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

Blog entry
By aorwick, April 26, 2018
Why are today's top treasuries incorporating algorithm trading in their FX programs? NeuGroup counts five reasons you should use FX algorithms right now.
 
Join this live webinar as Ted Howard, NeuGroup Associate Director, sits down with Susan Gammage of Thomson Reuters to discuss the recent explosion in FX algorithms.
 
5 Reasons to Use FX Algorithms Right Now
May 16, 11 a.m. PST/2 p.m. EST
 
During this live event, you will:
 
• Understand how current liquidity models can impact the effectiveness of various algos
• Learn new ways to use algo trading to improve the effectiveness and overall costs of your current FX trading program
• Discover ways to use algos as part of your FX trading strategies to improve trading accuracy and execution speed
 
Register now to participate in this live panel discussion with industry experts and explore ways to use algorithms to ensure the best execution of your FX program.  
 
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 bshegog, April 26, 2018
At the May meeting of the Global Cash and Banking group, first-time meeting sponsor C2FO will link its liberating working capital mission with the global cash management imperatives imposed by US tax reform to help members learn to do more with less excess cash. More offshore cash from US corporates will be available to return to shareholders, be used for M&A, capex or to fund pensions; so more efficiencies will need to come from treasury to maintain an MNC’s working capital and liquidity and to help suppliers do the same. 
 
Smart discounting to fund suppliers, supported by technology, including technology employing machine learning and artificial intelligence, can be part of the tool kit members will need to maintain working capital for their supply chains with more limited liquidity following repatriation of offshore cash. To improve the liquidity available in general, for their own working capital, members will also share tips and tricks to improve cash flow with better collections management. Read more about working capital optimization here.
 
The window to further optimize liquidity and working capital management is short, as NeuGroup member companies indicate they will tend to repatriate cash later this year and next. Nearly half of GCBG pre-meeting survey respondents say they will deploy all repatriated cash within a year and 20% will in the next two years. For global cash managers, the time is now to get a better handle on cash to ensure it is there to repatriate and then sustain supplier-, customer- and distributor finance programs once it has been sent home. 
 
As tax reform gets reconciled with the current US tax code and the tax rules of other jurisdictions, global cash managers will then need to work on a potential restructuring of current global cash and liquidity management plumbing. And for this task, the improvements made to working capital efficiency, from invoice discounting to improved collections, provide a little extra room to maneuver. So no need to wait for the tax department to weigh in on the restructuring plan to get started on an effort to become more efficient with cash.  
 
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 wchan, April 25, 2018
The big theme of the AsiaCFO meeting at McKinsey’s Digital Capability Center (DCC) in Beijing, China, was digital transformation in manufacturing and the impact of innovation in that space. While digitalization may take some of the human element out of manufacturing, members were equally captivated by their exchange on employee engagement and talent management. Here’s a look at some the knowledge members exchanged.
 
Employee Engagement. Two members shared ways they are engaging with employees to improve performance and retention, prompting member feedback and reciprocal sharing of examples. Engaging with employees is even more critical in the context of digital transformation, because the best talent will naturally be inclined to favor companies perceived as leading digital transformation. To counter this, firms not yet seen as digital leaders must communicate their digital transformation strategy and employees’ place in it—while being sure to make clear the company cares about its people.
 
Keys to Digital Transformation
 
1) Move faster. Global MNCs tend to think in terms of 5-year plans, but to succeed in a digital world they need to be able to make things happen in six months. The pace of change in China is conducive to moving fast, which is why members are encouraging their companies to pilot digital transformation efforts in China. They are preparing their teams for this, too. “We cannot move like an elephant” is the response of some members to the pace of the head office.
 
2) See through the eyes of the customer. A key element of digital transformation is to experience the digital world and your business’ place in it through the eyes of the customer. This is what differentiates digital leaders from laggards.  
 
3) Bust silos. Most members already see finance as an integrated part of the business management team and this sort of silo busting is critical to digital transformation.
 
4) Embrace risk. The other key to digital transformation is a proper attitude toward risk. Sometimes you must embrace it. If there is concern about putting the whole department or all employees in China on WeChat, dispense with it, and just do it.   
 
Digital Manufacturing: A Long Way from Frederick Taylor’s Stopwatch. The most telling value created by digitalization of the factory is the data capture. Sensors can be attached to everything and the workflow and process steps can be monitored continuously in real time. Tapping into this data will improve processes, from how workers move through the factory to how efficient they are at retrieving parts from a bin. Continuous improvement and the scientific management will never be left to guesswork again. 
 
