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

Blog entry
By Anonymous, May 18, 2018
The ERM spring meeting in Houston hosted by Marathon Oil gave members the chance to discuss their respective ERM programs (and they vary), share best practices, and work through some real-life examples of ERM’s opportunity to influence and play a role in strategy decisions. Morris Clark, VP and Treasurer from Marathon Oil, welcomed guests and helped set the stage by outlining the importance of integrating ERM into strategic thinking. 
 
Single greatest risk to a company is a strategic decision. “Companies need to be ready to change,” said Dr. Paul Walker as he kicked off the “Clunky Dance Part 2.5.” This discussion centered around the relationship between strategy and risk. “Companies must get better at seeing the risk and uncertainties in their strategic choices,” explained Dr. Walker, who is the Schiro/Zurich Chair in ERM at St John’s University. He noted that companies now are being valued differently; book value matters less because investors are more focused on the value of the market and future value. No longer is the money that was made important, but what money will be made in the future is the focus. Read more about ERM strategy here.
 
A well-controlled organization provides a solid foundation for the risk assessment process. The tone also must be set from the top. One member walked fellow members through the process of using “black swan” risk workshops to inform them of strategic planning activities. Some key black swan questions from the workshops include, what must be true in our current plans for the company to succeed? What are the biggest assumptions in these loans, and are we prepared? This member shared the results of their workshop and explained to members how the company changed its strategy. 
 
How do members organize risk? From risk categories to risk registers, members had a variety of methods used to organize risk. Although the names varied as well as the level of granularity, all members use some type of “bucket” format to organize risk. One member puts its nine highest-level risks on a one-page summary along with mitigation strategies. Another member said his company has some persistent risks that never go away. Most members update these risks annually although some update monthly. 
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By afriberg, May 15, 2018
Tech20 members gathered recently in Sunnyvale, California, for a mid-year meeting sponsored by HSBC. Here’s just a sampling of some of the standout topics and key takeaways from the event. 
 
Once repatriated money is home, you have two quarters. First on everyone’s mind vis-a-vis tax reform are cash repatriation questions: where is the offshore cash; how much can we bring home; how soon can we bring it back; what do we do with it; and how much time do we have to deploy it? There are many considerations. For example, is any part of previously taxed income considered for tax credits? And absent clear signals about what other jurisdictions will do in response to US tax reform, you don’t want to move too quickly in case something changes, for example in the EU. “Smart is better than speedy,” as one member noted. But the truth is that low effective-tax rate companies have a target on their backs. Firms keeping IP onshore now have an advantage; those with IP structures offshore may have to justify it if the additional cost of moving it onshore is not significant enough. Whether or not you have announced what you’re doing with your repatriated cash, once you bring it back, “investors will give us two quarters” to deploy it, a member who is head of treasury and tax asserted.
 
“What? Cash forecasting? Me?” After the “lazy” offshore cash is home, formerly cash-rich subsidiaries are in for an attitude adjustment. Under the old US tax regime and trapped cash, there was no need for forecasting except when money needed to be mobilized to, say, pay for an acquisition. From now on, an entirely new mindset needs to sink in: how much cash do foreign subs need to operate (and how do you determine that?), and how can accurate cash forecasting processes be taught and implemented? Precise cash and exposure forecasting just went from Holy Grail to Holy Imperative.
 
Good communications with regulators = opportunities, but don’t be selfish. One Chinese member updated the group with a few pointers on PBOC and SAFE decision making and communication. He  brought to light some cultural differences in how Western and Chinese companies view rules and guidance. The former often ask for written confirmations and, in effect, treat the absence of one as a no, while Chinese companies view verbal guidance as an opportunity to proceed. But, don’t focus only on what you need from regulators. Find out how they are measured (what their KPIs are) and try to contribute to those (e.g., bringing investment into the province), and you’re more likely to face a smoother process for your own requests. And if you have entities that straddle multiple jurisdictions, it’s ok to go “branch shopping.”
 
