Convergent Commercial
Quarterly
Convergent Commercial
Quarterly
May 2013
Welcome
Special points of interest:

Improving Collections

To Get Paid, Do You Have to Pay
Legal Fees

New Senate Bills Require Companies to Honor Gift Cards in Bankruptcy

New Workers’ Comp Formula

Economy Shows Some Bounce

Small Business Debt Collections
101
As we welcome in Spring you
are invited to enjoy our latest
newsletter. Also, we would like
to announce the opening of our
satellite office in Allentown, PA.
Mike Meyer, Convergent’s CEO
and I joined our initial PA team
members for our official opening in March.
CCI recently exhibited at the
annual ALA conference in
Washington, D.C. which gave us
a chance to meet many of our
law firm contacts. Next month
we will be exhibiting at the annual IASA meeting which provides us opportunities to meet
some of our Insurance contacts.
Our articles this month may
help you in your pursuit of delin-
quent customers and should
also help you understand what
documentation is important.
Another article on the
“improving” economy should be
of interest as well as some
ideas for improving individual
productivity.
Our cartoon this month illustrates a challenge we hope we
will not meet too often!
As always we appreciate the
loyalty of our clients and we are
always interested in ideas that
will help CCI improve our services.
-Dennis Casey
Vice President
From Left to right: James Joseph, Steven Stearns, Julius Burrell, Sheila Brewer,
Mike Meyer, Dennis Casey, James Ebersole, Matt Dietrich
Page 2
Convergent Commercial Quarterly
Volume 3, Issue 2
Improving Collections Through Proper Documentation
obtain the social security number of the person who is personally obligated for your debt,
such as a guarantor)
Name, address, and telephone
numbers of any guarantors, cosigners, or persons or companies liable for payment of the
debt
The following is a checklist of documents
which will assist your collector in quickly
collecting from your debtor:
 Credit Application or equivalent.
This is the most crucial document
because it should contain:
 Debtor’s full name and physical address (not just a PO box)
Debtor’s legal identity including
whether it is a corporation, LLC
partnership, or proprietorship
Debtor’s contact information
and telephone number
Social security or business
identification number (always
A credit application is also the
best way to have the debtor
agree to pay interest, collection
cost, and attorney’s fees.
Above the debtor’s signature
line should be a statement that
the credit information above is
accurate. Below the signature
line should be an agreement to
pay interest, which is signed
separately from the verification
of the credit information. Without a specific agreement to pay
interest, you are limited to suing for the legal rate allowed in
the state where suit is brought.
Also, if a personal guaranty is
expected, it must be in writing
as must the granting of any
security interest. Consult your
attorney for proper language or
ask us for an example.
 Documents such as statements
showing the exact amount due including principal and interest after all
credits are given
 Contracts, purchase orders, delivery
receipts, NSF checks, credit reports
 Photocopies of debtor’s checks (you
should make a practice to occasionally photocopy checks paid on the
account, particularly on marginal and
new accounts)
 Notices of bankruptcy, bulk transfer,
including bankruptcy of any guarantors or other persons or companies
liable for the debt
 Not every document is essential in
every case! Simply use this guide in
developing your file on a customer
before they become your debtor
*Prepared by the Commercial Law League
of America & compliments of the American Lawyers Quarterly
3 Biggest Things Hurting Your Productivity
There's one thing every leader needs to
have to be great: time management.
Struggling? Take a look at what may be
hurting your leadership.
1. Your Calendar.
If you regularly slough off meetings because you're overbooked, end the day
embarrassed because you failed to show
for conference calls you were expected
on, or spend your time scurrying from
one late-running meeting to the next,
you're not going to develop as a leader.
You'll simply stay on the same hamsterwheel, trapped in a groundhog day of
your own making. No excuse: Great leaders have the exact same 24 hours a day
that you do. They just manage them better.
2. Your Commitments.
When was the last time you made an
inventory of all the outstanding commitments you've made to others? Or even
just noted down the commitments you
casually added in one day?
Stuck leaders fail to realize that we can't
keep making commitments, large and
small, without at some point overloading
our ability to deliver on those commitments. If you've reached the point where
others can't trust you to do what you say
you'll do, you have a systemic problem-one that will fatally stall your ability to
grow as a leader.
3. Your Communications.
Got 400 unread emails in your inbox?
