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

Blog entry
By afriberg, October 26, 2017
The Treasurers’ Group of Thirty (T30) will meet in Toronto, Canada, in late November with an agenda focused on transforming treasury to meet business needs, optimizing TMS while remaining cyber-secure, the challenges of improving working capital metrics and more. The event will be sponsored by Kyriba. 
 
Here are some of the key sessions:
 
Treasury Transformation – The Journey So Far at Our Host Company: What does a cutting-edge, value-adding treasury department look like now? At what point do you decide that the treasury organization is no longer fit for the future growth and development of the company? And how do you go about transforming treasury to align its mission and service delivery with the company’s growth strategy and business model? Our meeting hosts will share what their company has done so far to transform treasury to meet current and future needs and challenges.
 
Cyber Security and Leveraging Technology to Prevent Fraud: What cyber security initiatives have members undertaken and how is awareness of cyber threats – rising in number and sophistication – communicated internally? Kyriba will address how you can leverage technology and configure your TMS to detect and prevent fraud and cyber crime.
 
Working Capital Change Management: “When the CEO notices working capital, it’s strategic,” they say. But that doesn’t mean that changing the company’s approach to working capital management or treasury’s involvement to drive that change is welcome in all quarters. How can treasury strike a delicate balance? Real-life examples of the positive impact treasury can have on working capital and cross-departmental collaboration.
 
Other sessions will tackle capital allocation and the best ways to communicate treasury’s performance to the board of directors. In addition, there will be lunch-table discussions on pensions, interest rate risk management and FX hedging. 
 
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 jneu, October 25, 2017

For MNC CFOs in China, SSCs are key to finance-business cooperation supporting growth.

NeuGroup’s Asia CFO group met October 19 in Shanghai and discussions about finance and business team cooperation dominated. Close finance-business partnerships are needed to meet the challenges in China of rapid economic growth, market and regulatory change, which require fast-paced business transformation. And to support close finance-business partnerships, MNCs need a new kind of Shared Services Center (SSC).

The SSC-Business partnership

One of the key lessons for business-finance team partnerships is the need for a strong SSC. This was underscored by two presentations over the course of the meeting. The first by a CFO and his shared services center head detailed a project to insource its SSC activities, including the business process outsourcing (BPO) of a recent acquisition. What they found was that bringing SSC activities in-house facilitates better end-to-end coordination of processes from the business end as well as finance. It also brings “sunshine” to several shadow costs that often remain hidden in BPO arrangements and creates opportunities to “harvest” value-added activities.

One example shared was allowing the SSC to take the lead on collections, which had been traditionally left to sales. Sales managers are often more inclined to close the next contract and do not want a collection conversation to get in the way of that. The shared services team is also going to be more conversant and receptive to training to make them more knowledgeable about procedures on all forms of payment collection, such as those involving bank acceptance notes and discounting, which is a common form of payment in China. The payments team in the SSC can also share knowledge on this form of payment creating a center of excellence. According to the CFO of the company presenting, the decision to shift collections to the SSC has already improved cash flow and DSO significantly. Banks and other providers offering solutions to improve the situation further, moreover, now have a central point of contact to make this happen.

In another example of how Shared Services Centers are evolving into new centers of excellence, Deutsche Bank highlighted its recently-created regional Cyber Incident and Response Centers. Their Asia Pacific center head described the work these centers do to protect the business and clients from cyber attacks. The aim is to improve the bank’s ability to detect threats and provide a robust response to incidents around the globe and around the clock.

Other examples shared involving SSCs and finance-business cooperation include the use of Robotic Automated Processes to retrieve point-of-sale data and relieve finance teams of confirmation calls and store managers from having to stop caring for customers to field their calls. Some companies are also distributing dashboards and other data visualization-intensive reports to line managers via WeChat, so they can receive and process important data from their smartphones without retreating to their office desks.

A well-functioning SSC is so important that many members noted initiatives to create a global SSC Head to boost efficiency and spread business value enhancing best practices across centers globally. The talent level and experience required to scale finance support to fast-growing, transformational businesses in a highly-regulated market like China means that SSCs based there often set the global standard. And thus, the heads of China-based SSCs serve a very important role even if they are not the global head. “My SSC head is who really helps me sleep at night,” as one CFO noted.