Cyberthreats call for collaboration and a “culture of security.” Becky Pearson, cyber insurance broker at Willis Towers Watson and John Schaefer, director of risk management at Lam Research, talked about what John called a “culture of security, and what insurance companies and tech firms are doing together to mitigate cyberthreats and transfer the residual risk via insurance. John said, “A breach is much cheaper if handled well,” and that the recovery will be faster. First, engage the organization beyond just information security to create resiliency, including the board, legal, HR, etc., and educate employees to be part of the solution. Negligent or malicious employees are your greatest risk. If security processes make jobs much harder, people will circumvent them and you still won’t be secure.
 
Following are NeuGroup Founder Joseph Neu's key takeaways from the meeting:
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
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Blog entry
By Anonymous, May 14, 2018
The TIMPG2 spring meeting in San Francisco, hosted and sponsored by DWS, gave members the chance to discuss where they stand, post-tax reform, on repatriating (and spending) overseas cash, the global economic outlook, rising interest rates and bringing technology to the investment management process. Here are some of the standout themes that emerged:
 
Tax reform takes center stage. Tax reform and its various implications are top of mind for cash managers, with pre-meeting survey results ranking tax planning and analysis the top project and priority. Many members are still in a wait and see mode, letting assets shorten over time and preparing for word from management about when and where repatriated cash is going. Members who plan to bring money back onshore were either strategically short in duration or plan to let assets mature over time and leave the liquidity offshore to bring back onshore as liquid cash. The latter seemed to be the preferred method, with many members’ tax departments judging the sting of the unrealized loss from an asset transfer too large a sacrifice, not to mention keeping track of multiple sets of accounting records. 
 
Members stressed the need for better cash flow forecasting as they will be forced to operate with smaller cash liquidity buffers once money comes back on shore. Several members mentioned the timing of the cash movement as the biggest variable.  One member, whose company previously wanted to generate maximum cash offshore for tax efficiency, is now asking whether to continue with this structure “or will repatriation be a continuous event?” But when all was said and done, many members left the meeting feeling comforted that not everyone has mapped out precisely how much cash is going to be repatriated, when it’s going to be moved back to the US, what that cash will be used for exactly, or has figured out the accounting details of transferring assets from one country to another.
 
“If you are questioning the markets you are not alone.”  Deutsche Bank assured members that with so many variables in the current environment, markets have become a bit unpredictable. The firm shared the top ten issues that will impact markets — many negatively, potentially — for the remainder of the year. Geopolitical events loom large; in Asia there’s uncertainty over the outcome of talks between North and South Korea, with the US and China in the background, as Japan and others boost military strength. On a more positive note, one DWS presenter commented that a strong and focused Federal Reserve chair (and vice chairs) will keep the economy steady. He believes that this is the strongest Fed in decades, saying, “This is a positive. We have some strong folks there.”
 
Starting to test the waters of technology. Recognizing that no one system does it all, members shared their experiences with a variety of systems such as Power BI and Tableau to compile data into one place. One member noted, “No one system will do everything, so how do I integrate? We have built an in-house data warehouse solution. The next issue is do you have the skills in treasury?” Members also shared that once you find someone with the right skill set, you need to guard them as everyone is out there looking. Read more about technological transformation here. 
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By thoward, May 14, 2018
Transforming treasury sometimes means making like the Beatles: follow the sun.
 
Treasury transformation is all about keeping up with the pace of rapid change. And many corporate treasuries are contending with the transformational changes within treasury departments that are fueled by big shifts in business models and technology that threaten traditional treasury roles and functions. As a result, many look at HQ and changes there. However, another approach to transforming the department is perhaps to break it up. That is move parts around.
 
At a recent NeuGroup Treasurers’ Group of Mega-Caps (tMega) meeting, members explored the viability of relocating to low-cost locations as a start. This would include moving nonstrategic treasury operations to lower-cost parts of the US (especially if they’re currently in California), which can save a ton of money. Florida is a popular destination because it gives treasury an East Coast time zone presence at as much as 70% of a cost reduction to HQ (lower real estate prices, no state income tax, etc.). What’s more, talent also seems to be there. Moves like this are often coupled with shifting treasury roles to “global business services” or “business services centers.” In this way, treasury can follow the sun. Read more here.
 