Why You Should Appoint a Simplification Czar. To expand a company without adding resources, firms need to simplify their processes. “We were doing a lot of things that created complexity with no good reason,” one member noted. “For example, we’re doing LIFO accounting for the supposed tax benefit, but how much of a benefit is that really generating? Firms have to stop doing things a certain way just because they always did them that way,” the member noted. There are also silly things, like using a rigorous procurement policy to order office snacks. To fix the problem and simplify things, he made his head of business services the regional simplification czar.
 
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, April 24, 2018
While not ready for prime time, companies should be learning more about blockchain.
 
Blockchain for the most part is still in the testing stage but it can be said that ultimately it will bring foundational change to businesses. Only last year, most treasury executives of nonfinancial corporates would likely have scoffed at such a notion. They probably also would have pled ignorance about how the technology even worked. But that’s changing rapidly, as indicated by a session at a recent NeuGroup Treasurers’ Group of Thirty (T30) meeting.
 
At the Cognizant-hosted meeting, T30 members were presented with the professional-services company’s view on the technology and its future.
 
The upshot: “What the Internet did to information, blockchain will do to value transfer,” said Lata Varghese, head of blockchain and distributed-ledger-technology (DLT) consulting at Cognizant. Those value transfers could include assets, currencies or data, over networks in a peer-to-peer manner that reduces the need to pay a “trusted party” intermediary. Read more here.
 
Also this week, integrated SaaS treasury and risk management provider GTreasury announced it will acquire Australian risk-software company Visual Risk. The acquisition will bring needed coverage for risk to the company. GTreasury said it is making good on its promise to expand and beef up its product offering after in an infusion of cash from growth equity firm Mainsail Partners in October of 2017.
 
Visualization has become a buzzword in corporate finance, as more companies look for better offerings for things like clearer post-trade visualization capability for trade benchmarking and bank analysis. At a NeuGroup Assistant Treasurers’ Group of Thirty (AT30) meeting this week, several members said it was encouraging that the company was investing in risk analysis, as it was much needed in the company product line. Several members use the GTreasury platform for cash management and intercompany loans. Read more here.
 
Finally, how should a global company design its FX risk management program to protect its business from the impact of foreign exchange fluctuations?
 
With FX in flux, there is continued debate over the ideal organizational structure for achieving the best results in managing risk. The vast majority of NeuGroup members favor a highly centralized model that increasingly takes advantage of better reporting and forecasting processes, enabled by technology to support hedge decisions. 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 aorwick, April 18, 2018
How should a global company design its FX risk management program to protect its business from the impact of foreign exchange fluctuations?
 
With FX in flux, there is continued debate over the ideal organizational structure for achieving the best results in managing risk. The vast majority of NeuGroup members favor a highly centralized model that increasingly takes advantage of better reporting and forecasting processes, enabled by technology to support hedge decisions. 
 
But does that mean the same number take a portfolio approach to hedging, one which nets out global exposures to hedge as little as possible, or one that considers earnings at risk and hedged exposures are chosen based on maximum risk reduction? Not at all. In fact, there’s a good deal of variance. Some NeuGroup members hedge exposures individually, while others use sophisticated value-at-risk models and manage risk to within well-understood tolerance levels. 
 
Where along this spectrum is eBay, and why? Look for Shan Anwar – NeuGroup member and Director of FX for eBay – to share his risk management philosophy with Senior Director Anne Friberg at next month’s San Francisco Treasury Symposium. Mr. Anwar will touch on how the business drives exposures, policy and objectives, hedge decisions and instrument choices, and how this all ties into results, metrics and compensation. 
 
The 29th San Francisco Treasury Symposium, taking place May 18, will feature top-level corporate treasury insights from the world’s leading companies based in the Bay Area. Don’t miss Anne Friberg as she leads Session 5B, covering FX strategies to address real world risk management challenges.
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Blog entry
By thoward, April 16, 2018
New tax law could bring brain pain before companies figure it all out.
 
Tax reform passed at the end of 2017 gives big benefits to corporations and especially multinationals. However, tax and treasury departments face major headaches on how to apply the hastily produced law. 
 
Although the idea of tax reform has been discussed for years, the Republican-led Congress produced the major legislative package—the Tax Cuts and Jobs Act—in seven weeks, and President Trump signed it into law on Dec. 22, 2017.  The unprecedentedly quick process has resulted in a law creating interpretative uncertainties and potentially unintended consequences. Read more here.
 
