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

Blog entry
By aorwick, February 24, 2017
Join Ted Howard, Managing Editor of iTreasurer, as he sits down with Maex Ament, Chief Strategy Officer and Cofounder of Taulia, to discuss the recent Spotlight Feature on how fintechs are changing the way buyers and suppliers approach their supply chain.  
 
Fintechs Transforming Supply Chain Finance
Featuring Ted Howard of iTreasurer and Maex Ament of Taulia
March 9 PST/12 EST
Click here to register
 
Fintechs are leveraging technology to streamline the buyer-supplier experience, eliminating age-old tensions and adding a powerful tool to working capital management. With help from these new players, buyers are maximizing their supply chain returns, and suppliers are strengthening their cash positions. 
 
Yet, NeuGroup survey data indicates that many MNCs do not have supply chain finance programs in place. Most companies still cling to old trade finance processes, which actually have the potential to weaken their supply chains. 
 
During this interactive webinar, Mr. Howard and Mr. Ament will address your questions and concerns about how fintechs use technology and data analytics to better manage working capital. 
 
Register now to participate in a live Q&A with industry experts as they explore the ways fintechs can help you save money and eliminate inefficiencies.  
 
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Blog entry
By afriberg, February 13, 2017
 
First NeuGroup meeting of the year: New president, FX volatility, setting hedge objectives and reacting to rising interest rates.

The sponsor of the first NeuGroup meeting of 2017, Société Générale, is predicting higher FX volatility this year, including higher intra-day volatility. This heightens the importance of improving FX trading and execution practices, which was a highly rated topic for members of the FX Managers’ Peer Group (FXMPG), who convene in New York on March 7-8.

With a new US president and administration in place, companies are attempting to understand the new political and economic environment and its impact on markets. In the case of rising interest rates, what should treasury do to make sure the hedge program continues to meet its objectives? And is this the right time to consider net investment hedging? Société Générale’s experts will weigh in. 

Continuing discussion of challenges faced in 2016, the group will compare approaches for determining the principal objectives for the hedge program and their internal hierarchy. 

Also on the agenda:

• New Hedge Accounting Exposure Draft: In September, 2016, the FASB released an exposure draft on hedge accounting with the aim of making “targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders.” Key goals are to make hedge accounting easier to achieve and account for, and reduce the risk of restatement. An expert from Bloomberg will share his analysis of the exposure draft and recent developments.

• The Options vs. Forwards Decision: A perpetually high-rated topic for many, this session will examine the decision parameters and influencing factors for members when determining which instrument best serves the hedge objective, generally or at any given time.

• Lunch with Table Topics: Each table will have a topic, selected from items on the topic poll that did not rate high enough for members to make the agenda with a session of their own but that were still ranked highly by several members. For example: counterparty exposure management; quantifying and mitigating tail risk; effective FX training; bank scorecarding.

For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.

 
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Blog entry
By brichardson, February 09, 2017
January 2017 was the start of a four-year adventure that is sure to touch many aspects of corporate America. The Treasurers’ Group of Thirty (T30) will gather March 15 in New York at the offices of Nasdaq MarketSite to discuss the impact of the new Trump administration on their businesses and the economy.
 
At the top of the T30’s wish list is tax reform, and the stars appear to have aligned so that a badly needed overhaul of tax law can take place. Reduced rates, deductions to encourage capital spending and relief from punitive tax rates on foreign income that prohibits repatriation of cash are all key hopes of American companies. As for America as a whole, funneling the majority of an estimated $2 trillion in cash into the US economy is sure to give it a boost. Kathleen Dale of KPMG, who did a great job giving an update on Section 385 last fall, will lead a session on the significant impact tax reform could have in this country. 
 
Speaking of the economy, there are so many new variables in the overall equation that it can be difficult to make sense of it all. Regulatory overhaul in the areas of banking, pipelines and health care; renegotiated trade agreements; new views on monetary policy; and additional spending on defense and infrastructure will be a boon to some industries and pose risks to others. The group will have a session on these topics to get some clarity on direction and impact.
 