Also this week, a look at pensions. A recent increase in treasury rates has given a slight boost to both corporate and public-sector pension plans in the last month. Nonetheless, there are many US pensions still struggling or facing shortfalls over the next few years. This is why some countries are adopting hybrid pension plans that are more sustainable and often offer better returns. The new schemes mimic the better parts of old-fashioned defined benefits (DB) plans and mixes in a little defined contribution seen in 401(k)s. The new pension is called “collective defined contribution” (CDC), and also known as “defined ambition.” Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By wchan, May 07, 2018
The Asia Treasury Peer Group (AsiaTPG) met in mid-April 2018 in Singapore, where members shared their top projects and priorities and enjoyed wide-ranging discussions on issues such as “trapped cash” in Asia, cash flow forecasting, the implications of US tax reform for treasury in Asia, plus technology solutions surrounding banks’ know your customer (KYC) requirements. Here are some highlights from the meeting:
 
US tax reform enables “frictionless” dividend payments. With US tax reform in place, corporations are expected to repatriate significant dividends to the US. Boundaries between US cash pools and international cash pools will start to disappear, and corporates can look forward to managing just one cash pool. Tax and legal teams are now likely to review the legal entity structures of all subsidiaries to maximize the benefits of US tax reform changes. 
 
Future regional treasury center roles may focus on corporate finance and capital markets. As US MNCs consider raising funds outside the US (instead of in it), regional treasury teams may need to build up their experience and skills raising capital in the region. Asia’s growth is still accelerating, so raising capital to take advantage of that growth may arise as an in-region activity.
 
Standardize, centralize, digitize. These are three core principles identified by IHS Markit surrounding technology solutions for KYC compliance: setting common standards on documentary requirements (standardizing); putting all content in a common place (centralizing); using a trusted technology medium to share information (digitizing) in a controlled manner. 
 
KYC compliance will no doubt get more burdensome, as regulatory standards rise and become more complex as growing businesses operate in multiple jurisdictions. Is “country level utility” the way to streamline KYC compliance? Following its success in South Africa, where Thomson Reuters launched a country utility to streamline KYC compliance, the company is working in consortium to build similar country utility services in Singapore and Hong Kong. This entails working with many banks to set the baseline standard regarding KYC documentation requirements. The solution is to establish a (nationwide) central repository that stores data and documents required to support a financial institution’s KYC procedures, and provide permissioned access to information requestors.   
 
Blockchain technology presents opportunity for “collective KYC.” In a “sharing economy” approach, blockchain technology can present an opportunity for a transparent and trusted environment to create collective standards regarding KYC. IBM, a guest speaker at this meeting, shared details of its pilot implementation of this concept in Singapore.
 
Technology can ease workflows in KYC compliance. Another guest presenter, Bloomberg, discussed how it acts as technology service provider for its extensive user base, enabling a secure way to exchange documents with any counterparty. Leveraging on technology that recognizes text in documents to pre-populate data fields in databases or pre-fill any form based on designated corresponding fields, it assists to reduce duplicate tasks, thereby making work easier, simpler.  
 
Leverage financial planning and analysis (FP&A) team for better cash flow forecasting. Quality cash flow forecasting allows treasury to be proactive about liquidity planning, rather than reacting to surprises. Raising accountability requires treasury to build partnerships with FP&A and reporting teams, and get involved earlier to cultivate familiarity with the data. At a member company, various finance teams across multiple countries and business units are “competing” to do their task well and produce forecasts of high quality, so such partnership efforts are paying off.
 
Following are NeuGroup Founder Joseph Neu's key takeaways from the meeting:
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 

 

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Blog entry
By thoward, May 07, 2018
The Fed has introduced a more reliable benchmark to replace the scandalized Libor.
 
