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

Blog entry
By thoward, August 29, 2018

NeuGroup’s Internal Auditors’ Peer Group will get a chance to see Microsoft’s Digital Crimes Unit in action at its November peer group meeting. 

Save the elections, save the world. That could be Microsoft’s latest tagline, as one of its businesses recently made a name for itself in cybersecurity news. In late-August, Microsoft announced it had stymied a group of Russian hackers by disrupting and taking control of several of its websites. 
 
By thwarting an attack on conservative groups, political campaigns, voting machines and advocates for tougher cybersecurity, Microsoft has thrust into the limelight its Digital Crimes Unit (DCU). Using a phalanx of specialists from a variety of a disciplines, the DCU executed a court order to disrupt and transfer control of six internet domains created by a group widely associated with the Russian government and known as Strontium, APT28, or more informally, Fancy Bear.
 
Microsoft says its DCU is made up of an international group of attorneys, investigators, data scientists, engineers, analysts and business professionals all focused on “protecting people, organizations and our cloud against cybercriminals. We disrupt cybercrime through the innovative application of technology, forensics, law and partnerships.”
 
In a way, Microsoft is becoming the top cop of the Internet, experts say. According to reports, the company has used the courts 12 times in the last two years to shut down 84 fake websites associated with Strontium. However, it has also used legal tactics to go after botnets, or malicious networks of automated accounts, since at least 2010. “We use creative technical and legal strategies to disrupt the criminal infrastructure, deter nation-state actors from using our platform, and notify victims of these cyberattacks,” Microsoft said in a press release.
 
And members of NeuGroup’s Internal Auditors’ Peer Group (IAPG) will a get a first-hand look at what the DCU does at the group’s meeting November 1-2 at Microsoft in Redmond, WA. The tour of the DCU will happen on Day 1 of the day-and-a-half gathering, which will also include sessions on agile auditing, audit committee reporting, and applying artificial intelligence and robotic process automation to the audit process. Members will also see some of the tools the DCU uses for its own investigations. 
 
Microsoft has a history of heavily investing in internal security, whether for straight-forward fraud like travel and expenses’ transgressions and theft of equipment and services, or for the more complex cybercrime world. It has hired ex-law enforcement professionals, including former FBI agents, former postal inspectors, and forensic accounting specialists.
 
According to Microsoft, the DCU is currently involved in using AI to help crack down on tech support scams as well as help in the fight against online child exploitation. It also recently announced a new service for political campaigns and other organizations to help “protect themselves from cyberattacks.” It is also broadening a Defending Democracy Program announced earlier in the year by partnering with NewsGuard Technologies, a new company that says it will rate “the reliability of news and information websites” and focus on “reducing fake online news.” 
 
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 more than 30 face-to-face meetings where members connect, exchange knowledge and review distilled insights. 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 aorwick, August 23, 2018
NeuGroup and Wells Fargo team up for the inaugural meeting of the Life Sciences Treasurers’ Peer Group.
 
NeuGroup is proud to introduce a new peer group designed for treasurers in the biotech, pharma and med-tech industries called the Life Sciences Treasurers’ Peer Group (LSTPG). It will meet for the first time at Gilead Sciences in Foster City, California, on September 25. To open the meeting, sponsor Wells Fargo will look at the M&A landscape across the life sciences sector. Attendees will hear from experts about the impact trade policy, tax reform and various political and economic realities may have on the deal environment, as well as how finance professionals should be thinking about valuation, especially when traditional quantitative valuation metrics have been stretched to the breaking point. 
 
With tax reform still top of mind, NeuGroup is continuing to place emphasis on its impact in fall meetings. The LSTPG will hear from a tax specialist on how new regulations and clarifications may affect life sciences companies reviewing their available cash, capital structures and general tax planning. Expect updates on rules and guidance from the IRS/Treasury, clarity on the four income baskets (general, passive, GILTI, branch) and responses and expectations from key foreign jurisdictions.
 