Cash-flow forecasting is also a nemesis for some companies. But News Corp has developed a model for a direct forecast that works well for them. The News Corp treasurer will review the company’s process and tools used for generation in the hopes that other members will find some nuggets of information that will aid them in their own forecasting activities.
 
For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.
 
 
 
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Blog entry
By thoward, February 06, 2017
In the February issue of iTreasurer we discuss developments (or arguably, retreats) in China, interest rates, M&A for 2017 and a little more Trump.
 
On page 1, contributing editor Bryan Richardson, who also leads the NeuGroup’s Asia treasury groups, discusses some of the challenges facing treasury practitioners in China. Over the last several years Chinese regulators have been easing back on strict rules on cash management. But lately, in its attempt to better control the economy, it’s been backtracking on some of the easing. “Uncertainty and erratic regulatory behavior in China is not new,” Mr. Richardson writes. “But advancing the country in such a meaningful and inviting way only to begin reversing course a few years later is a business-confidence killer. Add to these actions the even more aggressive posturing of China’s military in the South China Sea,” and the climate can suddenly get very chilly.
 
On page 6, iTreasurer takes a quick look at the forecast for prime funds. It doesn’t look great. Despite some pick up in prime inflows at the end of 2016 and into the new year, overall, the outlook looks pretty flat. There’d been some hope that the yield differentials, which favor prime funds, would induce money back into the assets. However, “investors that took a wait-and-see approach, moving into government funds temporarily with the expectation of moving back to prime funds in 2017, will likely be disappointed.” That’s because prime fund sizes are a fraction of the market value and most investment policy statements require the investment not to exceed a certain percentage of the total market value of the fund.
 
The featured meeting summary for February is the second-half meeting of the NeuGroup’s Global Cash and Banking Group. Members discussed solutions for managing cash amid historically low rates and the constant threat of regs that over the past several years have reshaped cash management and prompted attendees of the meeting to explore new solutions.
 
On page 11, contributor John Hintze discusses a Morningstar report on the market possibly getting ahead of itself amid great hopes for what impact the Trump administration will have on the economy via tax policy and regulatory relief. “The US stock market has jumped in anticipation of President Donald Trump’s promises of deregulation and lower taxes,” writes Mr. Hintze. “But Morningstar anticipates corporates’ humdrum growth prospects continuing, along with a less attractive environment for raising capital.”
 
Continuing the theme from page 1, iTreasurer discusses China’s attempts to curtail outflows and certain cash management tools. The unofficial restrictions China has placed on multinational corporations last year, which sent capital out of the country via pooling structures, just got more restrictive.
 
On page 14, NeuGroup founder Joseph Neu discusses ZIRP (zero interest rate policy), PIRP (positive interest rate policy) and the possible end of NIRP (negative interest rate policy). That is with Trump occupying the White House and the Fed hiking rates, Europe and Japan will have to give up on ZIRP.
 
Finally on page 15, iTreasurer delves into the M&A market: the upshot is that it will remain tight into 2017 after finishing strong in 2016.
 
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, January 25, 2017
As corporate treasury braces for big changes in 2017, NeuGroup hopes to play an important role in preparing its members to tackle new challenges. Our team recently met in Nashville, Tennessee, to make plans for the upcoming peer group meeting cycle, which is sure to be one of the most exciting yet. 
 
The Hermitage Hotel provided a charming backdrop for our discussions on how to improve knowledge exchange – both inside and outside of meetings. We spent a lot of time in small groups refining strategies, identifying ways to increase efficiency and familiarizing ourselves with new technology. 
 
And what would a trip to Music City be without a visit to the Grand Ole Opry? NeuGroup got a backstage tour of the Opry House, home to the longest-running radio broadcast in US history, and learned a thing or two about legacy and tradition.
 