Outlook

Building on meeting presentations showing the growing importance of SSCs, and the introduction of robotic process automation introduced at the prior meeting, NeuGroup will work with members and their SSC heads— both in the region, and those coordinating standards and best practices globally—to continue exchanging knowledge and insight on their use cases and evolution. Since they are so critical to finance and business partnerships, and SSCs in China appear to be at the forefront on global trends, we encourage all our stakeholders to pay attention to what is going on here, within their organizations, those of their peers and those of their banks and other suppliers. It’s a space worth watching.

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Blog entry
By bshegog, October 19, 2017
NeuGroup’s Treasury Investment Managers’ Peer Group and Treasury Investment Managers’ Peer Group 2 will gather together at the offices of sponsor J.P. Morgan Asset Management in New York City on November 15-16 to discuss a variety of global market and economic issues affecting the decision making of finance professionals responsible for investing excess cash. 
 
Aside from the opportunity to network and share best practices with dozens of counterparts at cash-rich corporations, here’s some of what’s on tap:
 
What’s Ahead for Global Markets: Chief Global Strategist and Head of the Global Market Insights Strategy Team for J.P. Morgan Asset Management, David Kelly will provide timely insights and analysis for investment managers trying to get a handle on how tightening monetary policy, dysfunction in Washington and global political turmoil are shaping the outlook for debt and equity markets and the global economy as 2017 winds down. How are you positioning the investment portfolios as rates look poised to rise in 2018 after the US economic expansion and the bull market in stocks enter their ninth years? 
 
Deep Dive on Credit: Debt instruments and credit play an outsized role in portfolios managed by members of these groups, and this session will feature an expert panel from J.P. Morgan Asset Management answering questions and offering analysis on everything from global fixed income opportunities to measuring counterparty credit risk to alternatives to money market funds. 
 
European Money Market Reform: Memories of US money market reform are still fresh in the minds of members now contemplating the implications for cash balances of similar changes coming in Europe. Like the US, there will now be variable net asset value (VNAV) funds in addition to the constant NAV public debt funds (government funds). Unlike the US, there will also be a “low volatility” NAV (LVNAV) option that will be allowed to be CNAV-priced. Members will discuss the details with J.P. Morgan Asset Management experts and get an update on political and regulatory reforms as well. 
 
Odds and Ends: Members will share what dashboards they use to report to senior management and what systems they use to prepare the reports. They’ll also talk asset allocation and efficient frontier analysis with specialists from J.P. Morgan Asset Management. We’ll have a session on the political landscape hosted by Axios, the new media company. And, yes, we’ll delve into some tax talk as members consider what they may do with repatriated cash. 
 
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 afriberg, October 17, 2017
NeuGroup thanks all the attendees of the T30 LC 2017 H2 Meeting in New York and the team from Société Générale for hosting and sponsoring. 
 
Here are some highlights from the event, held September 27-28:
 
Cyber Insurance, Anyone? Everyone?
Attendees had a lively discussion about buying insurance to cover losses from cyber attacks like the one that slashed hundreds of millions of dollars from quarterly profit at one member company. Exploring the cyber insurance market is one of this business’s top priorities, and several members favor making this an agenda item at the next meeting. Part of that session may include bringing in someone from Marsh & McLennan, which provides cyber security insurance to several members. One participant discussed the resistance of his IT department to providing information to a potential carrier. Another said the initial application for cyber coverage was easy but that in the second year the insurer asked a lot of specific questions.
 
Inside a Treasury Makeover.
One member at a beauty products company tackled the topic of treasury transformation by describing how his company addressed a fragmented and outdated treasury system infrastructure. Goals included increasing the reliability and accuracy of cashflow forecasting, boosting the percentage of cash under control and achieving further optimization of working capital. Notably, treasury chose to use third parties to oversee the transformation and help navigate the vendors and do an RFP, starting with Hanse Orga and then moving to e5 when the IT department wanted a say in the SaaS system. 
 
The biggest challenge involved resistance put up by business units to the changes treasury wanted to implement. Treasury ended up having to use “force” by establishing metrics to get affiliates on board. Another pain point involved finding that SAP is more fragile than treasury thought, leading to the conclusion the company should have done more testing before it went live with the new system.
 