Looking at a reading pile the size of a
small library? Do outstanding reports
and presentations start yelling for attention every time you open your laptop?
If so, your ability to lead is being compromised--severely compromised--by the
pressure to manage.
I wish I had a magician's ability to make
the problem of environment control go
away overnight. I don't. But I do know
that until you fix it, you'll never be the
leader you want to be.
Source: Inc.
Page 3
Convergent Commercial Quarterly
Volume 3, Issue 2
Impact Weather: Hurricanes in 2013 Will Be More Severe Than in 2013
In an announcement released by the
company, Senior Impact Weather Meteorologist Chris Hebert provided the following outlook, based on averages of
past seasons, ocean temperature
trends, and the absence of an El Niño
influence from the Tropical Pacific:
2013 2012
(Actual)
Named Storms
Hurricanes
16-20
19
7-9
10
2-4
1
Intense (Cat 3-4-5)
Hurricanes
As witnessed in the wake of Hurricane
Sandy – which had devastating effects to
the east coast, including over $50 billion
in losses, as well as flooding, power outages and other destruction in 24 states
– many businesses were closed for days
or weeks. The possibility of even stronger
hurricanes occurring in 2013 means that
any operation concerned about its balance sheet must take heed.
shut down, damage to facilities, supply
chain interruptions, and safety protocols
are all top-of-mind when severe weather
is imminent.”
Source: Claims Journal
“Since weather is the number one cause
of business disruption, this prediction
carries much weight for companies focused on protecting their people and
their assets,” Mark Chambers, president
of Impact Weather, said in the announcement. “Considerations such as
when – or even if – operations must be
To Get Paid, Do You Have to Pay the Legal Fees?
One of the hardest things to
swallow when
getting paid from
a non-paying
client that you
collect from is the reality that usually you
have to pay the legal fees to actually
collect your money.
 Before appealing
When is it most likely your delinquent
customer will pay the legal fees?
Why not, you may be asking? The Court
will make its own determination as to the
amount of a reasonable attorney’s fee
award. The lower Courts generally award
 When negotiating a settlement
 If the case involves the Supreme
Court
Surprisingly, even if the company who
owes you money agrees to pay the legal
fees in writing, you are not guaranteed to
have legal fees paid.
only a few hundred dollars after a live
hearing and testimony by your attorney.
Most often the delay in obtaining the fee
award does not make economic sense
when you are rushing to Judgment.
Even with a lot of hard work, getting paid
for legal fees is difficult, and the amount
you get may be disappointing.
Source: Frank, Frank, Goldstein & Nager,
P.C.
New Senate Bills Require Companies to Honor Gift Cards In Bankruptcy
On Nov. 30, Sen. Richard Blumenthal (DConn.) introduced S.3636.
The Gift Card Consumer Protection Act of
2012 is a bill requiring companies in
bankruptcy to honor outstanding gift
cards, prohibiting gift card expiration
dates and restricting certain fees associated with the cards – and making it
unlawful for a company to continue to
sell gift cards or gift certificates after it
has filed for bankruptcy.
The bill also affords “loyalty, promotion,
and award cards,” described as “cards
consumers receive by redeeming credit
card points or buying a certain product,”
the same protections as gift cards.
The bill was referred to the Senate Banking, Housing and Urban Affairs Committee.
“This bill bars absolutely draconian deadlines and abusive fees and charges that
unfairly confiscate consumer gift card
cash,” Blumenthal said in a press release. “Gift cards should not be the gift
that keeps on taking. This measure assures that consumers get their money’s
worth, no matter when they use the gift
card.”
Source: CLL
Page 4
Convergent Commercial Quarterly
Volume 3, Issue 2
New Workers’ Compensation Formula Lowers Premiums for Most Employers
A reworking of a key piece of the workers’
compensation rating formula isn’t changing
rates overall but is changing premiums for
most insureds, according to experts.
Tony DiDonato, director and senior actuary
at the National Council on Compensation
Insurance, the Florida-based organization
that estimates loss costs, said the change,
which took effect January 1, 2013, results
in a slight decrease for most insureds. But
balancing out those many decreases will
be some significant increases, often among
the largest insureds, he said before the
Casualty Actuarial Society’s (CAS) Ratemaking and Product Management Seminar
in Huntington Beach, California.
