For corporate treasury, the current landscape is all about taxes and repatriation and all the nitty-gritty in-between. Transition tax, anyone? How about foreign derived intangible income? The tax reform bill signed into law late last year means a whole lot of change for treasurers, particularly as it relates to acquisitions and funding. But at the same time, other issues need to be addressed, like FX risk and technology. In the February issue of iTreasurer
we take a look at all of these and more.
On page 1 we delve into the impact of the new tax law. “Not surprisingly,” writes contributor John Hintze, “the new tax law that cuts the corporate tax rate and allows repatriation of trapped cash will have a big impact on corporate treasury departments. It should set in motion a ramping up of M&A and push companies to start reconsidering funding strategies; it also introduces completely new elements for treasury to consider when managing cash globally. No need to rush to decisions, however, since much of the law may be subject to change.”
In our “Anticipated Exposures” section, we take a look at the impact of tax reform on speculative-grade issuers. In short, the last few years have been a debt-issuance palooza for spec-grade corporates. However, that all issuance might come back to haunt them in 2018. Also, we look at how treasurers should get involved in company M&A plans to help manage the plethora of FX risk that is part and parcel of cross-border M&A deals. This includes choosing a hedging strategy in case the deal collapses. There’s also a look at how utilities will see fewer dollars flowing into their coffers now that the new tax law has come to fruition. This is because the highly regulated businesses base their fees partly on expected tax obligations.
In our NeuGroup peer group summary, this month we highlight the Global Cash and Banking Group, or GCBG. At a meeting hosted by Microsoft at its headquarters in Redmond, Wash., members discussed a host of top-of-mind issues, including how technology and digitalization are shaping departments as they undergo various forms of transformation. The digital downside, of course, is all the threats posed to MNCs by cyberfraud and the resultant need for treasury to boost defenses. The meeting, sponsored by Bank of America Merrill Lynch, also touched on the automation of intercompany settlements, blockchain and creating a cash culture.
On page 11, iTreasurer discusses how criminals are getting more creative. “You’re a corporate treasurer and you get a call from the CEO, who’s about to board a plane, requesting you to bypass controls and make a payment to a certain supplier’s account.” Do you give up the controls? Absolutely not. Nonetheless, determining who and what is real and what isn’t is getting more and more challenging. One way of preventing payment fraud, according to Bob Stark, vice president of strategy at cloud treasury software company Kyriba, is to protect access to systems and data using two-factor authentication to access banking services.
Starting on page 12, in “When the Issuance Landscape Looks Uncertain, Try a Private Rating,” iTreasurer delves into how companies can get a snapshot of how their debt will be received by rating agencies and investors.
Finally, on page 15, we look at how corporate treasury needs to drive the process of embracing the digital innovations that are fast and furiously approaching.
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.