Business Credit JournalNovember/December 2014

7931 NE Halsey, Suite 103 Portland, Oregon 97213 Tel 503.257.0802 Fax 503.257.0247 www.nacmoregon.org

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In This Issue

Delaware Bankruptcy Court Adopts "Subsequent Advance" Approach to Preference New Value Defense ....................... 1

International Corner ............... 2

Chairman's Message ............... 3

President’s Message ............... 3

Are You Aware of NACM National's Secured Transaction Services? ............................... 4

Questions from the Forum ...... 5

Compliance Program Development: Choosing Your Metrics ............ 6

Free New Product! Portfolio Risk Analysis ................................ 7

Excel Tips, Tricks & Shortcuts .. 8

2015 Upcoming Education ..... 9

Credit Research Foundation ... 10

Legal Corner: Beware Elusiveness of Substantial Completion ............................ 11

Membership Breakfast ............ 12

Protecting Personal Information - Take Stock. Know What Personal Information You Have in Your Files and on Your Computer .... 14

Look for Hotspots: Insight into Lie Detection from Credit Congress General Session ......Speaker, Janine Driver ............ 15

Delaware Bankruptcy Court Adopts “Subsequent Advance” Approach to Preference New Value Defense

continued on page 9

Reprinted courtesy of Cooley, LLP

In a recent decision from the Delaware bankruptcy court, Judge Christopher S. Sontchi joined the debate over the interpretation of Section 547(c)(4)(B) of the Bankruptcy Code, which sets forth the new value defense to a preference claim.

In Miller v. JNJ Logistics LLC (In re Proliance Int’l, Inc.), the question was “whether an (alleged) preferential transfer may be reduced by subsequent new value regardless of whether it was ‘paid’ or ‘unpaid’ prior to the petition date, or whether the defense is only to the extent that the subsequent new value remained ‘unpaid.’” In a victory for the defendant, Judge Sontchi explicitly held that the defendant was entitled to reduce its preference exposure by both unpaid and paid new value, adopting the “subsequent advance approach” in calculating the new value defense.

Absent defenses, a trustee may avoid any transfer of an interest of the debtor in property (i) to or for the benefit of a creditor, (ii) on account of antecedent debt, (iii) while the debtor was insolvent, (iv) made within 90 days of the filing of the petition (or 1 year in the case of insider transfers), and (v) that left the creditor better off than it would have been in a Chapter 7 case if the transfer had not been made.

Pursuant to Section 547(c)(4), a transfer may not be avoided “to the extent that, after such transfer, such creditor gave new value to or for the benefit of the debtor … on account of which new value the debtor did not make an otherwise unavoidable transfer to or for the benefit of such creditor.”

Judge Sontchi recognized a jurisdictional split regarding the interpretation and application of the new value defense. The 7th and 11th Circuits have adopted the “remains unpaid” approach, including Matter of Prescott, 805 F.2d 719, 732 (7th Cir. 1986) and Charisma Inv. Co., N.V. v. Airport Sys., Inc. (In re Jet Florida Sys., Inc.), 841 F.2d 1082, 1083 (11th Cir. 1988), have concluded that new value must remain unpaid at the end of the preference period to be used as a preference defense. The rationale behind this approach is that “paid new value does not represent the return of a preferential transfer to the estate.”

Under the “subsequent advance” approach, new value does not need to remain unpaid at the end of the preference period. Courts including the 4th, 5th, 8th, and 9th Circuits have adopted this approach. Crichton v. Wheeling Nat’l Bank (In re Meredith Manor, Inc.), 902 F.2d 257 (4th Cir. 1990); Laker v. Vallette (Matter of Toyota of Jefferson, Inc.), 14 F.3d 1088, 1091 (5th Cir. 1994); Jones Truck Lines, Inc. v. Central States, Southeast and Southwest Areas Pension Fund (In re Jones Truck Lines, Inc.), 130 F.3d 323, 328 (8th Cir. 1997); Mosier v. Ever-Fresh Food Co. (In re IRFM, Inc.), 52 F.3d 228 (9th Cir. 1995).

Business Credit JournalNovember/December 2014

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Over the years I’ve been asked many questions about international credit and finance. Some of these have been asked repeatedly so I thought I would share some this month.

What do you think is the most important element of international credit and finance?