The change involves the experience mod,
the credit or debit that insureds receive for
their own claims experience. The mod compares an insured’s claim experience to that
of comparable employers. If experience is
good, the insured gets a credit – a discount. If not, the insured receives a debit.
What’s changing is the delineation between the primary and excess portions of a
claim, known as the split point. For the past
two decades, the split point has been
$5,000. This value is important because
the primary portion of each claim has a
much larger impact on an employer’s
mod than does the excess portion.
Actuaries believe that the primary loss
amount is more predictive than the
excess amount.
But inflation has both eroded the primary/excess split point and hurt its
predictive power. These days, the mod
doesn’t give enough credit to good
experience and doesn’t penalize poor
experience enough, according to actuaries at the CAS event.
“The plan was not being as predictive
as it used to be” in distinguishing between good and bad risks, DiDonato
said.
The change raises the split point – to
$10,000 in 2013, to $13,500 in
2014, and to an estimated $17,000
in 2015. These adjustments, incorporated into the entire rating formula,
improve the experience mod’s predictive power, according to DiDonato.
see their rates fall less than 5 percent.
Another 11 percent realized decreases
between 5 percent and 10 percent.
Rates were unchanged for 4.5 percent
of risks. Less than one in four would
see a rate increase.
Overall, the average mod was 0.98 – a
2 percent discount – under the old
system and 0.97 – a 3 percent discount – under the new system. DiDonato attributed the slight change to
vagaries in the states where the new
system had been approved.
All NCCI states have approved the
changes to the plan.
The Casualty Actuarial Society has
5,700 members who work in property/
casualty insurance, reinsurance, finance, risk management, and enterprise risk management.
Source: Insurance Journal
In 26 of the 38 states where the plan
has been approved, NCCI actuaries
sampled 75,007 risks, calculating the
experience mod under each system.
The NCCI’s sample showed that the
vast majority – 62 percent – would
Economy Shows Some Bounce
U.S. businesses and consumers have
shown surprising muscle recently, shrugging off the impact of higher taxes, a flareup of trouble in Europe and the budget
cuts that took hold this month. Gauges of
employment, retail sales and manufacturing all have notched healthy - if not blockbuster - gains, prompting many economists to ratchet up estimates for firstquarter growth. In a Wall Street Journal
survey, economists raised their estimate
of gross domestic product for the first
quarter to an average annual rate of
2.2%, up from a 1.7% estimate in January.
"A number of strong data points," on retail
sales, jobs and housing spurred David
Berson, chief economist at Nationwide
Insurance, to raise his estimate for firstquarter GDP growth to 2.8% from around
2%. "The government cut spending very
little" in March, he said, so the effects are
likely to be felt more later in the year.
It's now clear that consumers and businesses absorbed January's and February's
higher payroll taxes and gas prices without losing their footing. What is unclear is
whether the momentum can be sustained
in an environment where there is deep
mistrust of lawmakers' ability to clear
obstacles to growth.
Some of the factors that threatened consumers at the start of the year are expected to recede in the 2Q. Gas prices
climbed almost 50 cents in January and
February and fell in March. Consumers
are adjusting to the bite from higher payroll taxes. Tax refunds, some delayed by
wrangling over the fiscal cliff, failed to
mute February's retail sales and could
help lift March's numbers. Confidence has
been buoyed by rising home values, the
bull market in stocks and easier access to
credit.
However, there is much ground to be
made up. The 7.7% unemployment
rate has eased from the 10% level of
October 2009 but is far from the
4.7% average for the months leading
up to the recession in 2007. And
while housing appeared to turn a
corner last year, the market has a
long way to go to dig out from the
depths of the bust.
Washington's budget battles are perhaps the biggest headwind. Most
experts expect spending cuts known
as the sequester to weigh on growth
in coming months as the reductions,
which were triggered March 1, take
effect. The Bipartisan Policy Center, a
Washington think tank, estimates the
sequester could shave 0.5% from
GDP growth in 2013.
Source: Wall Street Journal
Page 5
Convergent Commercial Quarterly
Volume 3, Issue 2
5 Tips for Making Workplace Policy Changes Work
As Yahoo and
Best Buy can
probably attest,
change isn’t easy.
The two companies grabbed
headlines for
revising their telecommuting policies recently,
causing a stir among employees who were
going to have to adapt—like it or not.