It’s a melding of the acronyms. SWIFT recently announced it has reached an agreement with SAP to allow corporate clients of the business-software giant’s S/4HANA ERP offering direct access to the global messaging service’s vast network of banks, without intermediaries or the operational challenges of an in-house solution.
 
Depending on the complexity of the corporate customer, connecting to SWIFT directly or via a service bureau can take between three and 12 months. Under the agreement with SAP, its S/4HANA customers essentially have immediate access to the messaging network to connect with more than 11,000 banks worldwide. Companies can choose between an embedded connection to the SWIFT network, and bank connectivity through their usual banking partners. Read more here.
 
Meanwhile, the leveraged debt market shows signs of approaching the later stages of the credit cycle, but the trend in recent years toward looser debt covenants should give borrowers more flexibility and time to manage their debt obligations.
 
Looser terms combined with the surge in refinancing activity in 2016, which extended borrowers’ maturities at historically low rates, will soften the blow for leveraged borrowers during the next contraction of the credit cycle, according to a recent report by Fitch Ratings. 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 aorwick, April 13, 2018
NeuGroup brings its expertise to Stream 2 at the EuroFinance conference on Strategic International Treasury in Miami on Tuesday, May 15. 
 

Today’s treasurers rely on data and technology to generate strategic value, boost revenues and save on process, compliance and regulatory costs. But that same technology also creates some of treasury’s biggest challenges. Technological change demands that your role be constantly evolving and pushing boundaries to unlock opportunities and drive business growth. Meet with Senior Director Anne Friberg and members of the NeuGroup Network throughout EuroFinance to exchange ideas on vital treasury updates and strategies for maintaining best practice globally. 
 
 
To kick things off, connect with Douglass Tropp – Corporate Treasurer at Booking Holdings and NeuGroup member – for a session entitled “Treasury’s Two-Way Street: What Are You Worth to Your Banks? And What Do You Get in Return?” Despite the advances in treasury technology and bank connectivity, few treasurers have access to a consolidated view of accounts with their banks and its value to the bank or the dollar number for annual revenue. Mr. Tropp has distilled insight on how to maintain relevance as a client, not only to access core products and services, but also to ensure you are high up the list when it comes to information requests or issue resolution.
 
And later, Pradipto Bagchi – VP & Assistant Treasurer of Allergan and NeuGroup member – leads a session entitled “Refinance or Wait? How to Play the Tipping Point.” A record $2 trillion of U.S. corporate debt comes due in the next five years, with industries such as telecom and energy having especially significant refinancing needs. Does it make sense to refinance existing facilities now, even if they have two to three years remaining? And what cost-effective hedges are available for those who would rather buy protection against a surprise curve steepening than incur the costs of balance sheet restructuring today? Mr. Bagchi will give his take. 
 
In addition to these sessions, Ms. Friberg will oversee talks on cybersecurity, the changing face of global cash management, centralizing currency and managing rising rates and investment risks.
 
To register for the conference, visit https://goo.gl/xb5Amr.
 
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 jneu, April 11, 2018
US regional bank treasurers face a new world with deposits as rates continue to rise.  
 
While the ability of President Trump and a Republican Congress to move the needle further on bank regulatory reform before the midterm elections remains in focus, the dominant topic for exchange at our Bank Treasurers’ Peer Group 14th Annual Meeting on May 9-11 in New York will be what’s being called “deposit dynamism.”
 
Beyond betas. For the last several years, the focus of our deposit discussions has been on betas, which are just one element of modeling deposit behavior. The topic remains important, as the Fed signals more rate raising under a new Fed Chair who may hold press conferences after every meeting (meaning, perhaps, more opportunities to discuss fed-funds rate increases). However, deposit balance sensitivity to interest rates (betas) is not the only area of interest today. Banks are trying to look at deposit modeling and analysis more holistically, since there are more dynamics at play, as indicated by the fact that depositors have not churned as beta models have predicted—at least, so far. 
 
Reflecting new market dynamics. “Deposit dynamism” as one member put it, entails modeling deposits to look at flows based on pricing or environment changes as well as rate sensitivity. We are in uncharted territory regarding monetary policy, which is just one new market dynamic; and with rising competition from new players for deposits and competing “funds,” it’s time to take a broader look.
 
What models are being used? Accordingly, we will compare the models larger banks tend to use that are developed in-house with vendor-provided solutions. Novantas has been invited to share insight, including on some of the models it has developed. 
 
