CMA Daily News

Credit Problems Squeeze Retailers, Too

A record 7,000 U.S. stores could close this year, a retail analyst predicts, citing cuts in consumer spending and retailers' struggles to borrow money and fend off competition.

"We've got a very difficult situation in the retail business," says Howard Davidowitz, an independent analyst in New York. Several retail chains have filed for bankruptcy protection and another 15 or so are "on the edge," he says.

Retailers' debt jumped 30 percent in the past year, Davidowitz says.

"Just like consumer debt is up, corporate debt is up," he says. "Everybody's debt is up. It's a real danger."

Amid a tight credit market and banks suffering from the subprime mortgage mess, retailers are having trouble borrowing. Many retailers routinely use debt to finance their inventories, but that lifeline is harder to come by, Davidowitz says.

"This is a terrible time to be dependent on bank debt and be in trouble because the banks will be unmerciful...." he says. "There are many retailers out there ... who maybe could operate OK if they got some forbearance, but it's a terrible time to be dependent on bank debt."

Other factors are working against retailers. "Americans are spending less," Davidowitz says. "They've got the highest debt they've ever had." And consumers are spending more for food and energy, leaving less for discretionary purchases.

And, he says, "We have too many stores."

"We have 19 1/2 square feet [of retail space] for every man, woman and child in this country," Davidowitz says, suggesting that's nearly double what is needed.

Chains from Foot Locker to CompUSA have shuttered stores in the past year. In 2007, 4,500 stores folded, according to Davidowitz.

"Almost everybody closed because of too much competition," he says. "What happened? Wal-Mart came along and closed them down. The consumer made a choice to choose Wal-Mart. The prices were lower, the stores were bigger...."

SOURCE: NPR

U.S. Store Closings

A selected list of major recent retail closings:

• Foot Locker: 274 stores in 2007
• Ann Taylor Stores: 117 stores by 2010
• Zales: 100 stores
• Wilsons Leather: 158 stores
• Talbots: 78 Talbots kids' and men's stores by September
• Pacific Sunwear: 154 demo clothing stores
• CompUSA: 103 stores
• Bombay Co.: all 388 of its remaining stores
• Sharper Image: 96 stores
• Levitz Furniture: all 76 of its stores

Sources: Company statements and news reports.

ARE YOU CONNECTED?

Survey: Online Networking Sites Capture Interest of Hiring Managers

MENLO PARK, CA -- Job hopefuls seeking an edge in an increasingly competitive job market shouldn’t overlook online networking sites, a new survey suggests. Nearly two-thirds (62 percent) of executives interviewed believe professional networking websites -- like LinkedIn -- will prove useful in the search for job candidates in the next three years. And one in three (35 percent) respondents cited social networking sites -- such as Facebook or MySpace -- as a recruiting resource they plan to tap.

The survey was developed by Robert Half International, the world’s first and largest staffing services firm specializing in accounting and finance. It was conducted by an independent research firm and is based on interviews with 150 senior executives from the nation’s 1,000 largest companies.

Executives were asked, “Which of the following technology tools do you believe will be most useful in your firm’s recruiting efforts in the next three years?” Their responses:*

Professional networking sites		62%
Social networking sites		35%
Video resumes		20%
Second Life		7%
None of these		15%
Other/don't know		10%
*Multiple responses were allowed.

“Maintaining and developing professional contacts has always been a vital job search strategy, and networking websites are another vehicle for doing so,” said Max Messmer, chairman and CEO of Robert Half International and author of Job Hunting For Dummies^®, 2nd Edition (John Wiley & Sons, Inc.). “Networking sites can be used to identify new career opportunities, create online profiles that highlight one’s skills and experience, and build a roster of business contacts over time.”

While embracing technology can be beneficial, Messmer cautioned job seekers not to depend exclusively on the digital world. “Tried-and-true methods such as networking at industry events, submitting well-written resumes and cover letters, and diligently following up with hiring managers are still essential to landing the ideal job,” Messmer said. “Combining personal and online networking offers the best of both worlds.”