Although there are many, many important aspects I think the key is keeping current. International events happen constantly and often very quickly. You must have a system in place to keep current on events and to have the information and authority to make changes quickly. When Russia slapped an embargo on some goods being imported from the U.S., companies needed to react quickly to divert and re-route cargo. A typhoon or earthquake can devastate a county and require a quick response from vendors and customers. An election or other planned political change can be planned for – a coup or overnight restriction on access to hard currencies needs an immediate response. Many people do a very good initial country analysis, assign risk factors, and then forget it until an annual review. This can generate some very unpleasant surprises.

With all the other demands of the job and with the vast array of data available how can you effectively stay current?

First, you need to have a clear picture of the countries you should track. This would include countries you buy from or sell to and also countries that heavily influence this core group. Knowing the countries you buy from or sell to is quite straight forward. The second group is more challenging. Chile and Australia both depend heavily on commodity sales to China. When the economy in China slows this directly affects Chile and Australia. It is important to know the countries that are important to your core group.

What is the oddest thing you can remember happening?

We were shipping a container of large kraft paper rolls to Panama. One of the rolls had a crushed core. The container was pulled for inspection and evidently customs thought that something was hidden in the crushed core. We received a notice that they had pulled that roll but released the rest of the container for export. This meant that the import paperwork was inaccurate and that did not make Panamanian customs happy. Several

weeks later we received a notice that our roll had been destroyed. Also included was a detailed insurance claim form for the roll. We diligently completed the paperwork and returned it to customs. Several months later we received notice that the claim had been disallowed. They explained that they only honored claims when the

product was accidently damaged or destroyed. Since this destruction was deliberate the claim was disallowed. What a waste of time and paperwork! They must have known that the destruction was deliberate before they ever sent the form!

International Credit and Finance is challenging, exciting, and keeps you connected to the global community.

International Corner

Alice Knight is Vice President of Finance & Administration for Paper Products Marketing, Inc. Ms. Knight has more than 48 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, and as President of ICTF Forest Products Group.

Business Credit JournalNovember/December 2014

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Message from the ChairmanThank you to all who attended the Membership Breakfast. John Mitchell was excellent as always giving his overview of the economy. His fast-paced, frequently amusing presentations are enjoyed by all. Brett Haft, CBA, Chair of the Award Committee, announced this year’s award winners and NACM Oregon’s nominees for national awards. Barbara Davis, CCE, was announced as CCE of the Year; Charlene Gothard, CBF, as CBF of the Year; and in a joint award, Marilyn Rea, CCE, and Charlene Gothard, CBF, as Mentors

of the Year. I was honored to be included in this amazing group and awarded the Credit Executive of the Year.

If you are not aware of the contributions of these amazing women, let me list them: Barbara Davis, CCE, has served on the NACM Oregon Board for several years, cumulating in role of Chair. Not one to ride quietly out into the sunset, she is currently President of CFDD Portland Chapter while also serving on the CFDD National Board as Area Director - Oregon this year. She willing volunteers wherever needed and her professionalism is always evident.

Charlene Gothard, CBF – I can’t even begin to list everything she has done over the years. If there was something that needed doing, you can bet that Charlene was right in the middle of it, calmly making sure everything was done, not just well, but to perfection. She currently serves as the Chair Elect for CFDD National.

Many of you know Marilyn Rea, CCE, because of her involvement in the certification lunches. She prepares the course, follows up with candidates, and helps them all with their application process. She is currently the Vice President and Program Chair of CFDD Portland.

Now, take either Marilyn or Charlene individually and they are a force to be reckoned with—put them together and things happen quickly! They decided, since they obviously do not have enough on their plate, that NACM Oregon needed to establish certification study groups. They are writing the curriculum, organizing, and attending each study group together. They have a 100 percent success rate to date.

As you can see, this is a pretty humbling group to be included in and I am honored that I was recognized as the Credit Executive of the Year. It has been my pleasure to serve on the Board of Directors since 2008, and as Chair since April 2013. I have enjoyed every minute. Thank you.

The Annual Holiday Open House is coming in December; I look forward to seeing you all there.