Supply Chain Financing: Bank or Bank Agnostic?
The projects and priorities of one packaged foods company include rolling out supply chain management across markets. That sparked an interesting discussion about the pros and cons of using banks versus bank-agnostic providers when companies want to extend the terms of their accounts payable. While this department only uses bank-agnostic vendors, another member uses a bank for the service because it offers the best pricing and outreach for the company; the bank in question has particularly good reach with most if not all of the company’s suppliers. Another member said, “making the bank work for us” is another incentive. Members also discussed whether making financing for vendors mandatory is worth the cost in ill will. “Your suppliers will hate you,” one said.  
 
Tax Reform: The ‘Unified Framework.’
Société Générale updated the group on the “Unified Framework” for tax reform unveiled the day before by the Trump administration and key congressional committees. Highlights include a reduction in the corporate rate to 20%, a one-time repatriation of foreign profits held offshore at rates that were not specified and limitations on net interest expense deductions (again, no details). Asked about the potential use of repatriated cash, one member said it all depends on the interest expense deductibility dilemma. Many obstacles stand in the way of passage of a bill, including how tax cuts will be funded given limitations on deficit growth as Republicans seek reform under a budget process called reconciliation that requires deficit neutrality outside of a 10-year window. As one member observed, “There’s a lot of event risk; it’s going to be a little scary to watch.” That’s especially true for companies who will face pressure over the use of excess cash from activist investors. One member said, “We will have a tough time justifying not giving shareholders money because we are paying down debt.”
 
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 bshegog, October 13, 2017
The Corporate ERM Group meeting hosted by Parker Hannifin on November 9-10 in Cleveland will feature timely insights from corporate professionals, academics and other experts on critical risk topics, and will offer NeuGroup members the chance to discuss challenges and opportunities they face in this increasingly complex field. 
 
Check out these highlights from the agenda:
 
Regulation and Risk - The Banks’ View: KeyBank’s chief risk officer will share details and perspective on how his bank and the financial industry have navigated the changed, tightened regulatory environment in the wake of the financial crisis. What lessons does the experience hold for non-banks on how risk groups can better position organizations strategically amid an uncertain regulatory backdrop? 
 
Understanding Blockchain’s Risk Profile: Proponents of blockchain technology tout its security benefits, but some financial and risk professionals are wary of being too ahead of the curve. What’s the risk-reward offered by blockchain? We’ll get the views of Symbiont president Caitlin Long about the selling points of blockchain and her company’s technology, which promises to reduce risk and eliminate tampering in financial transactions and save money and time. Long, who worked at Morgan Stanley, also shared in a patent for terminating pension plans through mutual annuitization. 
 
Natural Disaster Risk - Harvey, Maria and Beyond: This season’s rash of hurricanes makes clear both the suffering and devastation brought by natural disasters as well as the difficulty of effective risk planning. Climate change and other factors are taking a toll on communities, governments and corporations tasked with anticipating unpredictable risks and dealing with the aftermath of calamities. Members will share their thoughts and strategies on managing financial risks that seem likely to grow in the years ahead. 
 
Odds and Ends: Members will discuss the growing link between risk and strategy and the challenges facing risk professionals fighting to play a greater role in a company’s strategic mission with one of the leading academic researchers on the topic. And we’ll discuss the just-released COSO framework on ERM with one of the project’s key advisors. What does this new framework mean, and why does it matter? 
 
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 afriberg, October 12, 2017
The Assistant Treasurers’ Leadership Group will meet in San Jose, California, in November to take on topics that concentrate on the treasury organization, maximizing the usefulness of existing systems and timely reviews of FX hedging programs. 
 
Here are some other key sessions:
 
Future Treasury Organization and Talent: What does a cutting edge, value-adding treasury department look like now? What is the end state vision for treasury transformation? This session will include: current thinking on treasury in key global regions; redrawing the line between treasury and shared services; headcount adjustments due to automation and digitalization; and key talent and skills needed when treasury goes digital. 
 
Freeing Trapped Data – Cash Flow and Exposure Forecasting Using Enterprise Systems Data: One of the biggest treasury frustrations is the inability to get the right data out of enterprise and bank systems in a timely fashion to inform forecasting and support better decisions on cash and exposure management. How do we free trapped data?
 