Here are five steps companies can take to
ensure a better workplace policy transition.
Shanti Atkins, President & Chief Strategy
Officer on Consultancy NAVEX Global reports:
1. Find out how the existing policy really
works
Before you even think about changing a
policy, you need to understand how the
current version functions in practice. “I’ve
seen that happen in organizations very
frequently, where it’s almost like you’re too
many steps ahead talking about what
changes to make,” says Atkins. “And they
may be very valid changes, but you don’t
have a firm grasp of how the policy is currently being utilized.”
It’s especially important to determine at
this stage whether the current policy is
being applied consistently. Are top performers getting special treatment? Do certain
business units or managers handle cybersecurity, for example, differently than the
rest of the company? “There can often be a
very big disparity between what the policy
says and how it’s actually implemented,”
Atkins says.
2. Get (more) input
So you need to involve others in the company in discussing a policy change—but
who? “What I’ve always advised clients is
to do a very simple process map,” says
Atkins. In other words, if X happened, what
would follow, and who would be impacted?
This exercise isn’t meant to be too taxing.
Nor is it to suggest that you need to make a
decision with a committee or that everyone
must agree. But even working through
three or four scenarios will give you a clear
idea of who to ask for input. “Like
most things in life, it’s the 80-20 rule:
a few situation types drive 80 percent
of the volume around the policy,” Atkins says.
3. Explain, explain, explain
Granted, telling employees that they’re
no longer allowed to use Facebook at
work or that the company will now be
monitoring their email aren’t the most
crowd-pleasing measures. But if you
let them know why management has
decided these steps are necessary,
these tough pills will be easier to swallow.
“Even if people don’t agree with the
outcome,” says Atkins, “if they’re given
the explanation, and they’re given the
courtesy of the bigger picture as to
why a rule is being put in place, they’re
generally pretty good with it.”
At the same time, if a change to something like a telecommuting policy will
affect people differently depending on
what they do, be up front about it.
“There needs to be real clarity around
how does this policy apply depending
on your job function, or even your location,” says Atkins.
4. Make it stick
Here’s a newsflash: employees don’t
always know what their workplace
policies actually say. According to Atkins, “What usually happens is:
There’s a bunch of policies. Very few
people actually read them and understand them, even though they attest to
that. And then the only time they tend
to engage with them is when the problem or challenge has already arisen.”
Ensuring consistent treatment then,
comes down to this: training and
awareness. “Policies, in short, have to
be brought to life,” Atkins says.
There’s a continuum here. Employees
and employers only have so much
time—so higher-risk areas will warrant
more intensive trainings. But with
something like telecommuting, “Are
you really going to do an hour-long
training on that?” Atkins asks.
Hence, the need for awareness. In addition to a well-versed explanation, employers can raise awareness by using
any kind of visual tool that enlivens the
policy. For instance, Navex produces
short videos on compliance topics that
can range from interviews with people
on the street to scripted scenarios with
a little bit of humor. The videos are
interactive, posing questions to viewers—and they have the added benefit of
being accessible on mobile devices.
Atkins and her colleagues call this approach “Burst Learning”: “It’s less than
5 minutes, it’s taking an issue and boiling it down to its essence.”
5. Be prepared for questions and complaints
Employees often have questions about
how a policy applies to them—or they
may want to lodge a complaint or allegation about a potential policy violation.
Companies should create separate
avenues for asking questions and bringing complaints. “It’s important when
you institute a big policy change that
could result in both complaints and
questions, that you make those two
channels very clear,” says Atkins.
To avoid bottlenecks, she recommends
designating more than one pointperson in HR to handle questions. And
it’s just as, if not more, important to
prep managers in advance. “In reality
when most people are upset or have a
question, they go to their manager,”
she says. “So for people who have direct reports, you want to give them
some elevated support in answering
questions.”
Atkins is a fan of providing managers
with a set of FAQs that can be reasonably anticipated. “Give them a written
script,” she says. “Not that they have to
read it verbatim, but so they get familiar
with the right response.” It’s also another way to help ensure that managers
are giving employees the same explanations—you guessed it—consistently.