Thank you,

Marsha Johnson, CCE TEC Equipment, Inc. mjohnson@tecequipment.com

Message from the PresidentWe have many education offerings and member events planned for this Fall and for the first quarter of 2015. Take a look at the calendar included in this issue. I hope we will have the opportunity to welcome you!NACM national designation classes in 2015. It’s a fact that individuals holding these designations hold more top credit jobs and have higher earnings. Planning to earn a national designation? One of your 2015 resolutions? Be sure to put the following 10-week, 30-hour classes on your calendar:• Business Credit Principles – Starts January 13, 2015, a

course covering the fundamentals of business credit, including the role of credit in the economy and in the company, the legal environment, credit policy, the credit application, information resources, credit decisioning, accounts receivable, deductions and disputes, delinquency and collections, insolvency, and bankruptcy. Meets one of the requirements to sit for the Credit Business Associate designation.

• Financial Statement Analysis – Starts April 7, 2015, a course covering the trade creditors approach to understanding and using company financial statements to evaluate credit risk, including sources of financial statements; reading the auditor’s letter, the balance sheet, the income statement, the cash flow statement, the notes; indicators of liquidity, profitability, and leverage; and using the analysis in decisioning. Meets one of the requirements to sit for the Credit Business Associate designation.

Membership Breakfast. The first membership meeting in 2015 will take place on Tuesday, February 17. Watch for speaker information!Meet & Greets in 2015. Many members enjoyed these occasional events last year. We have planned the first one for March 4, and we hope you’ll join us (4:30-6:30 p.m., location TBA). Thank you, Rod Wheeland, CCE, CAE Direct: 971.230.1158 rwheeland@nacmoregon.org

Business Credit JournalNovember/December 2014

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Are You Aware of NACM National’s Secured Transaction Services?NACM provides credit professionals with Mechanic’s Lien and Bond Services, and UCC filing services.

For ease of use NACM National has developed an online Lien Navigator, which provides step-by-step time frames for all 50 states, D.C., and the Canadian provinces. It provides links to statute references, quick lists section, and warnings cautioning users of nuances in the law. Lien Navigator also prepares, serves, files, and enforces preliminary notices, mechanics liens, and payment bond claims on a nationwide basis.

The UCC filing services handles every part of your UCC filing life cycle, including tracking jurisdictional requirements and expirations, calculating UCC filing fees, processing documents, writing checks, and submitting UCC filings, all within theircomprehensive system. They monitor all the UCC-1 filings within your portfolio for expirations or continuation, notifying you in advance of the deadlines so that you can take the appropriate action.

For additional information, go to www.nacmsts.com or contact your Account Executive.

Business Credit JournalNovember/December 2014

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Questions from the Forum

We have a long-term customer who has a business account with our company. Their company is a LLC. We were informed that one of the members that signed our credit agreement is deceased.

Both the deceased member and one of their other members also signed our personal guarantee. Is our credit agreement still binding since one of the other members signed the personal guarantee or do we need to have one of the other members sign our credit agreement as well?

Member:

Member:

Expert:

Expert:

The credit application would be binding if the deceased member had authority to execute it at the time it was signed. Generally, the death of one member should not affect the other member's personal guaranty. That may depend on the language of the guaranty. If it concerns you, tell them you are updating your files/paperwork and get the surviving member to re-sign.

William G. Fig

I have a situation where I've sent a bad customer to collections for a machine rental, and the freight company has sent us to collections for the freight that the customer I sent to collections owes them. (If that makes any sense at all.) I want to know if we're on the hook for their freight bill when the freight on the return of the machine to us was agreed to be paid by the customer that was sent to collections. I can't find any clauses in our contract or even on the BoL (Bill of Lading) that says if one party doesn't pay then the other party has to.

It depends on who contracted with the shipper. If you contracted with the shipper and the bad customer agreed with you to pay that cost, then you are likely stuck paying the shipper and chasing bad customer for the funds. If the shipper contracted directly with bad customer, then, absent some agreement by you with shipper to pay if bad customer did not, you should not be liable for the shipping costs.

William G. Fig

Welcome to a new section of the BCJ-Questions from the Forum. We will list questions and answers we think others can learn from. Have a question for other members or experts. Log on to the NACM Oregon Portal. Click here to go to the website.

