What's Neu - News from the The NeuGroup Network of Peer Groups

Blog entry
By amichels, November 08, 2018
The pilot meeting of the Tech20 High-Growth Treasurers’ Peer Group sponsored by Bank of the West/BNP Paribas and hosted by ServiceNow included asking what first drew participants into treasury. Many started in accounting and almost all of them said they liked that treasury is forward looking and supports driving business growth. That treasury also tends to touch most aspects of the business in helping to drive it forward also has appeal.
 
This forward looking-theme carried through to all the other pilot meeting sessions. Here are some of the meeting’s key takeaways:
 
  • Cash awareness a matter of culture, so start building it. One challenge for growth company tech treasurers is their firms are used to generating so much cash that they tend to ignore the need to forecast and use it efficiently. So treasurers at such firms must do even more to build a culture of cash awareness to gain better visibility and cash forecasting accuracy for when it becomes more mission critical in the future. One treasurer created stickers and buttons to hand out to everyone in the company to get them thinking more about free cash flow. 
 
  • Step back to assess new bank relationships. As growth companies outgrow their incumbent banks they need to build a new bank group. This is not a decision they should make quickly. The consensus of the group was that they should step back and do their homework, figure out who are these banks, what are their capabilities, what coverage and commitments do they get and what kind of person will cover them, and do they know what they are doing. Also important is how the credit underwriting is done. 
 
  • Find out what matters to the C-suite. One treasurer told the group he had been trained to understand what matters to his bosses and then figure out how to align his own treasury objectives to what they care about. If your boss cares about ROIC, then treasury’s mission can be about that. To find out what matters to your boss, sometimes you just have to get lucky. When he started his latest treasurer role, it was at a company with a several-decade history but no real treasury activity to guide him on what the C-suite valued from its finance function, so he had undertaken a study of what it had done and what it had not, including share repurchase, which the firm had not done. One day, the CEO came in and said the stock was priced too low and he wanted to buy some back. It turned out share repurchase was something he cared about. “It is often better to be lucky than smart,” the treasurer noted.
 
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Blog entry
By amichels, November 05, 2018
 
Here are some highlights from the 2018 fall meeting of the Treasurers' Group of Thirty Large-Cap Edition in New York, sponsored and hosted by BNP Paribas. 
 
Brexit Deal or Not, Divorce Will Remain Uncertain. A Brexit deal must arrive soon, but it will still be tentative given that major political obstacles remain before the March 2019 deadline. Hedging the possibility of a no-deal outcome may be wise, as well as prepping account structures for the eventual breakup.
 
Takeaway: A deal is just the start. To reach a Brexit deal, the UK and European Union (EU) must agree on the border status between the UK’s Northern Ireland and the Republic of Ireland, which remains an EU member. They also must agree on a nonbinding political declaration—a statement of intent. Even when a deal is reached, it must be passed by the UK and EU parliaments.
 
Takeaway: Prep but don’t panic. BNP bankers recommended establishing “shadow accounts” in the EU, in order to later migrate cash-management structures efficiently.  
 
Term SOFR on the Table as Libor Replacement Gains Traction. As concerns about Libor deteriorating mount, the infrastructure for Libor replacements is developing quickly. 
 
• Takeaway: Term products on the drawing table. Regulators have resisted developing “term fixings” for SOFR, which settles overnight, to avoid challenges faced by Libor. However, term rates are favored by corporate borrowers managing cash. The Alternative Reference Rate Committee (ARRC), which developed SOFR, recently announced plans to publish three-month and six-month rates based on the Secured Overnight Funding Rate (SOFR), the US’s so-called risk-free benchmark rate.
 
Capital Allocation: No Easy Matter. In a session exploring optimal strategies for high-level capital deployment, members heard about allocating capital more effectively, ranging from theoretical ideas to specific efforts by peers.
 
• Takeaway: Business drives capital. The treasurer of a major retailer said that a wide-ranging analysis, including internal assessments, white papers and talking with peers, concluded that more emphasis should be put on producing growth. Best-in-class peers committed to targets including cash flow, working capital and cash balance-- not just dividend increases and share repurchases. 
 
• Takeaway: Buyback funding alternatives. A BNP Paribas client funded share repurchases with convertible debt, buying back the stock at spot through an accelerated share repurchase and selling the convertible bond at a significant premium to spot. A valuable call option lowered its rate significantly. 
 
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Blog entry
By mkmoore, November 05, 2018
Treasurers’ Group of Thirty meeting gets underway on November 29 at host Avaya’s Santa Clara, CA headquarters. 
 
As T30 meets for the group’s 13th year, the treasurer members are keen to discuss their top-of-mind issues. Using pre-meeting surveys and benchmarking, members decide what they wish to discuss, a hallmark of NeuGroup peer group knowledge exchange process.
 