We’ll also ask members to think strategically about insurance, risk retention and alternative risk finance with universal and sector-specific risk types. All corporates face evolving risks, and those in life sciences have unique exposures. How are insurance products keeping up with changes, and what alternatives should firms be considering to most effectively mitigate risk, eliminate gaps in traditional insurance products and get the most for their risk management spending?
 
Also on the agenda: a round-robin on providing customer financing for medical therapies, treatments and devices. 
 
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 more than 30 face-to-face meetings where members connect, exchange knowledge and review distilled insights. 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 aorwick, August 21, 2018
The Treasury Investment Managers’ Peer Group keeps focus on tax reform and repatriation. 
 
This past spring, TIMPG members were just beginning to consider how much company cash was going to be repatriated, when it would be moved back to the US and what the cash would be used for. Half a year later, the post-tax-reform picture has become a bit clearer, and members are finalizing their plans. The group meets September 12-13 at Franklin Templeton Investments to discuss tax reform’s impact on the investment portfolio. 
 
In addition to tax reform and repatriation, the TIMPG will get a lesson in creating an optimal short-duration portfolio from sponsor Franklin Templeton. Expect talks on portfolio budget risk management, proper diversification and use of comingled products. Plus, members will share their formulas for asset allocation. 
 
The group will also explore opportunities in emerging markets debt and retirement issues in two special breakout sessions. For investment managers with the option to shift out of traditional corporate cash assets, emerging markets might be the way to go. Franklin Templeton tells you how to prepare. And for members getting involved in pension programs, we review trends in the 401(k) market.
 
Also on the agenda: a look at the state of the global economy, an update on municipal markets and US fixed income perspectives.
 
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, August 20, 2018
Corporate debt-to-GDP levels are at record highs. But until earnings weaken it should not be a problem, says Moody’s. 
 
Corporate debt rose to a record 45.5% of US gross domestic product in Q1 of 2018, according to Moody’s. Meantime the speculative default rate dropped to 3.4% in June and is expected to drop even lower by 2019. Moody’s says the last time the ratio of corporate debt to GDP was nearly as high as today was the second quarter of 2009. And back then, the default rate shot up to a high of 14.7% (in November of 2009). 
 
What does it mean? It could mean a bout of volatility commodity prices for one, says Moody’s. The rating agency notes that the 80s saw oil prices plunge as a high corporate debt-to GDP-ratio and a rising default rate led to a drop in oil prices (vs. dire predictions of excessively higher crude prices). But since corporate earnings continue to improve in the second half of 2018 and the default rate is muted, it likely means price stability in commodities for the time being. Read more here.
 
More efforts to bury Libor. With well over $170 trillion in debt linked to the London Interbank Offered Rate it’s no secret that regulators and investors will face headwinds as they try to disengage from the scandalized reference rate. But advocates for switching from Libor to new risk-free rate (RFR) offerings like the Federal Reserve’s Secured Overnight Financing Rate (SOFR) got a boost in the last month or so by two big entities offering securities linked to the Fed’s new rate. SOFR is a rate based on transactions in the US Treasury repo market.
 
First up was Fannie Mae, which at the end of July issued what it billed as the “the market's first-ever” SOFR securities. The three-tranche $6 billion SOFR debt transaction settled on July 30, 2018. Then the World Bank weighed in with an offering of its own. 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, August 16, 2018
The FX Managers’ Peer Groups 1 & 2 will kick off NeuGroup’s 2018 H2 meeting cycle with talks on the global economy, model FX programs, hedge instrument selection and much more. 
 
Between Brexit, brewing trade wars and volatility in the Turkish lira, 2018 has provided FX managers with plenty of points for discussion. What is the global economic outlook, and how will it affect corporations doing business on a global scale? FXMPG members will seek answers from sponsor Standard Chartered at their meeting, taking place September 5-6 at Medtronic in Minneapolis, Minnesota. Get ready to explore strengths and weaknesses in global leadership and emerging markets, and the impact they will have on the USD and FX markets. 
 