There’s a new benchmark in town ready to take down the tainted Libor. It’s called the Secured Overnight Financing Rate or SOFR. The Federal Reserve describes it as a “broad measure of the cost of borrowing cash overnight collateralized by Treasury securities” and is compiled using a volume-weighted median of transaction-level tri-party repo data from the Bank of New York Mellon, GCF Repo transaction data and bilateral Treasury repo transactions data from Fixed Income Clearing Corporation’s Delivery-versus-Payment service. That’s quite a mouthful. But to learn more about it and why corporations might face a challenge switching to SOFR, click here.
 
Also this week, we delve into what may happen to Europe’s low-volatility net asset value funds (LVNAV) if European regulators end up nixing so-called “reverse distribution mechanisms” (RDMs) in money market funds (MMFs). The issue is critical because RDMs allow euro-denominated MMFs to operate in a negative yield environment but maintain a stable NAV and pay dividends. To do this, the funds cancel some shares held by investors. Investors may hear something from European regulators in the next week, according to some sources. Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By Anonymous, May 04, 2018
The TIMPG spring meeting in New York, hosted and sponsored by BlackRock, gave members the chance to discuss where they stand, post-tax reform, on repatriating (and spending) overseas cash, hear presentations on the markets and investing cash, connect during breaks on topics including setting up CP programs and European money market reform, and hear how one investment manager is making his company’s defined contribution plan more like its defined benefit plan. Here are some of the highlights from the day-and-a-half:
 
Repatriation uncertainty enjoys company. Tax reform and its various implications for cash managers took center stage, as pre-meeting survey results ranked tax reform planning and analysis the top project and priority for members. One manager said, “My world changes dramatically with tax reform,” while another commented, “everything revolves around tax reform.” But when all was said and done, many members left the meeting feeling comforted that not everyone has mapped out precisely how much cash is going to be repatriated, when it’s going to be moved back to the US, what that cash will be used for exactly, or has figured out the accounting details of transferring assets from one country to another. One member said she liked hearing that repatriation for many companies is “a work in progress” while another found it interesting that almost everyone is “still in thinking mode.” Read more about tax reform here. 
 
Negative rates and European money market reform. New rules eliminating constant-value prime money market funds in Europe go into effect in January 2019. As an alternative, many MNCs have been considering the benefits of low-volatility NAV funds (LNAV) that will price to two decimal places if the full mark-to-market price doesn’t deviate from $1 by more than 20 basis points, making the funds similar to constant value NAV funds. But they will resemble variable NAV funds if things go south. And here’s the question one member brought to BlackRock: What will be the effect of negative interest rates be under the new rules? In the past, so-called reverse distribution or share erosion (cutting the number of shares) kept the funds paying dividends. But that may not be allowed under the new rules. BlackRock said the issue is being fought over in Brussels, with a meeting planned for early May. Stay tuned. 
 
Here are two more subjects that provoked interesting observations and discussions:
 
• ESG investing: In response to a member question about using environmental, social and governance (ESG) criteria, another said, “we have sectors that we won’t buy,” and talked about owning the “right things” while avoiding “the wrong things.”  Another said credit managers “should have this sensibility in their models.” Figuring out what’s right and wrong is another matter. One member half-jokingly reminded us that sin taxes on alcohol, tobacco and gaming can raise money that helps society, complicating the process of deciding on an ESG criteria.
 
• Reporting rhythm: Discussing the frequency and detail of reporting to executives, the consensus seemed to be that less is more. As one manager put what he’d learned at the end of the discussion, “sharing too much information is bad for our health.” Another said his department keeps monthly reports to the treasurer “pretty basic…We don’t get into a lot of underlying data. We communicate as little as possible.” A third said reports to the CFO and the board are kept “at a high level” and feature a lot of PowerPoint charts with colors. “They love it,” he said to laughter. 
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
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Blog entry
By afriberg, May 03, 2018
Members of the NeuGroup for MNC regional treasury in Europe (EuroTPG) are gearing up for their 2018 first-half meeting hosted by Lantmännen in Stockholm, Sweden, on May 23. Here are some highlights from the agenda:
 
Cash Management Trends and Innovations in Treasury. Technology has become a critical part of treasury. Banks, vendors and infrastructure providers have been pushing the boundaries, now offering tools designed to ease processes, integrate workflows and deliver real-time and accurate data for decision-making. Meanwhile, artificial intelligence (AI) and robotic process automation (RPA) are gaining acceptance. This is transforming cash management activities and vastly improving operational efficiency. We will hear from an expert speaker on this topic, which ranks as a top priority for members. Read more about RPA here.
 