Source: Corporate Counsel
Page 6
Convergent Commercial Quarterly
Volume 3, Issue 2
Small Business Debt Collections Process 101: Tips and Strategies for In-House Debt Recovery
What Options are There for Collecting
on Severely Past Due Accounts
Incorporate assertive collection tactics.
By stepping up your collection efforts from
the beginning with a series of deliberate
and assertive strategies, you will leave less
wiggle room for your customers and ultimately protect your business' bottom line.
Such tactics typically include a combination
of the following: running a credit check
before extending credit, shortening the pay
period, requiring a down payment, and
requesting post-dated checks.
Assertive past due collection tactics should
include:
 Quick follow-up on an account as soon
as it becomes overdue
 Sending out a series of collection let-
ters ranging in severity from a mere
warning that an account is overdue to
a final demand for payment before the
matter is turned over to a third party
 Closing or freezing the customer's
account
 Attempting a series of collection
phone calls
 Requesting a face-to-face meeting
 Attempting negotiation when there is a
valid reason for nonpayment.
The bottom line is as long as the lines of
communication are open, there is always
some chance that you will reach an agreement and receive some or all of the money
owed to you.
In general, when an account has gone
more than 90 days without payment, or
when either communication attempts
have been consistently ignored, promised payments are not met, or the person is unusually hostile, then it is time
to seek outside assistance. There are
basically three options for small business owners looking to recover some
portion of their overdue customer debt:
turn the matter over to a debt collection
agency, take the indebted customer to
small claims court, or hire an attorney.
The following is a brief rundown of each
option:
1. Using a debt collection agency to
collect on past due accounts
The use of a debt collection agency in
the recovery of overdue accounts is by
and large the most popular option
among small business owners - and
with good reason. The main advantage
in using a debt collection agency is that
the agency's employees take over the
burden of sending collection letters,
making calls, and negotiating payment.
Business owners and their personnel
are thus free to focus their energies
where it matters the most - on running
the business.
According to the Association of Credit
and Collection Professionals (ACA), in a
report entitled: The Value of Third-Party
Debt Collection To The U.S. Economy in
2007, businesses can expect to see
about a 20%-30% recovery on bad
debt, and fees typically will range from
about 25% to 30% percent of the
amount collected.
2. Going to small claims court to recover unpaid customer debt
Many small business owners use the
threat of going to court as scare tactic
to get debtors to pay up. Although several states have reported an increase in
the number of claims being filed, the
truth is that many of the claimants were
unable to collect on their debts even
after wining their case. This interesting
statistic is due to the fact that a claimant
who wins a case is solely responsible for
collecting the funds afterwards. Bottom
line with small claims court: often the
hassle (the paper work, the pre-case
preparation, having to personally go to
court) and the cost (in fees) of going
through the small claims process outweighs any benefits.
3. Hiring an attorney to recover past due
accounts
The choice to use an attorney can end
up being more effective than a collection
agency, especially in cases where some
legal action is a likely option. Most attorneys will charge a minimum service fee
and/or set limits on the minimum outstanding bill they are willing to work for.
If a business owner decides to take the
debtor to court, the attorney's fees will
then be lumped together with any courtrelated fees and charges connected with
the lawsuit.
Many business owners hire attorneys
only after their collection agency failed to
deliver results, because they assumed
the collection agency would be the
cheaper way to go. The truth is, however,
that the debt collection process can often be complicated and drawn out. In
many cases it may be simpler to just hire
a lawyer and go to court. Business owners should keep in mind, however, that if
they are not planning to take delinquent
customers to court, then they don't need
to hire an attorney.
In short, by following the above mentioned tips and strategies on effective
overdue debt collection, small business
owners can greatly increase their
chances of recovering part or all of their
past due receivables.
Source: Ezine Articles
Convergent Commercial Quarterly
Volume 3, Issue 1
Page 5
On a Lighter Side
Founded in 1961, Convergent Commercial has been a leader
in the commercial receivables management industry for over
50 years.
925 Westchester Avenue, First Floor
White Plains, New York 10604-3540
914.421.7900 Fax 914.421.7923
www.convergentusa.com
Convergent Commercial Mission
Boca Office
561.862.1701
value of our clients’ receivables through respect for the debtor,
Atlanta Office
770.512.3685
Allentown Office
770.698.3573
To use our talent, technique and technology to maximize the
effective collection/call center management, high ethical standards and strict adherence to applicable laws, regulations and
policies.