When a country music star joins the Grand Ole Opry family, it is the beginning of a new career chapter. NeuGroup, too, aims to empower its members and help them reach new heights in 2017. Over the next few months, expect some big announcements about peer group communication, and keep your eyes peeled as NeuGroup rolls out a new look. We look forward to growing and innovating with you! 
 
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Blog entry
By thoward, January 17, 2017
The New Year issue of iTreasurer starts off with more Trump, what else? As with his predecessor, people are seeing a variety of presidents in Donald Trump, from being a threat to American democracy and for that matter, the world, to being the restorer of the American dream and making America great again for everyone. Whatever their personal views, from a business standpoint, treasurers probably lean toward the latter view, i.e., a more positive depiction in their painting of The Donald portrait. They see the possibility of tax and regulatory relief and other bullish things for business.
 
So it is on page 1 NeuGroup founder Joseph Neu delves into what Trump will mean when it comes to corporate taxes. In “Capital Planning: It’s All About Trump’s Tax Plan,” Mr. Neu points out that treasurers have had repatriation tax holiday and tax reform on their minds for years and are hoping the new president makes meaningful progress during his term. And if it is repatriation tax relief, what will they do with that money? “Depending on the sector, most firms will look at strategic acquisitions and then share repurchase and dividends,” Mr. Neu writes. “Depending on the state of their leverage and rating outlook, some may also retire debt, but given the current rate outlook and recent low-rate opportunistic funding, there will likely be few taking this route.”
 
On page 4 iTreasurer contributor Julie Zawacki-Lucci writes about what 2017 will bring for treasury budgets. After mining the data collected from numerous peer group meetings, Ms. Zawacki-Lucci concludes that it will be a good year for budgets. “Purse strings appear to be loosening slightly for 2017,” she writes.
 
In our peer group meeting summary that begins on page 7 we take a look at the takeaways from The NeuGroup’s Treasurers’ Group of Thirty Large-Cap edition (T30 LC). One key takeaway is that the treasury function’s stock is rising. That’s been reflected in compensation levels, which have been moving higher. “The increasingly strategic role of treasury is showing up in respectable compensation levels, especially in pharma and biotech,” according to Anne Friberg, who runs the group. Treasury’s sphere of influence is also expanding, according another takeaway from the meeting.
 
In a similar vein, beginning on page 11, James Volkwein and Joseph Mauro of Deutsche Bank author a story on five trends to watch in 2017. Among them is “corporate treasury’s role as the principal risk manager of the organization,” which will continue into 2017 and beyond. In the piece they also note “the longer-term trend of treasury becoming more strategic as its mandate expands.”
 
Finally in "2017—The Donald Debuts: Delights, Doubts, and the Dollar" on page 15, Anne Friberg weighs in on a Trump administration and its impact on the US dollar and taxes. Will it be Dr. Jeckyll Trump, going “whole hog on expansionary fiscal policies—tax cuts, infrastructure spending—as he has more than hinted in speeches, tweets and other pronouncements?” Or will it be Mr. Hyde Trump, killer of free trade treaties and bullier of business? Whoever emerges after January 20, one thing is certain, Ms. Friberg writes: “The year 2017 may bring both elation and exasperation with the new president, but likely not ennui.”
 
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, December 22, 2016

Thoughts on the season I wanted to share.

As the holidays are now upon us, this is the time for exchanging joy. The rest of the year, NeuGroup is focused on encouraging value creation with knowledge exchange. For the next week or so, we encourage you to exchange some joy. There is a lot of sentiment out there, with and without valid reason, encouraging sorrow and unhappiness. 

Ignore it for a while and enjoy.

Me, I will be enjoying thinking about past holidays, including those that exist in memory with just a bit of Gluehwein gauziness. It sets a joyful mood.

Happy Holidays! 

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Blog entry
By thoward, December 19, 2016
"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way..." -- Charles Dickens, A Tale of Two Cities
 
We would venture that Dickens's classic opening to A Tale of Two Cities fits the mood of today. It certainly has been an interesting year. And for our last issue of 2016, iTreasurer reflects on this unforgettable year from a treasurer's perspective. So in the heart of the issue is a review of the year’s big themes through the lens of NeuGroup peer group meetings and the top takeaways from them.
 