Changes to FX Hedging Practices: Structural USD strength and reversal, global rate inflection points, updates to hedge accounting and geopolitical concerns have many MNCs reviewing FX hedging practices.
 
We’ll also tackle capital structure and planning for US tax reform and offer up a treasury excellence and innovation showcase.
 
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 afriberg, October 11, 2017
 
The Tech20 Treasurers’ Peer Group will meet in Sausalito, California, in early November to tackle a full agenda that includes a panel on acquisition and spin-off financing with members and bankers from BNP Paribas. 
 
Here are some other key sessions:
 
Risk Management – FX Hedging and Industry Standard Risk Management Policy: The session will kick off with a member seeking input on what constitutes an industry standard risk management policy and how he can bring his program up to date. FX programs are challenged with new (but most say better) rules for hedge accounting, and trends in cost cutting, digitalization and the USD cycle. 
 
Capital Allocation – A Continuing Conundrum: In the 2017 tax and political environment, how do members stand on the capital allocation conundrum? How much should go to buybacks, dividends, M&A, etc.? How do you decide? And who influences the decision? A member will discuss the capital allocation issue while another will address the calculation of the company hurdle rate and the factors influencing it.
 
Growing Up and Transforming Treasury – Member Case: We’ll hear how one of the tech members describes the journey so far to scale treasury and align its mission and service delivery with the company’s evolving growth strategy and business model. What can this member’s experience teach other companies to do and to avoid?
 
Another session will tackle tax and treasury synergies and collaboration, and an external speaker will present a blockchain use case.
 
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, October 05, 2017
 
Members of NeuGroup’s Internal Auditors’ Peer Group will get together in early November to exchange views on a wide range of topics, including cyber risks to the cloud and data as well as systems implementation audits.
 
Other topics will include:
 
Risk assessments. Who does an annual risk assessment and who does a quarterly one? Members will compare and contrast strategies and processes and discuss how each company arrives at the top risks. What are members using to glean this info? An online survey? Interviews? What questions do they ask?
 
RPA audits. Artificial intelligence continues to advance and provide new and innovative applications for corporate treasury that holds the promise of reducing human error and costs. With that in mind, many companies are thinking about robots for tasks that don’t need a lot of brain power.
 
Post-acquisition audits. Acquisitions are always exciting times for companies. But a sober review of what happened and what happens next is always important. This can inform management (for the next acquisition) how events, decisions, communications and actions surrounding the merger were handled. What could have been done differently to make the integration easier and what additional actions remain unfinished?
 
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 jneu, October 05, 2017
NeuGroup thanks everyone who participated at the tMega 2017 H2 on September 26-27 in Cupertino, especially Apple for hosting the meeting at Apple Park, the company’s immense and impressive new headquarters. Here’s what you missed. 
 
Inside Apple Park. Members got one of the first looks by outsiders at the inside of Apple’s still-unfinished, future workplace: a 175-acre plot that’s home to a huge, four-storied, glass and steel circular building powered entirely by renewable energy set in a natural landscape with thousands of trees. Our tour included an airy cafeteria and the 1,000-seat, underground Steve Jobs Theater, where Apple unveiled the newest iPhones and other products about two weeks before tMega’s arrival. Members marveled at the tremendous engineering and construction achievement of making Jobs’s vision for Apple Park a reality.
 
Keeping Pace with the Tax Reform Beat. The moving target of tax reform remains a core topic for treasurers tasked with planning for something that remains far from certain. One member said his company’s plans through March 2018 assume no tax reform but “if there is, that’s a bonus. We all are very hopeful they’re going to get something done but we can’t plan they are going to get something done.” Indeed, on the day the White House released a “unified framework” that calls for a 20% corporate rate, one tax and policy expert told the group Senate Majority Leader Mitch McConnnell has lost his magic and that the odds of broad tax reform passing by next summer are less than 50:50.
 
Hedge Accounting Changes. Members discussed the implications of FASB’s long-awaited update to hedge accounting standards, unveiled in late August with a mandatory effective date beginning in January 2019. Whether to adopt the standards early is among the questions now facing treasury. A bank presented the group with the most significant changes, a list of positive and negative “game changers” and some recommendations. The analysis included the observation that companies still must attest to a hedge being “highly effective” to qualify for hedge accounting; but for cash flow and net investment hedges, FASB has eliminated the requirement to measure and report hedge ineffectiveness.  
 