What a deposit review tells us. Next, we will assess the deposit review process, using a member example of a project undertaken with EY, to determine what inputs and outputs are most relevant for a given institution. We also will discuss where in the organization deposit modeling is done and the level of satisfaction: great, average, lousy? 
 
Morgan Stanley, returning as annual meeting sponsor, will provide added insight, too, including analysis by its Chief US Economist Ellen Zentner on the direction of rates, the latest views from the firm’s bank analysts on what’s driving bank value and what questions banks should be prepared to answer. Members of Morgan Stanley’s treasury staff will also be on hand over the course of the meeting, as in past years, to participate in the exchange with member treasurers. Catch up on everything you missed from the last meeting here. 
 
We look forward to connecting with our regional treasurers to exchange knowledge on making deposit modeling and analysis more dynamic, as well as other topics—and to distilling that knowledge into insight that everyone can use to succeed.
 
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 bshegog, April 10, 2018
The Corporate ERM group will meet in early May at Marathon Oil in Houston to drill into a wide-ranging number of issues on the minds of enterprise risk management professionals at multinational corporations. Here’s a quick look at what’s on tap after members discuss their projects and priorities:
 
Dance Moves: Dr. Paul Walker of St. John’s University will give another lesson in his series on how companies can turn the “clunky dance” that risk and strategy groups often perform into something resembling a smooth waltz. Underlying the new choreography is a commitment to improving the detection of risk and uncertainty embedded in strategic choices. And we’ll review how organizations view the challenges of uniting risk and strategy, and discuss the best practices to address them. Later, a member will share with the group work done with Dr. Walker involving how to measure and anticipate the risks of unforeseen and surprising events. Call it a black-swan workshop.
 
Back to B-School: Remember those Harvard Business School case studies? We’ll close the strategy discussion with a workshop where members work through a case study to see what risks could have been avoided and how the situation should best be handled. We’re looking forward to hearing varying perspectives and opinions as members make the case for their take on the topic.  
 
Risky Business: On day two, we’ll tackle how members organize and frame risk, select which risks to analyze (what’s the right number of risks?) and we’ll discuss what other internal teams can support the risk mitigation effort. Later we’ll explore what it takes to have a world-class risk program and which metrics should be used to judge the success of ERM groups. How can programs grow more robust? Read more about risk framing here. 
 
As always at NeuGroup meetings, members will have plenty of time for off-line and informal discussions when they can connect, compare notes, exchange knowledge and, perhaps, discuss their dance moves. 
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates over 30 face-to-face meetings to inform actions, transform practices, and enhance careers for more than 400 members from across treasury and finance functions, covering multiple industries and global regions. Visit www.Neugroup.com for more information about peer groups and www.iTreasurer.com for content and news.
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Blog entry
By thoward, April 09, 2018
They’re in demand when rates are low and also when they begin to inch up.
 
Since the implementation of money market fund reform in 2016, which included gates, fees and a variable net asset value regime, prime institutional money market funds have withered. They have made a comeback, but not to their glory days. Another reason they have shrunk is because a host of investment alternatives have entered the market over the last several years. One of those alternatives is separately managed accounts.
 
SMAs have long been viewed as a solution that can enhance yield, provide control, and add diversification and flexibility to a corporate liquidity portfolio – and also as a decent alternative to money market funds. In its basic form, an SMA is a portfolio of securities that can be managed to a set of unique investment guidelines tailored to meet an organization’s needs. So, with an SMA, the manager has the ability to customize the strategy by identifying the appropriate maturity profile, sector, currency, and credit risk that are aligned with an organization’s investment policy and liquidity needs.
 
According to Fitch Ratings, assets in SMAs are estimated at $400 billion and it cites Federated Investors data as one sign of their popularity. Federated reports 97% growth in money market separate accounts between 4Q 2015 and the second quarter of 2017. Fitch expects “continuing growth in SMAs as investors are likely to re-evaluate their cash needs and move money out of government funds to higher yielding products.” Read more here.
 
Meantime, companies need a bit more structure when it comes to asset allocation. According to NeuGroup Peer Research, companies don’t have a systematic framework for capital allocation models nor clear indicators of which hurdle rates to use when. Although at some companies the capital allocation model may reside only in the head of the CFO, NeuGroup found in pre-meeting surveys across a wide variety of groups that the old reliable capital asset pricing model, using a company’s own beta, is the most common method to calculate its weighted average cost of capital (WACC). About one in five use their WACC for all hurdle rates while half use WACC in combintion with other evaluation methods. 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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