Meanwhile, the FXMPG2 will take an in-depth look at a mega-cap member company’s FX program at its meeting hosted by Societe Generale in New York City on September 12-13. The presentation includes background on the business, an outline of policies, and description of hedge decision, trading and accounting approaches. From strategy to processes and instruments to metrics, no detail of the program will be spared. 
 
Later, members get the chance to ask, “Options vs. forwards, or options and forwards?” Both groups will consider the FX policy and decision framework that is needed to allow for a strategic switch between hedge instruments. Plus, hear more on how to use dynamic hedging and cost-effective ways for managing EM balance sheet risk. 
 
Also on the agendas: dashboard demos, roundtables on talent and training, and exposure ID and forecasting from A to Z. 
 
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, August 13, 2018
Fitch says pre-planning bankruptcies make filing faster; meanwhile bankruptcy filings on the rise.
 
There are quick loans and quicky divorces, get-rich-quick schemes and quick passports. Add to the list bankruptcies. Companies are spending significantly less time in Chapter 11 bankruptcy lately, which is a boon for the ongoing viability of their businesses as well as creditors. However, it’s not for every firm. The trend has emerged just as companies’ Chapter 11 filings have jumped. 
 
A special report published August 7 by Fitch Ratings, “Shrinking Length of US Bankruptcies: Analysis Reveals Faster Credit Recoveries on Recent Cases,” finds that the median duration from bankruptcy-petition date to confirmation date of the reorganization or liquidation plan has shrunk significantly. In 2017 it declined to four months, compared to five months in 2016, and seven months among cases between 2003 and early 2018. Read more here.
 
Also this week, new lease-accounting standards become effective at the start of 2019, less than five months away. But there’s a problem, according to Deloitte: Companies don’t think they’ll be ready in time. 
 
Deloitte says a recent survey, conducted during a May webinar by the consulting firm, found that 41.3% of respondents were somewhat concerned about their ability to implement the standard by January 1, 2019, while 5.8% were very concerned. That is a slight improvement over the month before, when 42.1% were somewhat concerned and 7.2% were very concerned. 
 
However, those numbers are disquieting given respondents then had just seven months left to prepare, and a few months earlier the Financial Accounting Standards Board (FASB) had approved two ways to ease the transition. 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 amichels, August 06, 2018
Most MNCs still have more than a month to contribute to pensions and save on taxes.
 
Pensions, 401(k) plans and other retirement accounts are no joke. Not having enough money in them is one big reason so many people across the world have a fear of the future—a fear now fanned by worries that robots will eventually make many workers obsolete. But while pensions are no laughing matter, managing them while balancing the other financial needs of a company requires a firm command of what every great comedian has: excellent timing. 
 
The timing of pension contributions by multinationals got more interesting after US tax reform passed at the end of 2017. While the lower corporate rate of 21% is great for MNCs for obvious reasons, the reduction from 35% meant a lower tax deduction for pension fund contributions for qualified plans. The good news for corporates: the window for making contributions and getting the higher deduction did not close at the end of 2017. But for most companies the window will shut in mid-September.
 
That reality has sparked many NeuGroup members with pension responsibilities to wade deeper into the contribution waters in 2018. The topic drew plenty of attention at peer group meetings, as did the related subject of pension de-risking, including annuitizing some liabilities. We got a fresh reminder of all this after Raytheon last week said it would make a $1.25 billion pension contribution by Sept. 15. For more on what Raytheon and other companies are doing, read more here.
 
Reality Check for Fintech’s Disruptive Potential 
 
Treasurers straining to keep up with digital transformation can’t ignore the growing number of fintech startups offering solutions that could change how MNCs work with their banks—most of which are increasing their collaboration with fintechs. But a new report says bank concerns over security, financial stability and scalability are holding back the growth of fintech startups in the wholesale payments space. 
 
The report by Aite Group, “The Wholesale Payments Fintech Vendor Landscape,” says, “Most of these challenges are issues that larger, more established fintech firms and financial services providers can overcome more easily given their existing regulatory compliance, understanding of the market, and proven track record of deployments and clients.”
 