Bill represents mortgage servicers and lenders in prosecuting and defending mortgage foreclosure actions and defending lenders and servicers in "wrongful foreclosure" lawsuits in state and federal courts in both Oregon and Washington. Bill also represents general contractors, subcontractors, and material suppliers in all aspects relating to their businesses. This includes contract review and drafting, preparing construction bond and lien claims, and litigating all types of payment claims in state and federal courts. He also handles administrative claims against contractors' surety bonds.

In addition, Bill represents small- to mid-sized businesses with their legal needs, including contract disputes and collection of their accounts receivable. Because debtors sometimes attempt to hide assets or do not voluntarily pay the judgment entered against them, Bill also has extensive experience in pre-judgment provisional process and post-judgment collection enforcement.

Business Credit JournalNovember/December 2014

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Compliance Program Development: Choosing Your Metrics

With the higher frequency of regulatory action and the escalating amount of the fines, the focus on compliance policy and procedural effectiveness is becoming more important. These fines are being imposed for reasons including selling to parties on the lists of denied, unverified, or foreign-sanctions evaders or end-users with ties to known terrorist groups, among other offenses.

Knowing what is in the set of written compliance guidelines (or developing them if they’re nonexistent or badly out of date), warrants closer attention then ever before, and the credit professional’s skill set can be of great help to companies in this area. Though not as traditional as day-to-day credit or collections tracking methods, various metrics and benchmarking efforts can go a long way toward keeping your company in line and current with compliance regulations. You might even save it a lot of money. The following are some potentially helpful suggestions to get started:

The Basics

Research by Deloitte and Compliance Week indicates that the most popular metrics used by those statistically tracking the effectiveness of their compliance programs include:

• analyses of internal audit findings;• completion rates for workforce training;• the volume of calls to internal hotlines; and • ethics surveys.

These are considered good jumping-off points, but it’s important to note these are not the only ones to consider. Deloitte characterized the above metrics as somewhat rudimentary, which make them easy to implement to get started.

Visiting government websites dedicated to compliance issues (like www.bis.doc.gov) to use information there to develop things like export management systems or draw ideas for setting policies and metrics is also advisable. Establishing a recurring audit calendar to screen each procedure can be helpful as well.

Customize

After choosing the metrics best fit for your company, it is also critical to design a program that is right for the company. A program, software, or basic set of metrics that come “off the shelf,” so to speak, can be a good start, but customization based on a company’s situation is much more effective in the long term. This may vary based on the industry, the size and staffing levels of a business, and the regions in which it does business and so on. The latter point can be particularly important, as some governments can have draconian or intentionally vague mandates, with enforcement sometimes more likely when a U.S. company is involved in the business dealings—examples include Russia, Argentina, and other volatile countries.

More advanced metrics come from responding to what your company finds most important, such as evolving metrics used to track credit-granting or collection functions. It could be helpful to add a metric to track denied or delayed sales because of a compliance red flag discovered by the credit department. Tracking what did not happen can be a great way for credit to show upper management their best work and value by saving the company from regulatory headaches or fines. A metric that tracks changes in payment behavior before and after terms were altered because of good or poor payment performance or a major industry change might also be a good choice to develop.

Constant Tweaking

Policies on metrics that track compliance issues should be considered “living documents.” Though there shouldn’t be massive changes to every metric once they are shown to be working, a company must work to get the right balance and the proper areas of focus being tracked. This can take time, especially during initial development. The purpose of compliance metrics is not entirely different from that of the more traditional credit and collection metrics, which are also adapted at times based on what kind of information the company deems most useful. A credit professional or CFO does not simply set metrics and never investigate if a change here or there would paint a clearer, more helpful picture.

continued on page 8

Business Credit JournalNovember/December 2014

7931 NE Halsey, Suite 103 Portland, Oregon 97213 Tel 503.257.0802 Fax 503.257.0247 www.nacmoregon.org

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Free New Product! Portfolio Risk Analysis One of the most valuable aspects of NACM membership is the insight gained from Industry Credit Groups.

As portfolios grow, budgets shrink and the credit professional is asked to do more with less, converting this valuable insight into an easily digestible and efficient format that can be regularly utilized can become more and more challenging – until now. In response to member requests, our technology and business development team has been hard at work creating a new benchmarking tool. This new tool – Portfolio Risk Analysis – provides members with an objective and consistent way to identify risk segments within their customer base – and compare those segments against their group, their industry, and even the overall participating NACM member base.