Robert Half offers the following tips to make the most out of online networking:

• Craft your profile carefully. Pay as much attention to the content of your online profile as you would the information in your resume, and ensure the content highlights your professional skills, not just your personal interests. Also double-check for typos and grammatical errors.
• Ask for recommendations. Most professional networks provide space for others to comment on your work or recommend you to others. Don’t be shy about asking colleagues to post on your site. These testimonials help hiring managers learn more about your experience and work ethic.
• Build your list of contacts. The more quality contacts you have, the better. Invite trusted friends and colleagues to join your network. If you see an interesting profile in one of their networks, ask them to introduce or refer you to that person.
• Don’t post anything you wouldn’t want an employer to see. Job seekers should exercise discretion when posting personal information online. Use privacy settings effectively and make sure that any public messages or images you post don’t detract from your professional image.
• Don’t stop networking once you have a job. Savvy job seekers continue cultivating their networks after they secure positions. Online networks aren’t just job search tools; they also help you stay up-to-date on industry trends, find mentors who can offer valuable career advice, and alert you to upcoming events and educational opportunities.

Robert Half International has more than 360 staffing locations worldwide and offers online job search services at www.rhi.com.

NOTE: If you are on linkedin.com you can look up many of the CMA Team and add them to your network; Dina Amadril, Jodi Owens, Laura Rothman, Rob Svehlak, Kim Lamberty,  & Amber Jackson.

CMA New Member - Tom Duffy Company

From their website:

Tom Duffy is a wholesale flooring distributor that specializes in the distribution of unfinished & prefinished hardwood floors and laminate floors,  ceramic tile and sundry & installation supplies to the professional installer and retail community. Tom Duffy has 23 locations serving Arizona, California and Nevada.

CMA New Member - Giumarra Bros Fruit Co.

From their website: A simple desire to build a family-based produce business through hard work and commitment to quality, was the seed that grew into one of the world's largest agricultural organizations. That seed was planted by "Papa Joe" Giumarra over 70 years ago.

Today, The Giumarra Companies is recognized for setting standards of excellence in the world of agribusiness. We are privately owned and operated by members of the Giumarra family.

Giumarra works hard with its international network of growers to make sure its wide variety of products are available to retailers throughout the year.

Giumarra's association with the finest international produce brands guarantee the highest quality fruits and vegetables arrive on time at their destinations.

Vallejo City Council Delays Bankruptcy Vote

Vallejo residents who thought they would know the decision about whether the city will file for bankruptcy are finding out they're still in a waiting game. Tuesday night was supposed to be the deadline for the city to strike a deal with its largest unions, police and fire -- which take about 75 percent of the city's budget. But a deal was not reached, and the council set May 6 as the new date to decide whether to go forward with bankruptcy.

Vallejo residents who attended the meeting demanded apologies and told the council to make the decisions or find someone who can, reported NBC11's Noelle Walker. The city will run out of money to pay its bills on June 30.

Debt Collection Done From India Appeals to U.S. Agencies

Although the stereotype of a collector may be “some guy with chains and a cut-off shirt,” Mr. Black said, collectors in India are “very polite, very respectful, and they don’t raise their voice.” He added, “People respond to that.”

Read the full story on Yahoo Finance.

Economic Woes Continue Business Bankruptcy Surge

The upward trend in business bankruptcies that began in 2007 has apparently continued through the first quarter of 2008 and looks to worsen as the nation's economy struggles through a recession, according to research and analysis from accounts receivable insurer Euler Hermes ACI.

According to information from the U.S. Bankruptcy Courts, 29 public companies sought either Chapter 7 or Chapter 11 bankruptcy protection between January 1 and March 31, an increase of 81.25% over the first quarter of 2007. Additionally, the size of the bankruptcies has continued to increase as evidenced by the total assets of the filings—in Q1 2007, the 16 public company bankruptcies featured combined assets totaling just over $1 billion; the 29 bankruptcies for Q1 2008 feature combined assets of nearly $10 billion.

The bankruptcy up-tick appears to continue the trend from 2007, when Euler Hermes ACI forecasted that the number of business bankruptcies would escalate by more than 50%. While final Q4 business bankruptcy numbers from the U.S. Bankruptcy Courts have yet to be released, the trend through the first three quarters of the year gave credence to the forecast.

