Vol. 3, No. 22– October 25, 2004

 

Check 21 Brings Changes and Opportunities for Business Owners

 Big companies or small companies, start-up or long-term player, Check 21 will have an effect on how you do business. Are you prepared to handle the increased opportunity for fraud and changes to your cash flow after Check 21 is implemented? 

What is Check 21? 

Check 21, which takes effect October 28th, has been under consideration for some time by The Federal Reserve Bank. When planes were grounded after September 11, 2001, the physical transportation network, which the system relied on, proved to be inadequate. So, Check 21 was designed to increase the efficiency of the check processing system and make it less susceptible to delays. Under the new law, Check 21 will allow any bank or party involved in processing a check to convert it into an electronic image, or a “substitute check.” This eliminates physical handling of paper checks as that image is then electronically shuttled from one location to another.

Beginning in November, you may see “substitute checks” in your bank statement. Substitute Checks are a legal copy of the original check and may be used the same way you would use an original check. Banks, businesses and individuals must all accept substitute checks. No one can opt out of accepting them.    

Since Check 21 will not change everything overnight, these substitute checks will appear along with original checks in your bank statements or just like other check images in an image statement. The checks will have a variety of new codes designating that it is a substitute check and showing its route through the clearing process.   

This process where the original check is imaged and removed from the payment stream is called truncation. It is the truncation process itself that will streamline the payment system allowing checks to be presented for settlement much sooner than they are now. Eventually same day settlement may be common practice.

What Check 21 means for your business
While many industry innovations must occur before Check 21 reaches its full potential, there are several things a business owner should consider with the implementation date less than a month away. 

If you have relied on check stock as your primary source of fraud prevention, you may be leaving yourself open to harm. Many of the fraud control mechanisms currently in use today may not survive conversion to image and then re-conversion to a substitute check. Others may survive, but will not be as effective.   

As these security features disappear, account reconcilement and Positive Pay will become even more valuable tools to deter fraud and avoid the inadvertent errors caused during check conversion. These services can help you detect fraud and inaccuracies earlier to minimize the impact on your business.   

Using float as a cash management strategy has never been a good idea, but now it is even more important to manage your account like the check will be drawn on the day it is written. If you have been relying on float, you should speak to your commercial or small business banker about how a line of credit can help you manage cash flow when money gets tight.  

Depending on how you write checks, your funds availability may or may not change. If you receive a high percentage of checks drawn on non-local banks or you deposit a high number of checks, Check 21 will likely have a favorable impact on your cash flow. But if you write a high percentage of checks to non-local payees, or if you issue a large number of checks, the impact will likely be unfavorable.   

What's next? 

Many new technologies are in development or initial testing phases. The ATM machine you use will eventually be designed to image deposits, and bank tellers will be able to image checks when they are presented at the counter. Plus, businesses large and small may have a terminal at their register, which will allow checks to be converted at the point of purchase.  

Many of the changes coming may not have an impact on your business in the near future, but you must take steps now to be prepared. Check 21 provides many opportunities for banks to invest in and share technology to improve their customer’s cash management. And the passage of Check 21 itself insures the payment system will function even when terrorists or Mother Nature do their best to bring commerce to a halt.  

Source: Andrew Kaplan, Senior Vice President, Commerce Bank. Commerce Bank is a Missouri-based bank with $14.5 billion in assets operating in Missouri, Kansas and Illinois. 

POTOSI LUMBER COMPANY LEVELED BY STORMS 

October 19, 2004 - What officials are calling a “possible tornado” leveled the Potosi Lumber Company located along Highway 21 in Washington County (Missouri). At the time of the storm, six people were inside the structure and one person was standing on the parking lot. All seven escaped with minor injuries. One person was taken to a local hospital for treatment. 

Debris from the building, such as sheet metal, was blown across Highway 21. The strength of the winds was so strong the sheet metal was wrapped around trees like pieces of paper.  

Source: Chris Cline, Staff Writer, The Daily Journal, Park Hills, Mo.  

MLA FALL FLING – NOV. 18-19, 2004

Presented by Federated Insurance 

Last year, we renewed the “Fall Fling” concept as the Annual meeting of MLA members. Thanks to members’ enthusiastic response, we are continuing this outstanding event. Both dealers and associate members appreciated the opportunity to mingle with one another, exchange ideas, laughter and sometimes a story or two. Please plan to participate in this exciting event. 

Thursday, November 18 

10:00 a.m. – MLA Board Meeting, Chateau on the Lake, Branson, Mo.