After a round-robin of each member’s projects and priorities, meeting sponsor Standard Chartered will give the group an overview of the new thinking in keeping borrowing costs down in an era of rising interest rates. The bank will also present on share buyback trends and practices. As many companies have decided that repatriated funds will go toward share repurchases, members will discuss the strategy trends including whether buybacks drive management away from value-accretive projects or induce more efficiency and rigor in decision-making.
 
During a roundtable session, members will discuss rethinking the art and science of capital allocation decisions and metrics, including on what basis capital allocations are determined: WAAC, NPV, RaROC or risk-adjusted NPV. Member companies who have made substantial changes to their capital allocations approach because of US tax reform will share their experiences.
 
In a member-lead presentation, the topic of reevaluating treasury roles and responsibilities and how they fit within organizational structures will be addressed. Treasury professionals are continually asked to do more with the same, or fewer, resources. Meanwhile, roles and responsibilities for those charged with performing treasury duties continue to expand, often well beyond core treasury activities. Understanding how companies compare is also difficult due to the differing demands of businesses that have developed unique treasury structures.
 
Companies across the NeuGroup Network are routinely evaluating treasury roles, responsibilities and structures to best scale finance functions, prepare for growth, adapt to new technologies and proactively manage increased treasury scope. In this session, members will assess typical and atypical roles and responsibilities, compare them across organizations and examine how they fit within them. The goal is to help members better scale teams and maximize efficiencies and effectiveness. 
 
 
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Blog entry
By thoward, November 01, 2018
 
Cyber security, ERM and Emerging Risks, Ethics & Compliance Program audits to be discussed at NeuGroup Internal Auditors’ Peer Group Meeting. Members will also get a tour of Microsoft’s Digital Crimes Unit.
 
The Internal Auditors’ Peer Group is gearing up for its second-half meeting of 2018. Members will delve into a wide range of topics, including now familiar topics including cyber security, ERM and emerging risks. 
 
Here is a brief synopsis of some of what will be discussed and questions that will be addressed. 
 
Cybersecurity. A discussion of current maturities of cybersecurity programs at member companies, including whether Securities and Exchange Commission guidance from February 2018 has been followed. Background: in February, the SEC voted unanimously to approve a statement and interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.
 
Digital Crimes Unit Tour. Microsoft’s DCU is dedicated to fighting global malware, reducing digital risk and protecting vulnerable populations. The tour will show how the DCU combines big data analytics, cutting-edge forensics and novel legal strategies to protect data, help consumers gain control of personal information, and help keep seniors and children safe online. The DCU is made up of an international team of attorneys, investigators, data scientists, engineers, analysts and business professionals based in 30 countries, all working together to transform the ongoing fight against digital crime.
 
ERM and Emerging Risks. How are companies identifying emerging risks before they happen? Many boards of directors are asking IA and ERM to identify the unknown risks. What are the sources?
 
Audit Department Road Maps. IA is always looking to improve how they engage with stakeholders. This helps IA reach its organizational objectives as well as quality audit outcomes. Mapping out a step-by-step process is a good exercise to identify activities in each phase of an audit and can create new insights for stakeholders, management and internal auditors alike.
 
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Blog entry
By jzawacki-lucci, October 29, 2018
The Global Cash and Banking Group’s 2018 H2 meeting last month in New York, sponsored by Bloomberg, which hosted, and Citibank featured lots of talk about one option to ease the universal pain point of know your customer (KYC) compliance. 
 
Members Band Together to Solve an Industry Issue
Jim Aschmeyer at The Coca Cola Company has been pounding the proverbial payment to pull together several large multinational treasury teams, Bloomberg and Citibank to move forward on a solution to KYC and AML headaches. His passion is clear, and it was exciting to hear his story and dream of the possibility of painless KYC processes and adherence to AML regulations. The goal is clear: “If we look at the data as a deliverable, the information is all there. Mapping is the next step” to giving banks what they want and allowing us to say, “I love ya, but don’t call me,” Jim said. For more on Jim's KYC mission, click here.
 
Cautious Optimism for Bloomberg’s KYC Solution
Bloomberg presented Bloomberg Entity Exchange, its solution to the relentless KYC documentation requests and ALM regulatory requirements facing global treasury groups. The tool was met with a mix of excitement and skepticism about whether it will get to the roots of the issue. It is by far more than a glorified SharePoint or Dropbox site; but if banks still want paper originals, time-consuming paper shuffling will continue, regardless of where the backup is housed. Obstacles include onboarding participating banks, complicated legal agreements and adding signer management functionality. As Jim said, we “don’t have all the answers yet, but we have a starting place.”
 