Also in this issue we weigh in on how a Trump administration will impact corporate treasury; highlight the findings from a 2016 NeuGroup Peer Research FTE and compensation survey; discuss the challenge of managing pension funds in a low rate environment and look at how financial technology companies are changing how supply chain financing gets done.
 
Starting on page 1, iTreasurer takes a look at the possible impact Trump's presidency will have on the global economy and how business gets done. President-elect Trump’s phone call with the Taiwanese president and his hyperbole regarding companies sending jobs overseas raises many, many questions. But, writes contributor John Hintze, “these questions and others impacting corporate treasury are unlikely to find much clarification before Trump’s inauguration. However, the new president will have the tools and in many instances the political support to make dramatic changes to trade, taxes and the US economy.”
 
Next, contributor Julie Zawacki-Lucci sorts out the takeaways of an FTE and Comp survey conducted in the middle of 2016. One of the main takeaways was that being a part of treasury is “a good place to be.”
 
“Total compensation levels for NeuGroup treasury members were higher than suggested in other broader treasury surveys,” observes Ms. Zawacki-Lucci. “Total compensation for treasurers averaged $845k, with the minimum at $214k and the maximum at $1.77M. Of that total, on average, $317k was the base/cash salary, $163k cash bonus, and $277k in equity grants and performance based equity awards (vesting in approximately three years).” A good place indeed.
 
On page 7 begins our look back at the year that was. And what a year. “Never a dull moment, and treasury management reflected it, from picking up the pieces following the shocking Brexit, to confronting the challenge of Section 385, to then picking up the pieces again after a shocking US election. But all the while, treasurers maintained their solid presence as the company cash-management stalwarts.”
 
Geri Westphal then discusses pension management with input from Société Générale. Corporations the world over have been facing many challenges in their pension plans. First it was the crash and then in the aftermath, persistently low interest rates. The situation has also been exacerbated by high asset values, and both issues have created the need for tools that can help mitigate interest-rate and draw-down risk. That’s because at current levels, “pension fund deficits can impact corporate valuations and can potentially handicap corporate development plans,” Ms. Westphal writes.
 
Finally, we look at how fintech companies have been driving innovation in supply chain finance and thus “continue to streamline the buyer-supplier experience, eliminating age-old tensions and adding a new tool to working capital management.”
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 brichardson, December 13, 2016
The NeuGroup launches a new peer group for assistant treasurers.

The Assistant Treasurers' Leadership Group, The NeuGroup's newest peer group, held its inaugural meeting last month at Dolby Labs in downtown San Francisco. The meeting was sponsored by hometown bank, Wells Fargo. 

More than 20 companies were present for the day-and-a-half meeting, which began with an extended session during which members reviewed their company profile and current projects and priorities. The session included a deeper dive into the Dolby organization and set the stage for the balance of the meeting by giving everyone a summary of participant companies. This allowed members to pursue sidebar and follow-up conversations with others having similar challenges or projects.

Following lunch and a tour of Dolby’s new in-house theater, the group was led by Adobe’s AT in a discussion on how treasury brings value to key corporate initiatives. Referencing a list of examples submitted prior to the meeting, the group discussed roles in M&A deals, capital structure, instilling discipline into business development spending, and de-risking and restructuring pensions. Adobe cited their own example of taking over accounts receivable and disbursements 18 months ago to improve those operations.

The next session was on the topic of capital structure and featured Wells Fargo and Tech Data. Wells Fargo gave an overview of what they are seeing in the market, which is a focus on hurdle rates for Return on Invested Capital (ROIC), return of capital to shareholders, and tax reform and repatriation. Tax reform is naturally a big topic. The likely prospect of returning all of that offshore cash is a major impact to corporate operations. Wells noted that rating agencies have been quiet about their reactions to repatriation and the likelihood of seeing most of that cash just go to shareholders.