"The escalation in bankruptcies is a direct result of the deterioration in the U.S. economy, which is now in recession," said Euler Hermes ACI Chief Economist Dan North. "Businesses are now facing a serious combination of factors which will almost certainly continue the trend of increased bankruptcies, including skyrocketing energy and commodities prices, plummeting house prices, job loss, a slowing consumer, record foreclosures and delinquencies and tightening credit conditions. Bankruptcies are likely to continue rising for the next year as the economy struggles through the recession."

Source: Euler Hermes ACI

Are You Viewed As a Leader?

Company executives are fully aware of the impact sales has on their company's future, but many of them might not be so aware of how close accounts receivable (A/R) relates to the organization's sustainability and potential for growth. "It's really important to show them how credit can affect them," said Susan Archibeque, CCE in a recent NACM-sponsored teleconference entitled "Credit Leadership."

Archibeque noted that while sales may have the most obvious tie to a company's position, it's important for the business' decision makers to understand how important credit is to help the company make more sound strategic decisions and also to increase the profile and clout of the credit department within the organization. Archibeque noted that the relationship between credit and sales should be an equal and mutually-beneficial one. "The only way that we can change perception of credit is to have a positive experience with sales," she said. "It's important that sales and credit are on the same committee." Archibeque even noted that, in some instances, sales should be tied to credit and suffer the consequences when one of their customers fails to pay.

Before any of these options are put into place, however, Archibeque noted that a credit department needs to take stock both of how they're performing and how they relate to the rest of their company. "We need to look at your company internally," she said. "Look at the impact A/R is having. You need to know where improvements need to be made… to change the philosophy of credit in [your] organization." Archibeque also added that it's important for credit staff to be involved in the company's future as much as its present situation. "You need to be on the strategic planning committee so you can be in on your company's growth," she said. "You need to know where your company's going in terms of expansion."

For more information on NACM's teleconferences, or to register, click here.

Jacob Barron, NACM staff writer

Mary Lynn Jordan CMA's New Chairman - VIDEO

CMA 2008 Board Chairman Mary Lynn Jordan from CMA Business Credit Services on Vimeo.

Mary Lynn Jordan our new CMA Board Chairman tells us her strategy for the future of CMA.  Please excuse all the noise from the wait staff at Quiet Cannon. I did not realize how powerful my new  microphone was it picked up every dish and fork that was moved.

We are also trying out a new service for video instead of YouTube called Vimeo. You can load higher quality video on Vimeo, let's see how it works.

Average Days to Pay – New Tradeline Measurement on anscers.com

CMA launched anscers.com with the tradeline measurement Days Beyond Terms (DBT) as an option on each tradeline. A DBT measurement tells you, on average, how many days beyond terms a customer pays.

The DBT measurement sparked conversation among anscers users, some claiming this measurement was the best to use, others suggested the use of Average Days to Pay (ADP). We surveyed users and found the split about 50/50 at the time.

Now that anscers is accepting full accounts receivable contributions we find a lot more customers using the ADP measurement and the data in the DBT field is misleading. ADP measures how many days to pay from the date of the invoice, DBT measurement starts on the invoice due date.

Since full accounts receivable contributions are the focus of anscers and key to building a substantial database, CMA has made a decision to change the tradeline measurement from DBT to ADP on anscers.com.

To accomplish this:

1.    All data that currently exists in the DBT fields will be removed from the anscers database.
2.    The DBT field will be changed to ADP on all anscers screens and group worksheets.
3.    Starting in May 2008 full accounts receivable contributors that include ADP or DSO (a similar measurement) will be added to the anscers database.

Our goal is to have this completed by April 28, 2008, and we will keep anscers users informed of our progress.

For those who prefer to view DBT calculation, there is still a way to make the new ADP data work for you. Simply take the ADP on a company subtract your terms and that will give you a DBT estimate according to your terms (ADP 54 minus your terms of 30 = 24 Days Beyond Terms).

If you would like to contribute your full accounts receivable to anscers.com please contact Teresa Campos at 818-972-5361 or tcampos@creditservices.org.

For any concerns or questions please contact Customer Service at 818-972-5332.

Thank you for using anscers.com!