Looking Differently at KPIs
Another member company presented her way at looking at KPIs, starting with the company mission and tying in the core values that treasury provides the overall organization. She offered a compelling look at how and why they try to distinguish between KPIs, operational metrics and leading indicators, saying, “I don’t want a report. I want an indicator that tells of me of success or failure versus the operational metric of activity.” Also, the focus should be on analytics, not mere calculations, to highlight performance. 
 
A Bit Big Brother, but Better Security
Citi presented additional security that is now available to CitiDirect users which generates a “user persona” for everyone logging into the system, using IP addresses as a base security layer, how users type (i.e., hunt and peck or two-handed), what you typically access and how typically you use data. Big Brother tracks everything a user does from your end to enhance your account security. Although member pushback was that “the security issues we face are because vendors are getting hacked,” Citi reported as many as 3,000 hack attacks every half-hour on CitiDirect; so, it’s comforting to learn the extent to which the bank is going to make sure your accounts are safe. 
 
 
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Blog entry
By mkmoore, October 26, 2018
“Solve My Problem Speed Dating” is one of the most popular sessions at the Tech20 Treasurers’ Peer Group, which is meeting this year at the Bernardus Lodge in Carmel Valley, CA. The annual meeting held on November 9-7 is sponsored by MUFG.
 
In speed dating, members including Amazon, eBay, Facebook and Google, engage in rapid-fire conversations, one-on-one for a few minutes, similar to actual speed dating. The aim is to name a troublesome issue they are grappling with, ask a question, or share a takeaway. When the moderator rings the bell, “ping,” we "turn the dial" and you go to the next person. It is fast and furious, but the members love being able to share quickly, get answers, and challenge each other.
 
Of course, between golf outings, cordials around a fireplace and games of bocce, members concentrate on serious issues that they have selected via pre-meeting surveys and agenda development. MUFG is presenting on the daunting topics of the interest rate environment along with the transition from Libor to SOFR.
 
High on the lists of topics chosen by the members is repatriation structures, how to use their cash, and post-tax reform capital structure optimization. US tax reform has prompted many multinational corporations to revisit how to bring back cash, what to do with it, capital allocation, buyback optimization, and how to reshape the balance sheet, both onshore and offshore. MUFG will contribute to this session with thoughts and data on capital allocation decision-making processes, criteria and metrics, along with an overview of the lay of the land in a post-tax reform world.
 
Members will also discuss jumping into the concept of “tomorrow’s treasurer today” with a look at how members companies are changing with technology advances. No small matter for tech companies. But how does it fit with treasury? Consultants and vendors urging treasury to jump on the bandwagon are quick to promise their solutions will improve efficiency. Treasurers must decide whether it’s worth the effort to advocate a move from what actually works to something that may possibly work better. Member volunteers with share their real-use cases of data visualization tools, artificial intelligence and robotic process automation.
 
Rounding out the meeting, members will take a look at reevaluating treasury roles and responsibilities and how they fit within organizational structures. This member roundtable has the goal of helping members better scale teams and maximize efficiencies and effectiveness.
 
 
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Blog entry
By jneu, October 25, 2018
 
The NeuGroup Process is being put to work in Asia in partnership with HSBC.
 
NeuGroup is looking forward to our first HSBC NeuGroup Industry Treasurers’ Roundtable next week in Singapore. This is part of our initiative to bring the NeuGroup Process for peer knowledge exchange to partner clients and clients we have in common. 
 
Focusing on the Technology, Media and Telecomm sector, it is also part of a vision to connect leading innovation companies from the US with their globalizing peers in Asia. Our aim is to further treasury and finance solutions, best practices and standards supporting business innovations to spread quality-of-life changing products and services faster.
 
On the agenda for next week is a look at the political risks altering the outlook and business ecosystem considerations in the region, starting with those stemming US-China trade tensions.
 
Next up we will set up connections to exchange insight to help participants help each other succeed with their top treasury projects and priorities.
 
HSBC will then help participants understand how to harness digital technology innovation to transform their own business by describing some of the ways they have been transforming the bank. Microsoft’s CTO for the region will shed further light on how digital transformation initiatives are being worked on by corporates.
 
A further highlight will be one of our mutual China corporate client’s spotlighting their regional expansion strategy via acquisition and the lessons learned from a treasury perspective.
 
We will share some of the post-meeting takeaways in the coming weeks.
 
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Announcement
By jneu, October 24, 2018
 
The NeuGroup Process is being put to work in Asia in partnership with HSBC.
 
NeuGroup is looking forward to our first HSBC NeuGroup Industry Treasurers’ Roundtable next week in Singapore. This is part of our initiative to bring the NeuGroup Process for peer knowledge exchange to partner clients and clients we have in common. 
 