Pension Liability De-Risking. Members enjoyed a lively session on improving pension asset-liability balances and minimizing the risk exposures companies face from their defined benefit plans (de-risking). One presenter detailed his company’s commitment to move away from equity and extend fixed income as its service cost as percentage of Projected Benefit Obligation (PBO) declines; he asked the group for thoughts on the ideal glide path. The goal: to move fixed income allocation from 20% to 40%. Another discussed waiting for interest rates to rise before further de-risking the company’s plan as it tries to determine how quickly to “move up glidepath,” as his slide put it. Other topics discussed included annuitization, terminating and freezing plans (“a hot topic,” one member said) and the resulting amount of resistance and “noise” companies encounter from shutting down or limiting pension plans. 
 
Cyber Attack: Real-Life Lessons Learned. The group also heard a member describe the cyber attack that shut down his firm’s worldwide IT systems in June and infected half the company’s laptops and desktops, leaving treasury without the ability to access its TMS (which was not compromised) as the quarter closed. The department had a business continuity plan but did not envision losing access to laptops. The company was forced to buy new laptops, use personal computers and to use smartphones. 
 
If you would like more information about NeuGroup’s tMega, visit this link. The group’s next meeting will be in New York City March 13-14, 2018. 
 
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, October 03, 2017
Not only is honesty the best policy but it also might be best practice for fattening up tax coffers, too. That’s the idea behind the United Kingdom’s new requirement for UK companies of a certain size to post their tax strategies for all to see. Also, should multinationals feel safe in submitting their tax reports to the revenue authorities in the countries in which they do business? These are just a couple of the topics discussed in this month’s iTreasurer.
 
First, the honesty policy. As part of UK’s Finance Act 2016, companies with a substantial presence in the country are required to post to the internet on an annual basis a public document that describes their organization’s tax strategy regarding their UK operations. This they feel will push companies onto the straight and narrow and thus increase revenues to Her Majesty’s Revenue and Customs strongbox. If it works, watch out. Other countries might just give it a try. And the potential is high if it turns out to be that easy, suggest Heléna Klumpp, a partner with Ivins, Phillips and Barker, and “perhaps greatest in the United States, where tax legislation is a distinct possibility in the coming months.”
 
In the Anticipated Exposures section on pages 4-5, iTreasurer takes a look at reducing bank accounts, how some companies are neglecting their investment policies, which means missed opportunities and possibly losses. Also a look at how all issuers are getting extra friendly terms from their investors.
 
In “OECD: Don’t Abuse Tax Payer Info,” on page 6, companies have been expressing concern that their tax information, which they must report under direction of the OECD’s BEPS (base erosion and profit shifting) Action 13 (part of the 15-point action plan), might be abused or otherwise used not in accordance with the Action’s intent. This worry was strong enough that the OECD issued a guidance on what constitutes abuse and lays out conditions and consequences if any country abuses the tax info. This means, according to the OECD, appropriate use is restricted to:
 
• High-level transfer pricing risk assessment;
 
• Assessment of other base erosion and profit shifting related risks;
 
• Economic and statistical analysis, where appropriate.
 
So, it sounds like companies will have to keep their fingers crossed.
 
There are two peer group meetings in this month’s issue, one from the NeuGroup’s Assistant Treasurers’ Leadership Group (ATLG) and the other from the European Treasurers’ Peer Group (EuroTPG). ATLG members tackled tax reform and ongoing Obamacare repeal efforts. In addition they learned about the pluses of FASB’s new hedge accounting and got detailed hedging strategies related to debt issuance.
 
At EuroTPG members discussed the impact of global politics on their business environment and how despite an improving global economy, increasing emerging markets risks need to be addressed with a robust risk management process.
 
Finally on page 15, frequent issuers who are members of the NeuGroup’s Treasurers’ Group of Thirty Large Cap Edition, were advised on some strategies for issuing in the current environment. One suggestion was to listen to the market and be responsive, but not overly so and not become too predictable in issue cadence.
 
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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