4:30 – 6:00 p.m. – Member meet-and-greet reception

6:00 p.m. – Dinner or Show (on your own) – Order tickets in advance at www.bransonshows.com 

Friday, November 19 

7:30 a.m. – Breakfast and Annual Meeting – This is your opportunity to meet leaders from the National Association, hear an update of MLA activities, install and recognize the new MLA Board of Directors, and hear about special association programs including new round-tables being organized now. 

9:00 a.m. – On the Bottom Line with Bill Sharp - This short program is brim full and spilling over with ideas you can take home and use to improve the bottom line of your P&L. Here’s what will happen:

·         You will get the results of the U.S. Lumberyard Cost of Doing Business survey of the “typical” U.S. yard.

·         You and others in the room will quickly brainstorm practical ways to improve a few key items on your financial statement by small amounts.

·         You will be staggered by the impact of these improvements on your BOTTOM LINE.  

This is not an accounting mumbo-jumbo program. If you understand the terms “sales, gross margin, inventory turns and collection days,” you won’t have any trouble staying up with the instructor. But, because of time restriction, you’ll need to buckle your seat belts. It’s lean meat only .. no time for soup or salad. 

Noon – Meeting adjourns – But … you can stay to enjoy beautiful Branson. Start your Christmas shopping, play golf (weather permitting) and enjoy the last of the fall foliage. Make it a great get-away for you and your family (or leave the kids at home)! 

Registration Information 

To attend, all you need to do is register. Complete the registration form and return by Friday, October 30. Let us know who is coming and we’ll do all the rest. 

This meeting is sponsored by Federated Insurance, your suppliers and your Association. This will be a fun get-together and a way to thank you for your support and membership. The cost to you is your time and your travel expense. We’ll cover all the meeting expenses. 

Cost: No charge for the meeting. 

To get a registration form, just contact the MLA Office at 800-747-6529. Sponsorship opportunities are also available.

MARK YOUR CALENDAR 

Note these important dates and events on your calendar and make plans to attend. Details will be forthcoming: 

Building Material Auction – The Fall MLA auction is set for October 30-31 at Wyandotte County Fairgrounds, Kansas City, Kansas. If you have surplus building materials, returns, unclaimed special orders or used rental equipment robbing you of valuable warehouse and yard space, consider consigning these items to the auction. Material receiving dates will be October 26-28. Call 800-245-9690 for more information. 

Area Meetings – Dates are being set for area meetings throughout the MLA territory. These dates have been set in Arkansas. Information has been faxed to Arkansas dealers – if you need additional information, please contact Art Brown at MLA – 1-800-747-6529.

November 9 - Little Rock

November 9 – Springdale

November 10 - Hot Springs

November 10 - El Dorado           

Educational Symposium – Plan to participate in the special trip to the Forest Products Laboratory in Madison, Wisconsin and the Mercantile Exchange in Chicago. Our thanks to BlueLinx for their commitment to sponsor the bus for the trip to Madison. Special hotel arrangements have been made. It’s set for December 8-9, 2004. Contact Art Brown at 800-747-6529 with questions or simply reply to this newsletter and request a registration form. (Complete information appears in this newsletter.) 

2005 Education Programs – Dates are set for MLA’s most popular education programs. Mark your calendar and start planning for these sessions. Registration forms will be available this fall. 

Feb. 14-15 – Basic Estimating, Wichita, Kan.

Feb. 16-17 – Basic Estimating, Kansas City, Mo.

Feb. 17 – Yard Foreman School, Columbia, Mo.

Feb. 18 – Advanced Estimating, Kansas City, Mo.

Feb. 24 – Yard Foreman School, Oklahoma City, Okla.

March 10-11 – Basic Estimating, Tulsa, Okla. 

If you need this training and none of these dates or locations is convenient, please notify Olivia at MLA to discuss the possibility of scheduling another session. We appreciate your input. 

NLBMDA Training without Travel – Call 800-634-8645 for more information or a registration form. As a member of MLA, you attend at member prices, without leaving your office. 

November 4 - Entry-Level Driver Training Requirements and Safety Performance History Review of New Drivers, 1:00 EST.

November 17- Lockout/Tagout for Lumberyards

December 15- Forklift Training and Triennial Review   

FEDERATED ANNOUNCES LEADERSHIP AWARD 

Federated Insurance Companies is proud to announce these marketing representatives have earned the prestigious Federated Marketing Leadership Council Award: 

            Bob Boyd, Overland Park, Kan. (5^th time)

            Justin Plante, Ballwin, Mo.

            Jim Stewart, Topeka, Kan. (2^nd time) 

Marketing representatives chosen for this award are recognized for their outstanding performance including sales achievements and service to clients.

“Federated takes special pride in recognizing this achievement,” said Jock Kinnett, Executive Vice President, Director of Insurance Operations at Federated.  

