Turbulence is your friend. It exposes strengths and weaknesses. Success during turbulent times is directly related to your actions in prior good times. (It’s a little late to do anything about this one now, but it’s an important point to keep in mind when times are good again.)
- Those who do better in unpredictable times aren’t better at predicting. They realize they can’t possibly predict uncertainty. The best way to prepare is to have the right people on your team. Companies that went from great to good to bad to irrelevant to dead had one thing in common: a high percentage of key seats in the company held by ineffective people.
- People either share your core values or they don’t. They can’t be taught. Someone with a poor work ethic may be able to hide it for awhile, but eventually it comes out. A corner-cutter is always a corner-cutter.
- The “right” people do not need to be tightly managed. That’s not to say that they don’t need to be trained or mentored. But, with good instructions and training, the “right” people will do the job better without being micromanaged. If you are a micro-manager because you feel that you have no other choice, you’ve made poor hiring decisions.
- “Right” people don’t have a job; they have responsibilities. For them, job descriptions are somewhat irrelevant. They understand the concept of doing whatever it takes, and you don’t have to explain it to them.
- The “right” people have only one response to a commitment: fulfillment. They carry through on what they say they will do without you harping on it.
- The “right” people have a passion for your business. You can’t create that in them. You might motivate them with a reward for awhile, but you can’t create passion. It’s intrinsic.

Do you have the “right” people in your key seats today? If not, what are you going to do to get the right people there? When it’s time to hire again, how can your interviews help you discern who is “right” and who is not?

I know that it’s easy for me to talk about this when I don’t have to walk a mile in your shoes. I don’t know what it’s like to have sales drop by 75%. I don’t know what it’s like to hire manual laborers at minimum wage. I don’t know what it’s like to have employees not show up for work on Monday because they are drunk, high or in jail. All that’s true. But what I do know is that we all want our businesses to thrive. We want them to be better next year than they are today. And when we once again are setting records for sales, we’ll still have goals for the company to do better.

And I know this: there has never been a better opportunity to re-make your company. And if you don’t put thought into it right now, you will find yourself with exactly the same company next year and the next. I encourage you to visit http://www.jimcollins.com/ for more on the importance of finding the right people, how to be a better leader (which is, in turn, more attractive to better employees), and how to take your company from good to great. The resources on that site are free.

NLBMDA Commends Congress for Rejecting Limits on the Mortgage Interest Deduction

From NLBMDA

The National Lumber and Building Material Dealers Association (NLBMDA) commended the members of the House and Senate for rejecting an Obama Administration budget proposal that would have placed limits on the home mortgage interest deduction for higher-income wage earners. Opposition to the change was among the critical main issues NLBMDA members raised with their members of Congress during the association's annual Legislative Conference in March.

As originally proposed, the change, starting in 2011, would have impacted households with adjusted gross incomes of $250,000 and would only allow write-offs at a 28 percent marginal tax bracket rate. For example, someone in the 35 percent bracket that has $20,000 of mortgage interest, property tax and charitable deductions, which are all targeted in the budget proposal, would currently be able to write off 35 percent of the $20,000 -- $7,000. Capped at the 28 percent rate, the write off would shrink to $5,600.

"This proposal could have further depressed the housing market since potential buyers would have had to factor in lower tax benefits, which could have lead to further devaluation of homes and opened the door to further assaults on the mortgage interest deduction," said NLBMDA President and CEO Michael O'Brien.

The House and Senate Budget Committees included specific language in the budget resolution that they were not including the limits in the mortgage interest deduction. However, the issue many not be settled since Congress is still in the early stages of budget negotiations.

"NLBMDA members will need to remain vigilant and continue to contract their members of Congress to assure that this misguided proposal, which could severely dampen any housing recovery, is not enacted," said O'Brien.

Summer Management Conference: What Will You Do for Fun?

The North Georgia mountains offer a wide variety of recreational opportunities and you'll want to take advantage of it during our Summer Management Conference at The Ridges Resort & Club at Lake Chatuge. As they say on their website:

Every day at The Ridges Resort & Club Lake Chatuge offers new delights,
whether your preferred sport is golf or fly fishing. Your group can choose from
a wide range of activities including horseback riding, nature walks, or just
relaxing in our pool and hot tubs. Nearby, set off on a whitewater rafting or
kayaking adventure in the pristine Nantahala National Forest. Whatever your
interests, our team will help you create an enjoyable visit.

So what are all those recreational opportunities? Well, The Ridges has a list of them, including links to relevant information, here. Here's a taste....

Swimming Pool
Beach Volley Ball
Horse Shoe Pits
Badminton
Fitness Center
18-Hole Championship Golf Course
400-Slip Marina
Water Sports, Boating & Other Activities
Tennis Courts
Hiawassee River Trout Lodge (Private Trout Fishing Stream)
Lodge Fishing Pier (poles available at front desk)
Audubon-listed Wildlife Sanctuary
Outdoor Playground
Walking Paths
Recreation Options Nearby:
Appalachian Trail & Nantahala National Forest
Miles of Hiking Trails
Biking
Whitewater Rafting
Kayaking
Horseback Riding

Watch this blog for more details!