Cybersecurity – Threats, Mitigation and Insurance. Facing an increase in the frequency and complexity of threats as automation and digitalization become the norm, members will discuss cybersecurity, evolving threats and preventive measures they have used. The session will feature a roundtable on what protective strategies members have explored, responses to breaches and their experiences with cyber insurance in Europe.
 
Also on the agenda:
 
“Solve My Problem.” The group will try to collectively address and offer solutions to specific challenges members are facing. These may include, for example: KYC compliance and privacy concerns in the context of the General Data Protection Regulation (GDPR); collections and trapped cash in sanctioned countries; and building a treasury dashboard.
 
US Tax Reform and Implications for EMEA Regional Treasury. Regional treasurers are currently confronting a host of implications stemming from US tax reform. For member discussion, NeuGroup will share a summary of takeaways from our peer group meetings thus far, covering how corporations are best managing issues like dividend and repatriation considerations; cross-border funding implications; onshore and offshore cash going forward; and business-trading and legal-entity structures.
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By afriberg, May 02, 2018
Members of the NeuGroup for assistant treasurer leaders (ATLG) will gather in Summit, N.J., on May 23-24 for their 2018 H1 Meeting hosted by Celgene and sponsored by Bloomberg. Here are some of the highlights from the meeting agenda:
 
Developing Talent for Treasury and Your Own Advancement. How do you develop treasury talent and keep employees passionate about their work? And how do you successfully move up and into the treasurer’s office yourself? What is the necessary skill set and how do you get it? Led by meeting moderator and former treasurer of Caterpillar, Ed Scott—who will describe his own career journey—members will discuss their challenges, best ideas and successes. Read more about talent management here. 
 
Pension Management Case Study. A member will share her company’s approach to pension asset management in the context of bankruptcy proceedings and life after reorganization, including strategies to de-risk pension liabilities; how pension liabilities affect company valuation; and de-risking in the prioritization hierarchy of capital structure initiatives.
 
Technology and Systems to Future-Proof Treasury. Beyond TMSs, what are the emerging technologies that will transform treasury and deliver on efficiency and automation mandates, as well as enable treasury to make smarter decisions using data that is increasingly available in real time? What part do blockchain, robotic process automation (RPA) and artificial intelligence (AI) play in the future of treasury? Members will weigh in with their opinions and approaches. 
 
Tax Reform, Repatriation and What Comes Next? Members will discuss questions arising from the new US tax regime, including: What are all the implications affecting capital structure, investments, and cash management? What actions are MNCs taking in the short term and what are some longer-term changes they’re making, and why? Will there be wholesale changes on the balance sheets of corporate America?
 
Also on the agenda:
• Best practices in debt capital markets with experts from Bloomberg
• Transition from LIBOR to SOFR
• Hedging FX, rates and commodities
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By Anonymous, May 01, 2018
Fintech is no longer a disrupter, but a partner to help strengthen new solutions with more integrated propositions.
 
Virtual account structures can add significant value and efficiency in the processing of real-time payments because of the need for instant clearing, availability of funds and account reconciliation. Treasurers will have greater flexibility to design and maintain complex account hierarchies, while maintaining full control of the structure.
 
This spotlight feature explores what you should be focused on NOW to best utilize these new technologies and incorporate them into your overall treasury optimization strategy.
 
 
Read this free report to:
• Learn how to create a virtual account structure for your organization that will allow for real-time processing, increased visibility and greater optimization of your working capital.
• Understand how the rapid increase in the use of APIs will enable both corporate and consumer bank customers to use third-party providers to manage their finances including bill pay, P2P transfers and spending analysis.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
 
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