LUMBER NEWS – QUICK GLIMPSES 

Florida Estimates $400 Million in Timber Damages… Florida is still recuperating from an unprecedented season of hurricanes and tropical storms. The state's forestry industry is in disarray, with damage figures as high as $400 million.  

One state association estimated that 2.3 million acres of forestland were impacted by the hurricanes; efforts to clear downed trees are ongoing and extensive, glutting the market with salvaged timber.  

Source: LBM Daily, October 12, 2004 

The newly enacted manufacturer tax bill includes several provisions for all small businesses. The core bill repeals an export tax deduction that was ruled illegal by the World Trade Organization and resulted in the European Union levying tariffs on U.S. goods. The bill gives manufacturers a deduction against revenue derived from domestic manufacturing. Provisions that apply to all small businesses include: 

-          Extending the Section 179  $100,000 limit on equipment expensing and the $400,000 phase-out threshold through 2007.

-          Reducing the 39-year depreciation period for improvements to leased property to 15 years for changes made before Jan. 1, 2006.

-          Changing rules on S corporations to allow all family members to be treated as one shareholder and increasing the maximum number of shareholders to 100.

-          Reducing the deduction for vehicles with gross weight of 14,000 pounds or less, primarily sports utility vehicles, to $25,000.  

And for consumers, the law gives taxpayers who itemize the option of taking a deduction for state and local sales taxes in place of the existing deduction for state income taxes. 

Source: Last Week in Washington, published by NRHA, October 18, 2004 

Reminder… The Environmental Protection Agency has sent a reminder that Dec. 31, 2004, is the stop-sale date for residential home, lawn and garden pesticides containing diazinon. It will not be legal to sell products such as Ortho Diazinon Insect Spray, Ortho Diazinon Soil and Turf, Hi-Power Ant, Roach, Spider Spray Formula and Scotts Lawn Insect Control after that date. Manufacturers are offering a buyback program in which they will repurchase unopened and unused residential products from retailers. Consumers can continue to use any of these products in their possession but are cautioned to contact local hazardous waste disposal officials for instructions on proper disposal.  

Source: Last Week in Washington, published by NRHA, October 18, 2004 

Scientists, Economists Argue Against Change in Roadless Rule… The Bush administration's stance on road building in national forests continues to come under fire. Today, 127 scientists, including chimpanzee expert Jane Goodall and biologist Edward O. Wilson, sent a letter to the Bush administration indicating their opposition to its policy. Meanwhile, a separate letter came from more than 110 economists, including Nobel laureate Kenneth Arrow, also opposing the Bush administration's policy.  

The letter from the scientists pointed to the role that roadless areas play in biodiversity, sustainable public lands management and ecosystem health. The economists highlighted the Forest Service's inability to adequately maintain the current 430,000 miles of national forest roads, and expressed doubt that the Forest Service could build more without adding to a maintenance backlog of more than $10 billion. They also are wary of the proposed policy because they believe it will increase public subsidies of private timber companies for road-building and other purposes.  

Source: LBM Daily, October 21, 2004 

Homebuilding Likely to Push Third Quarter Earnings Higher Across the Board… North America's homebuilding industry appears to have done especially well in the third quarter, despite the interruption of several hurricanes. Although the wet weather held back home-construction starts in September, permits for new construction rose, and that combined with low interest rates should translate into profitable third quarters for many forest product companies. When earnings begin trickling in, starting Friday with Weyerhaeuser, lumber companies ought to show profits led by larger volumes and higher prices for wood products. Doormaker Masonite has clearly benefited from the housing surge, posting a 20 percent quarterly profit today. Geo, Mexico's top homebuilder, today posted a 40 percent quarterly profit jump in a nationwide building boom there. 

Source: LBM Daily, October 22, 2004 

A Rough Market and High Material Costs Compel Louisiana-Pacific to Close a Maine Mill… Louisiana-Pacific Corporation plans to halt OSB mill operations at its Woodland, Maine location as soon as November 8, 2004. The curtailment is due in part to worsening market conditions and escalating raw material costs. LP management announced that the Woodland mill may restart at any point in the future, provided market conditions so allow and that the Houlton, Maine, OSB mill will continue to operate at normal levels. 

Jeff Wagner , LP's VP of OSB says that company "[regrets] the impact that this curtailment will have on our employees in Woodland and on the surrounding community... The people at our Woodland mill have done a great job of operating the mill efficiently to combat rising raw materials costs. Unfortunately, continued escalation of raw materials costs coupled with seasonally weaker market conditions made it necessary to make this difficult decision to curtail operations."  

Source: LBM Daily, October 25, 2004 

THOUGHT FOR THE DAY 

“People with goals succeed because they know where they are going... It's as simple as that.”– Earl Nightingale