But the report’s author, Aite Group senior analyst Gilles Ubaghs, says it would be wrong to write off startups in the wholesale payments space. “There’s a big role for fintech startups to play,” he said. “They will have a big influence, even more than they are now, but it’ll be via partnerships of some form with larger players. That’s where they’re going to grow. They’re too small to go it on their own.”
 
Part of the proof that startups have a long way to go in the payments space is, of course, market share. Aite’s survey of banks found fintech heavyweights, such as ACI, FIS and Fiserv, dominate the wholesale payments landscape, accounting for 58% of bank infrastructure. Big IT vendors, including IBM and Oracle, account for 19%. Midsize fintech players account for only 6% of infrastructure, while startups hold an average of just 3%. 
 
“Therefore, their current direct impact in terms of wholesale payments infrastructure remains negligible,” the report says. “From a wholesale payments perspective, current bank positioning remains well-established, with little sign of any immediate threat of critical disintermediation. The Uber or Airbnb of wholesale payments looks increasingly unlikely.” 
 
Mr. Ubaghs expects to see more acquisitions and investments in startups by large fintech players and banks as well as ongoing collaboration in incubators. And, he says, the negligible market share startups have now “means that they have scope for significant growth, particularly as financial institutions become more comfortable with working with these smaller firms in less mission-critical areas of wholesale payments and other areas of the bank.” 
 
 
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 thoward, August 01, 2018
This month’s issue of iTreasurer dedicates more than a few pages to tax reform. That’s because despite its passage, the Tax Cuts and Jobs Act of 2017 still has a few wrinkles to iron out or, in the case of the story on page 1, a lot of spaghetti to unravel. We also take a quick visit to Dublin to provide a quick snapshot of the SAP treasury management conference that took place there in early July. We also take a look at the evolution of a cloud-based systems implementation provider. Along the way we look at IBORs, ISDAs and tax evasion. 
 
First up, repatriation. Bringing trapped cash home sounds great to companies, but there are a lot of unknowns. That’s why the new tax rules are likely to keep tax and treasury departments busy over the next few years. And the unprecedented pace of the process resulted in a law creating interpretative uncertainties and potentially unintended consequences. But what’s for certain, according to NeuGroup peer research, is that most of the cash is going to buying back stock.
 
In our Anticipated Exposures section, we take a look at corporate readiness for the end of IBORs, particularly the scandalized Libor. With support potentially ending for global IBORs in just three years, while a broad array of market participants indicate some awareness of initiatives to adopt a new risk-free benchmark, only a tiny percentage have done anything about it. Also, with Brexit underway, the International Swaps and Derivatives Association is readying itself for any legal fallout with French and Irish ISDA master agreements. Currently companies can choose to use English, New York or Japanese law to settle international derivatives disputes. 
 
On page 6 is an update on the recent SAP treasury conference in Dublin. The conference was pertinent to a variety of maturities in terms of where companies find themselves on the SAP platform timeline. “Companies using SAP find themselves along a spectrum that ranges from early versions of its ERP to the ever-evolving S/4HANA,” writes contributor Anne Friberg. “Where they stand depends on when they implemented SAP and whether they have an installed, on-premise version or use a private or public cloud (SaaS).”
 
The featured peer group summary this month is from the Treasurers’ Group of Thirty Large-Cap Edition meeting, which was held at Starbucks HQ in Seattle. Large-cap treasurers continue to grapple with the implications of tax reform, as well as cyberthreats, talent, technology and how it will change the role of treasury.
 
On page 11, NeuGroup Advisory Board member Peter Connors, of Orrick, Herrington & Sutcliffe LLP, and his colleague Joshua Emmett take an in-depth look at the new tax laws, particularly the treatment of passive income or Subpart F income. “Subpart F income is includable as ordinary income,” write the authors. “Until the enactment of recent tax reform legislation, if income of a CFC was not Subpart F income, the US shareholders did not have to include it when calculating their income for the current year, and the tax was effectively deferred. This has changed.”
 
