California’s stewardship law AB2398: Software suppliers respond

HomeNewsCalifornia’s stewardship law AB2398: Software suppliers respond

HICKSVILLE, N.Y.—On July 1, California’s AB 2398, otherwise known as the Carpet Stewardship Law went into effect. Though it is only two months in, it appears the thousands of hours spent by the industry—from manufacturers to associations—have paid off as so far the transition has gone about as smoothly as anyone could have hoped. One of the key reasons for this was the quick response by the industry’s software suppliers who made sure their systems were up to speed in providing the assessment to end users as required by law.

Chad Ogden, president and CEO of QFloors, said along with many other new capabilities, QFloors Version 6.0 not only “features options created in direct response to the new California law, users received their software update prior to the law going into effect.” The software update has a function in which the user specifies if he is in California. If so, invoices are automatically changed to reflect and detail the assessment charges, and all necessary tracking goes into motion.

As a refresher to non-California dealers, contractors and distributors, AB 2398 provides for a 5-cent stewardship fee on every square yard of carpet sold in the state of California. This fee is required by law to be visible and is an after-tax item on all invoices for carpet sold in the state, regardless of whether the product was produced in California or shipped in from outside of the state by a manufacturer, wholesaler or retailer, including those who do business solely on the Internet.

Not complying with the law can be a costly endeavor. A civil penalty may be imposed by the state for anyone in violation of AB 2398, including manufacturer, distributor, importer, wholesaler and retailer. There are two fines: $1,000 per day of non-compliance and $10,000 per day if the violation is intentional, knowing or negligent.

This is why having your software system able to handle this or any of the new laws is essential. Ogden said the QFloors system updates invoices and tracking so “dealers can easily stay in compliance with the requirements of AB 2398.”

Terry Wheat, president of RFMS, said the company “ensured our clients affected by this legislation were ready to comply by the deadline and with total assurance that their business management software would accommodate all aspects of the law’s requirements.”

He told FCNews RFMS’ business software system was updated in June and the software enhancement was included in a free upgrade to all subscribers. “This upgrade also allows clients to seamlessly process a B2B invoice from a mill containing a recycling fee. Additionally, because RFMS modules are completely integrated, the general ledger is automatically updated “to provide an accurate audit trail and accounting of the fees.”

When it comes to Kashmoo’s, Tim Magnuson, CEO, said because it is a “configurable web-based system, changes such as this are quick and easy to make, and are instantly active with no need for the customer to download or install anything.”

With a “significant” number of users in California, Don Kilbourne, vice president of Pacific Solutions, said it was important for the company to make sure AB 2398 would not disrupt their daily operations. Fortunately, “Since carpet is a trackable material type in the Pacific Solutions product data- base, our system can provide a detailed account of every carpet sale with material quantities, job numbers and customer information in the event of an audit.”

Steven Wang, president of Floor Covering Soft, said for the company’s estimating software FloorEstimate Pro 2011 editions, “this charge item can easily be configured (added) as a line item, similar to adding a carpet tear-and-haul charge.” He noted the addition was also added as a default item for the “convenience for users.”

For users of the CDMS system, Cathy Welsh, operations manager, said no special upgrade was needed by the company for them to comply with the law. “We have been able to process this change all along— there was no additional piece of software needed. Users just needed to create a new line item with the charge of .5-cents per yard on the invoices. The CDMS program is extremely flexible and can handle most any new situations that are presented, most without any or minimal programming.”

To make sure users under- stood what was required, CDMS posted the setup instructions to customers on April 1, “the first test date that Shaw Industries began sending test invoices with this information. We sent the information to our customers again in mid June to remind those in California or those CDMS clients who sell to customers located in California, and then reminded them again when the law went into effect on July 1.”

Retailers such as Decker Warner of By Design Floor Covering in Newbury Park, Calif., are very happy to be using industry specific software to help run their business. “I have no idea how I would’ve managed all the new requirements without QFloors; it would have been a nightmare.”

He added the software provider “helped immensely with our company’s transition.” So much so it has been “absolutely painless. I’m no scientist when it comes to the computer, but with QFloors, it now takes care of all that the Carpet Stewardship Law requires.”

The purpose of the law is to incentivize the growth of the recycling and diversion of post- consumer carpet discarded in the state as California accounts for approximately 10% of all carpet sold in the U.S.

Frank Hurd, chairman of the Carpet America Recovery Effort (CARE), said everyone in the country needs to be aware of this regulation because “while California is the first state to enact such legislation, it will not be the only one. Other states have already been closely watching, monitoring…and examining how it is implemented, so we can expect that similar laws will be cropping up around the country in the coming years.”

In fact, states such as Washington and Illinois are trying to enact their own versions and others have indicated they are contemplating doing the same.

It is for this reason, QFloors’ Ogden said, retailers using industry specific software have a distinct competitive advantage over those who use generic, off-the-shelf accounting products. “The entire purpose of our existence as a software company is to make life easier for floor covering businesses. This new California law puts a lot of added responsibility on dealers, who are already extremely busy [and under a great deal of stress]. They are now required to invoice differently, and also have additional tracking and record-keeping responsibilities. We knew it was important to give dealers the option of having all of this done for them automatically.”

He added AB 2398 is one more thing that makes running a flooring business unique among retail and commercial operations, and why industry specific software makes businesses more efficient compared to generic programs.

Pam Bowe, co-president of the Floor Covering Business-to-Business Association (fcB2B), which took a lead role in helping ensure industry software companies were filled in on exactly what AB 2398 meant to their customers, agreed. “Floor covering gets to market differently than other items—and in so many ways. That’s why industry-specific software is so essential. The companies who supply flooring software try very hard to incorporate all the idiosyncrasies that happen in the industry, tasks a generic accounting program won’t do. For instance, how many can put in retainers, spiffs, overages and so on? These are all very important facets of the industry. Flooring software gives users an edge.”

When it comes to AB 2398, Ogden said it is based on the square yardage of one particular product. So not only does the software have to know the difference between carpet and tile, for example, it needs to calculate the fee after the sale based on volume, not a percentage of the sale. “Generic software is not set up to do this. And to have to do it manually with every sale greatly increases the chances for errors.”

Making the overall process easier and eliminating errors are “main reasons why people first switched from hand ledgers to computers,” he concluded, “and then from generic applications to software designed specifically to meet the unique requirements of the flooring industry.”

-Matthew Spieler

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