Leveraging the strength of the NACM National Trade Credit Report data share, this new tool provides another layer

of perspective that can either confirm that your existing credit and collection policies and procedures are working as intended, or help to highlight where refinement of a process might yield improved results. Whether you’ve got a hundred customers or a hundred thousand, whether your challenge is reducing delinquency or improving efficiencies, or anything in between, we anticipate this new tool will very likely play a part in your success.

Already report your accounts receivable file to NACM? Great – you’ll have the new product activated for free in advance of the Industry Group meeting so you can come prepared with questions on how to best utilize it. Not yet sharing your data? We think you will change your mind after you see what is now available as a member benefit for FREE.

Contact your group secretary with any questions.

Business Credit JournalNovember/December 2014

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Excel Tips, Tricks & ShortcutsInstead of hitting the SUM button every time you can use "Alt =" and it automatically does the SUM () action.

Format your numbers with $ sign using: "CTRL + Shift + 4" easy to remember, 4 has the $ sign on it.

Format your numbers with % sign using: "CTRL + Shirt + 5" easy to remember, 5 has the % sign on it.

Jump to the start or end of a column: "CTRL + up arrow" or "CTRL + down arrow."

Jump between worksheets in a workbook: "CTRL + Page Down" or "CTRL + Page Up."

I love the format painter to keep everything the same, if you Double Click Format Painter, you can select multiple cells.

Move a column to a new column: Cut column (CTRL +X) move to column, right click insert new column, insert cut cells. This works great if you have already created your spreadsheet but need to move a whole row of content, otherwise, just select area and move with arrow to new column or cell.

Insert today's date: "CTRL + ;"

Insert current time: "CTRL + ; + Shift"

continued from page 6

Compliance Program Development: Choosing Your Metrics

Most experts agree that one of the worst things to do when setting up a compliance program and base-level metrics is not monitoring them properly or making the appropriate changes as the needs arise. Letting an established compliance program and its tracking methods get woefully out of date can be just as bad as not having one at all. A policy that is in place, but left to become inadequate—to a negligent level—can be held against the company if investigated by the federal government. Showing that the compliance program was continually monitored and adjusted is considered a good-faith effort and goes a long way in many compliance-related cases.

The good news is that most regard the setup of compliance metrics as the difficult stage of the process, but once that’s done, making changes to the tracking categories in the months down the road is a much smoother process.

Source: NACM-National

Business Credit JournalNovember/December 2014

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Continued from cover

Judge Sontchi discussed two prior Delaware bankruptcy court opinions on the subject (Burtch v. Revchem Composites, Inc. (In re Sierra Concrete Design, Inc.), 463 B.R. 302 (Bankr. D. Del. 2012) and Burtch v. Masiz (In re Vaso Active Pharm., Inc.), 500 B.R. 384 (Bankr. D. Del. 2013)), indicating that “the Court believes that its previous rulings have, at least by inference, adopted the subsequent advance approach.”

Accordingly, Judge Sontchi adopted the “subsequent advance” approach to the new value defense, giving the defendant full credit for all subsequent new value it provided to the debtor, whether unpaid or paid.

The decision undoubtedly represents a victory for preference defendants in Delaware cases. However, given the jurisdictional split, defendants in other jurisdictions, including the 7th and 11th, should be aware that the creditor-friendly “subsequent advance” approach has been rejected in favor of the “remains unpaid” approach.

Reprinted courtesy of Cooley, LLPContact: Jay R. Indyke212-479-6080jindyke@cooley.com

Delaware Bankruptcy Court Adopts “Subsequent Advance” Approach to Preference New Value Defense

2015 Upcoming Education

Event: Instructor: Date: Time:

Business Credit Principles: Rod Wheeland, CCE January 13 - March 17, 2015 1:00 p.m. - 4:30 p.m.

Letters of Credit: Raeann Binau, January 21, 2015 8:00 a.m. - 10:00 a.m. CICP RCGP

Office Skills: Outlook Neal Otto January 29, 2015 8:00 a.m. - 12:00 p.m.

Office Skills: Powerpoint Neal Otto February 5, 2015 8:00 a.m. - 12:00 p.m.