Finally on page 14-15, contributor John Hintze discusses the newly rebranded e5 Solutions, which, after being acquired by Germany’s Hanse Orga Group, now goes by Serrala and offers more than SAP, e5’s previous single implementation services offering.
 
Enjoy the issue.
 
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 jneu, August 01, 2018

I am excited to announce that Martin Trueb has joined NeuGroup as a senior executive advisor. Martin has been a trusted member of our advisory board for two decades and a very active member of our treasurer-level peer groups for almost as long. He will help us launch one of our new groups, The Tech20 Treasurers’ Peer Group High-Growth Edition, this fall and will be providing leadership to additional groups as needed. Martin will also join our other senior executive advisors to offer members across our network advice and mentoring based on their vast experience in treasury and finance. In Martin’s case, this includes building appropriate treasury and finance infrastructure to support company growth and transformation.

Martin Trueb recently retired from Hasbro, Inc. where he served for over 20 years as the Senior Vice President & Treasurer.  Based in Pawtucket, RI, Hasbro, Inc. is a global play and entertainment company committed to creating the world's best play experiences.  From toys and games to television, movies, digital gaming and consumer products, Hasbro offers a variety of ways for audiences to experience its iconic brands, as well as premier partner brands.

Thanks to my association with Martin and Hasbro, I have seen the tremendous evolution of the company, including its transformation from a traditional toy company to an entertainment brand platform taking full advantage of our current digital age.

As Senior Vice President and Treasurer at Hasbro, Martin established a global Hedge Committee to monitor foreign currency cash flow exposures and develop strategies to mitigate the risk of changes in foreign exchange rates.  Early on, he established an International Treasury Centre (ITC) in Switzerland to consolidate non-US cash and short-term debt.  Over time, he partnered with the global finance teams to evolve the ITC into a true global treasury operation to execute all aspects of cash management (bank relationships, payments, receipts, funding, capital structure and foreign exchange issues).

Martin was also responsible for creating integrated financial models to forecast financial statements (P&L, B/S and Cash Flow), cash position (receipts and disbursements).  He was an early proponent of treasury software and oversaw the implementation of a variety of systems, including FXpress, FXall, Selkirk, Treasura, and most recently, Reval. 

In addition to his core treasury responsibilities, Martin managed Hasbro's global insurance programs (property, casualty and D&O) and was able to reduce the total cost of risk by over twenty percent.  He also managed Global Credit & Collections and started shared service centers for the Americas, Europe, Middle East & Africa and plans for the Asia-Pacific region. 

Martin received a BS degree in Marketing from California State University, Fresno, an MBA in Finance and International Business from the University of California, Berkeley and speaks Portuguese and Spanish.

I encourage all NeuGroup customers to welcome Martin and connect with him in his new role with us.

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Blog entry
By thoward, July 30, 2018
With US tax reform, Canada will have to take proactive measures to protect its tax base.
 
Slashing the US corporate income tax rate 14 points to 21% will all but certainly reduce the likelihood US companies will choose inversions to countries with lower rates. And while the tax overhaul is unlikely to draw full-blown inversions back to the US, companies should reconsider their cross-border configurations—especially with Canada.
 
US reform fits into a global trend of countries seeking to attract companies—the proverbial race to the bottom, as some may call it. The average 25% rate comprising federal and state taxes puts the US slightly below the average of the top 30 countries in terms of GDP and slightly above the OECD average. For other countries, especially neighboring ones like Canada, the US’s biggest trading partner, the more important change may be less its southern neighbor’s more attractive tax rate, and more its own relatively less attractive one. What’s a Canadian to do? Follow the Irish example? Read more here.
 
More Libor
 
Despite overall inertia about moving away from the London Interbank Offered Rate, there have been a few proactive organizations that are at least looking to amend the language in the documentation. The problem is that just changing the language may not be enough, according to Fitch Ratings. And unless it’s revised again, some $4 trillion in syndicated loans could be repriced. If this happens, it may “affect a company's cost of debt, which may ultimately implicate credit quality if altered significantly.” 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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