Focusing on the Technology, Media and Telecomm sector, it is also part of a vision to connect leading innovation companies from the US with their globalizing peers in Asia. Our aim is to further treasury and finance solutions, best practices and standards supporting business innovations to spread quality-of-life changing products and services faster.
 
On the agenda for next week is a look at the political risks altering the outlook and business ecosystem considerations in the region, starting with those stemming US-China trade tensions.
 
Next up we will set up connections to exchange insight to help participants help each other succeed with their top treasury projects and priorities.
 
HSBC will then help participants understand how to harness digital technology innovation to transform their own business by describing some of the ways they have been transforming the bank. Microsoft’s CTO for the region will shed further light on how digital transformation initiatives are being worked on by corporates.
 
A further highlight will be one of our mutual China corporate client’s spotlighting their regional expansion strategy via acquisition and the lessons learned from a treasury perspective.
 
We will share some of the post-meeting takeaways in the coming weeks.
 
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Blog entry
By mkmoore, October 22, 2018
The Asia Treasury Peer Group (AsiaTPG) meets on October 29 and 30 where members have selected a decidedly tech-focused agenda. Members set the agenda via polls to determine the issues that are most pressing to the group. This meeting is hosted by member GE at their Singapore offices and sponsored by HSBC.
 
Members will hear from sponsor HSBC on the concept of a digital treasury. HSBC will share its digital transformation journey as well as how its Innovation Lab has worked with clients to explore various initiatives to build a digital treasury.
 
Members will also tackle technology developments currently transforming today’s treasury for tomorrow’s challenges. Currently bewildered by a host of buzz words, acronyms and phrases, i.e., bots, RPA, AI, data visualization and blockchain, treasury teams are forced to keep pace with a host of technological advances. However, given resource constraints (both time and effort) they must decide what tech to choose and whether it’s worth the effort to advocate a move from what works today to something that may possibly work better tomorrow. The session will focus on real use-cases showcasing new treasury technology as well as treasury tech for broader-use applications. This includes everything from digitalization possibilities for dashboards to transformation efforts that pave the way for growth by driving efficiencies and adding value through automation, straight-through processing, plus bank rationalization.
 
In addition, the group will examine the regional treasury function of three companies, namely Alibaba, GE and UPS, with the discussion covering team organization, strategy, roles and responsibilities. We will also compare-and-contrast on regional treasury set-ups, comparing how US and European MNCs approach a problem versus how Asia-based firms address a similar problem. The discussion will extend to how Asia-based firms manage the region from a banking and business support perspective. 
 
The “tech buzz” theme of this peer group meeting will continues with open forum topics like cybersecurity, the fintech landscape, trends and their impact to corporate treasury. 
 
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Blog entry
By amichels, October 18, 2018
 
The pilot meeting of the Life Sciences Treasury Peer Group sponsored by Wells Fargo  and hosted by Gilead Sciences in Foster City, CA, provided a setting where finance professionals discussed issues specifically affecting the pharma, medical technology and equipment industry, as well as challenges and opportunities faced by all treasurers and their teams.
 
“Nobody in the World Wants to Pay.” That frank assessment was among comments made during a dinner discussion about the cost of health care and what it means for patients, health care companies, insurers and governments. One member said the expense of developing a drug is often “forgotten,” while another participant said political answers to the problem are “super hard” and made more so by controversies over high-priced drugs. He talked about the value of having payors “with skin in the game,” saying, “the more subsidized something is, the more it costs.” 
 
New Ways to Pay? One of the most interesting ideas to surface about financing customer drug costs is matching the time a patient has to pay with the duration of the therapy, say, 18 to 24 months. Less clear is whether the patient would pay a financing rate and, if so, whether a third-party like a bank or fintech would hold the risk or the drug company itself would do so. The discussion also touched on so-called outcome-based pricing that’s pegged to a drug’s effectiveness.
 
“M&A is Not a Democracy.” That statement from a Wells Fargo banker points to the reality that deals are getting done, despite valuations in life sciences that he described as being at “astronomical levels” with “very high multiples—people are struggling to pay them.” He said companies that used to use hurdle rates are “moving to something else” and that pressure to do transactions is driving a more “aggressive financial posture in terms as what qualifies as a good deal.” Often, behind that posture lies a view that by bolting on an acquisition a company positions itself for future synergies and other deals that will accrue to its benefit and growth. 
 
Insurance Conundrums. A presentation about innovation in insurance coverage addressed the difficulty of many life sciences companies to get affordable product liability coverage and other issues, including the desire of some companies for integrated programs that would better match coverage with risks. A presenter from Aon said the insurance broker would “love to come to each of you with a parametric solution that will be indexed,” but that the industry also needs to come up with other approaches. But in the end, many participants remained skeptical about the outlook and unhappy with the lack of transparency in pricing insurance, with one saying, “it’s so opaque.”
 
 
 
 
 
 
 
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