Office Skills: Word Neal Otto February 12, 2015 8:00 a.m. - 12:00 p.m.

Membership Breakfast Kate Brown, OR February 17, 2015 7:30 a.m. - 9:00 a.m. Secretary of State

Certification Roadmap Marilyn Rea February 19, 2015 11:30 a.m. - 1:00 p.m.

Office Skills: Excel Neal Otto February 26, 2015 8:00 a.m. - 12:00 p.m.

Meet & Greet NW March 4, 2015 4:30 p.m. - 6:30 p.m.

To register for NACM Oregon events/classes or for questions, contact:

Shawna Kelly at 971.230.1202 or skelly@nacmoregon.org.

To register online go to: http://www.nacmoregon.org/education/calendar.html

Look for these classes and events to be announced in the approaching months.

Business Credit JournalNovember/December 2014

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Page 10

Credit Research Foundation 3rd Quarter

The 3rd Qtr. 2014 Edition of the CRF News is packed with informative articles.

Features include:

• CRF Technology Upgrade Survey Results

• CRF Members Conquer Tech Upgrades

• Apple Pay and B2B Payment Channels

• To Trade or Not To Trade Bankruptcy Claims

• Key State Law Changes Affecting the Construction Industry

• New Value Defense Court Ruling in DE

• Macro-Economic Outlook by Moodys.com Chief Economist Mark Zandi

• and more ...

To view the CRF News in the convenient Flipbook presentation, click on this link:

http://www.flipcity.com/fvx/ulib/417a8ac0-5ddb-40e7-8c8c-5301a0cc941c/12143/1/Web/flipviewerxpress.html

National Summary of Domestic Trade Receivables Results 3rd Quarter 2014DSO slightly increased from the prior quarter to 39 from 38.50. A year ago the measure was 39.78. Best Possible DSO increased to 30.00, as compared to 29.64 last quarter and 31 a year ago. Average Days Delinquency increased to 6 from 4.62, as compared to 4.60 a year ago. The percent reported over 90 days past due increased to 0.395 as compared to last quarter at 0.390, as compared to 0.40 a year ago.

Medians for 31 different industries are included in this summary. If any SIC code has less than three responses, it will not appear in the report. So to get more participation in your industry, please mention the survey to your colleagues, and pass along the link for them to participate.

Please contact Customer Service or your Account Executive for a copy.

Now that you’ve done the NSDTR, if you really want to see how you’re doing, you’ll want to participate in CRF’s comprehensive Benchmarking survey. You can do that at: http://www.crfonline.org/surveys/benchmarking/benchmarking.asp.

To those of you that provided data we thank you again for your participation.

Business Credit JournalNovember/December 2014

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In the construction industry, "substantial completion" is a loosely and often-used phrase. However, this term has a specific and significant meaning in the context of construction lien claims.

Oregon statutes set forth a specific notice procedure for declaring a project "substantially complete." Once the statutory procedure has been properly completed, a rebuttable presumption is established that the project is, in fact, substantially complete. If a lien claimant's 75-day deadline to record a construction lien has not already begun to run, the designation of the project as substantially complete will start the clock. Because the failure to timely record a lien is an absolute defense to a lien claim, as one might suspect, there has been significant lien-related litigation regarding the issue of substantial completion.

However, in April of this year, the Oregon Supreme Court issued two decisions regarding "substantial completion" in the area of claim preclusion. Both of the cases show the importance of a contractor obtaining the owner's written acceptance of a project in order to trigger any contractual or statutory time limits on construction-related claims.

In the first case, PIH Beaverton LLC v. Super One Inc., the court addressed whether the plaintiff's construction defect claim was barred under ORS 12.135, the applicable statute of limitations for such claims. The 10-year limitation under ORS 12.135 begins to run upon the "substantial completion" of the project, which the statute defines as "the date when the contractee accepts in writing the construction, alteration, or repair of the improvement to real property or any designated portion thereof as having reached that state of completion when it may be used or occupied for its intended purpose or, if there is no such written acceptance, the date of acceptance of the completed construction, alteration, or repair of such improvement by the contractee." The court held that the posting and filing of a notice of completion by the owner pursuant to the Oregon lien statutes did not necessarily establish that the owner accepted construction of the improvement as complete. The notice of completion only established that the owner was taking responsibility for the use and maintenance of the portion of the project that was sufficiently complete for its intended use and occupancy. Thus, the court concluded that the completion notice did not conclusively establish the date that the statute of limitations began to run regarding the plaintiff's construction defect claims.