Tetra Tech is involved in a significant acquisition of a portion of Avnet, which rating agencies and shareholders love. The tie-up will add considerable synergies. The company had to lever up to make the acquisition but has managed to retain its investment grade rating, in part, by promising to pay down debt and return to their BBB profile within 24 months.

The last session of day one addressed tools for improving working capital management. The discussion focused on supply chain financing, with members debating the pros and cons of the different vendors and models. One member noted that his company opted to focus on simply imposing a lot of discipline to working capital management before seeking out tools.

Day two began with an Open Forum that was closed to the sponsor. The majority of the time was spent discussing members’ experiences and views toward the various banks they use. For any particular bank, some members had positive experiences while others had negative experiences. The conclusion was that that was driven by how much business you have with them and the quality of the relationship manager. A seasoned and tenured RM is going to make a very positive impact on your relationship.

The meeting wrapped up with a session on that perpetually challenging topic, cash flow forecasting, led by a company that has been under pressure to know their cash flows intimately. The company was purchased in a LBO by a private equity firm and was structured with debt anticipating revenue in the $6 billion range. The company has exited poorly performing businesses to improve margins, which has been successful. But the debt is still there and is weighing on cash flow. Historical approaches to forecasting were not keeping up with the new structure, so drastic measures were taken to improve forecasting accuracy and, just as important, timeliness.

The inaugural meeting was a very positive launch for this new group, and everyone looks forward to its continued progress and development. And if you ever get the chance to attend movie theater fitted with “Dolby Cinema” technology, do it, as the sight and sound will blow you away.

For more than two decades, The NeuGroup has been a trusted thought leader and respected advocate for global finance and treasury professionals. The NeuGroup leads the way in peer knowledge exchange through its flagship publication, iTreasurer, and The NeuGroup Network, which includes 18 invitation-only groups serving more than 400 treasury and finance professionals across functions, industries and global regions. Visit NeuGroup.com for more information.

 
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Blog entry
ATLG, Dolby
By jneu, December 07, 2016

Dolby Laboratories hosts the launch of newest NeuGroup.

One of the highlights of our newest, Assistant Treasurers' Leadership Group meeting last week in San Francisco was being able to experience the powerful sound and vision technologies of a Dolby Cinema. It definitely is a dramatic difference from the traditional movie-going experience. A big thank you to Dolby Laboratories for hosting and to Wells Fargo for their sponsorship of the inaugural meeting. Here are a few takeaways, I'd like to share:

  • Staying in the credit sweet spot. Since the financial crisis it has been said that BBB is the new AAA, since this investment-grade rating offers the optimal balance of financial flexibility and leveraged cost of capital. As the new normal shifts, as it looks like it will under President Trump, firms will have to assess how this credit sweet spot may change, especially as repatriated cash comes into the mix for so many large US firms. Everything you've learned about capital structure and allocation these last years needs now to be revalidated at least.
  • Working capital tools still have gaps. Members discussed working capital tools supporting both dynamic discounting and supply chain finance. Working capital management is a perennial treasury topic that takes on added significance with the probable changes coming in the rate environment. The challenges to implementing effective working capital improvements are many, and you can add to them the fact that tools aimed at aiding working capital management have functionality gaps including easy integration with ERPs in some cases.
  • Frontier market entry gatekeepers. Given the whipsaw effects on emerging and, especially, frontier markets caused by shifting US policy, now is the time to ensure that sales has a gatekeeper to challenge the economics of market entry into them. Treasury serves this role well. Someone needs to curb enthusiasm when sales proposes entering into a place like Nigeria. Sales may be forcecast to be strong with healthy margins, but the bad news invariably overlooked is that pricing has to be in naira and that's a currency that may never leave the country, is subject to high deval risk and is expensive to hedge.

This was the last NeuGroup meeting of 2016 and we look forward to more invaluable knowledge exchange next year. Happy Holidays!
 

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