The second case, Sunset Presbyterian Church v. Brockamp & Jaeger Inc., involved a construction contract in which it was specified that any claims arising from the construction would accrue on the "date of substantial completion." The trial court granted the defendants' motions for summary judgment based on the grounds that the plaintiff failed to file its claim within the time specified by the contract, or within the time allowed under ORS 12.135. The plaintiff appealed. The Supreme Court held that the plaintiff occupying the property for its intended purpose on a particular date did not necessarily establish that the project was substantially complete at that time and, therefore, was not conclusive proof that the plaintiff's claims started to accrue on that date. Absent a certificate of substantial completion from the architect, whether the plaintiff's claims accrued under the contract's limitation clause was a question of fact for the trier of fact. Because the owner contested the date that it accepted the project, the court held that the occupation of the property, by itself, did not trigger the 10-year statute of limitations under ORS 12.135.

Both of these cases may be examples of "good facts make bad law," but they nevertheless show the importance of a contractor establishing, in writing, the date the owner accepts the project as complete. A contractor may no longer rely on an owner's completion notice to establish "substantial completion" of the project needed to trigger the statute of limitations on a claim. Thus, absent the owner's written acceptance of completion, when asserting a statute of limitations defense to a construction-related claim, it appears a contractor may well be stuck litigating a potentially expensive factual dispute regarding when the owner accepted the project.

Legal Corner

Beware Elusiveness of Substantial CompletionWritten by William G. Fig, originally published by the Daily Journal of Commerce

William G. Fig - Sussman Shank

Bill represents mortgage servicers and lenders in prosecuting and defending mortgage foreclosure actions and defending lenders and servicers in "wrongful foreclosure" lawsuits in state and federal courts in both Oregon and Washington.

Business Credit JournalNovember/December 2014

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Membership Breakfast

continued on page 12

Rod Wheeland, Marsha Johnson, and John Hardy.

Bethany Batsell and Alicia Burks. Mike Bena, CCE, and Betty Beeson-Bauder, CBF.

Shawna Kelly; Caroline Anderson; Marsha Johnson, CCE; Alice Knight,Rod Wheeland, CCE/CAE; and John Hardy.

John Mitchell, Speaking on "Year Six - Recovered, Challenged, and Changed."

The Membership Breakfast, was held on October 14, 2014, with John Mitchell as our speaker. We had our annual Designation of Excellence awards presented. Congratulations to the 2014 award winners: Marsha Johnson, CCE, Credit Executive of the Year; Barbara Davis, CCE, CCE Designation of Excellence; and Charlene Gothard, CBF, CBF Designation of Excellence. The final award was presented to Marilyn Rea, CCE, and Charlene Gothard, CBF, as the Mentors of the Year.

John Mitchell was a dynamic speaker and spoke about, "Year Six - Recovered, Challenged, and Changed." He talked about employment and job growth, inflation, household well-being, and so much more. Join us for our next Membership breakfast February 17, 2015.

All Photos are from Left to Right.

Business Credit JournalNovember/December 2014

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Brett Hanft, CBA presenting Charlene Gothard, CBF & Marilyn Rea, CCE, Mentors of the Year.

Barbara Davis, CCE; Troy Vandenson; and Tim Cain and audience listening to John

Winston Asai

Brett Hanft, CBA, presenting Marsha Johnson, CCE,

Attendees listening to Economist, John Mitchell. Marsha Johnson, CCE; Charlene Gothard, CBF; Marilyn Rea, CCE; and Barbara Davis, CCE

Caroline Anderson & Eve Sahnow, CBA Brett Hanft, CBA, and Clara Nemeth presenting Barbara Davis, CCE, Credit Executive of the Year.

Business Credit JournalNovember/December 2014

7931 NE Halsey, Suite 103 Portland, Oregon 97213 Tel 503.257.0802 Fax 503.257.0247 www.nacmoregon.org

Page 14

Protecting Personal Information - Take Stock. Know What PersonalInformation You Have in Your Files and on Your Computers.Information from the Federal Trade Commission

Effective data security starts with assessing what information you have and identifying who has access to it. Understanding how personal information moves into, through, and out of your business and who has—or could have— access to it is essential to assessing security vulnerabilities. You can determine the best ways to secure the information only after you’ve traced how it flows.

• Inventory all computers, laptops, mobile devices, flash drives, disks, home computers, digital copiers, and other equipment to find out where your company stores sensitive data. Also inventory the information you have by type and location. Your file cabinets and computer systems are a start, but remember: your business receives personal information in a number of ways through websites, from contractors, from call centers, and the like. What about information saved on laptops, employees’ home computers, flash drives, digital copiers, and mobile devices? No inventory is complete until you check everywhere sensitive data might be stored.

• Track personal information through your business by talking with your sales department, information technology staff, human resources office, accounting personnel, and outside service providers. Get a complete picture of:

» Who sends sensitive personal information to your business? Do you get it from customers? Credit card companies? Banks or other financial institutions? Credit bureaus? Job applicants? Other businesses?

» How your business receives personal information. Does it come to your business through a website? By email? Through the mail? Is it transmitted through cash registers in stores?

» What kind of information you collect at each entry point. Do you get credit card information online? Does your accounting department keep information about customers’ checking accounts?

» Where you keep the information you collect at each entry point. Is it in a central computer database? On individual laptops? On employees’ smartphones, tablets, or other mobile devices? On disks or tapes? In file cabinets? In branch offices? Do employees have files at home?

» Who has—or could have—access to the information. Which of your employees has permission to access the information? Do they need access? Could anyone else get a hold of it? What about vendors who supply and update software you use to process credit card transactions? Contractors operating your call center?

Different types of information present varying risks. Pay particular attention to how you keep personally identifying information: Social Security numbers, credit card or financial information, and other sensitive data. That’s what thieves use most often to commit fraud or identity theft.

Would you like a copy of the Protecting Personal Information: A Guide for Business?

Contact your Account executive.

Business Credit JournalNovember/December 2014

7931 NE Halsey, Suite 103 Portland, Oregon 97213 Tel 503.257.0802 Fax 503.257.0247 www.nacmoregon.org

Page 15

The insights shared among the business and credit experts who gather at NACM Credit Congresses can last throughout every attendee’s career. Among these insights were the sharp, concrete tips shared by “human lie detector” Janine Driver, the 2014 General Session keynote speaker. Driver is a former investigator with the Bureau of Alcohol, Tobacco, and Firearms (ATF) and the Central Intelligence Agency (CIA), and while most credit professionals may not deal with crooks as regularly as Driver did (hopefully!), the points she made during her presentation should come in handy on customer visits or when talking to a particularly cagey potential customer about the likelihood that they’ll pay what they owe.

Driver’s lesson in separating fact from fiction started when she asked the attendees to ask her, hypothetically, if she was cheating on her husband. When she answered “no,” she simultaneously shrugged her shoulders. The shoulder shrug, Driver noted, is an example of what she calls a “hotspot,” which is a signal that says to the person asking the question that the person speaking isn’t telling the whole story.

It’s important to note, however, that “hotspots” don’t always signal that a speaker is lying. “Anytime you have a ‘hotspot’ you have to do due diligence,” Driver said, offering another example of a company meeting a potential customer using terms specific to credit management. “Are you good at paying your vendors?” Driver asked the hypothetical customer. “Yeah, I’m great at paying my vendors” the hypothetical customer replies, as they shrug their shoulders. Then, the template response offered by Driver was “Maybe, I’m wrong here, but it appears to me there’s something you’re not telling me.”

These words, or some variation thereof, should be part of any credit professional’s repertoire when conducting a credit investigation that’s full of hotspots. “At that point they can say whatever it is they want to say,” Driver said. “That’s your due diligence: when finding a hotspot it just means there’s something I’m not telling you. It doesn’t mean I’m lying,” she added.

Driver also noted that there’s an important distinction that separates the responses of potential customers that are truth tellers and those that are liars. “Truthful people tend to convey and liars tend to convince,” Driver said. “The liar needs to be believed, so they’ll try to oversell you.”

Source: NACM-National

Look for Hotspots: Insights into Lie Detection from Credit CongressGeneral Session Speaker, Janine Driver

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