Welcome To NeuGroup

Connecting Every Finance Professional Who Wants To Share And Learn

Welcome To NeuGroup

Connecting Every Finance Professional Who Wants To Share And Learn

Our Mission

To help our members in Corporate Finance and Treasury reach their full, professional potential. We assist our members and those who serve them to drive success for their companies, their customers, their teams, their peers and themselves.

Our Vision

To connect every finance professional who wants to share and learn with others seeking the same. Bring the best of these professionals into our leading membership network for knowledge exchange to be a source for solutions, advice to achieve greater success and for new insight and validation for the advancement of Corporate Finance and Treasury professions.

The Corporate Finance and Treasury Elite From the World's Most Iconic Companies
NeuGroup Process

Share Your Projects And Priorities And What You Would Most Like To Learn From Other Finance Professionals

Connect

NeuGroup helps you forge meaningful connections with fellow finance professionals who share similar projects and priorities or have useful experience with them.

Exchange

NeuGroup establishes trust to facilitate open and honest knowledge exchange and inspires you to share and learn to reach your full professional potential.

Distill

NeuGroup distills useful content from each exchange to drive success and focuses on new insight that is validated by our peer groups of leading finance professionals.

Testimonials

NeuGroup Helps Our Members Drive Success For Themselves, Their Teams, Their Companies, Their Customers, Investors And Every Other Stakeholder In Their Reaching Their Full Potential

Our NeuGroups

NeuGroup currently connects 500+ corporate finance and treasury professionals from hundreds of the world’s most iconic companies for knowledge exchange in over 20 peer groups and distills insight from these exchanges to help them succeed.

Treasury’s Key Role as Corporates Support Black Communities

Treasurers weigh investments, deposits and transactions that will benefit Black communities.

Treasury teams within the NeuGroup Network are playing a key role at companies that are stepping up efforts to support Black communities and Black-owned financial institutions.

  • NeuGroup members discussed their initiatives and options at a recent Virtual Interactive Session (VIS) that followed a webinar in which Netflix detailed its commitment to allocate 2% of cash holdings—initially up to $100 million—into financial institutions and organizations that directly support Black communities in the US.

Treasurers weigh investments, deposits and transactions that will benefit Black communities.

Treasury teams within the NeuGroup Network are playing a key role at companies that are stepping up efforts to support Black communities and Black-owned financial institutions.

  • NeuGroup members discussed their initiatives and options at a recent Virtual Interactive Session (VIS) that followed a webinar in which Netflix detailed its commitment to allocate 2% of cash holdings—initially up to $100 million—into financial institutions and organizations that directly support Black communities in the US.
  • Director of treasury Shannon Alwyn told VIS participants that Netflix approached this project—an idea from someone in HR which treasury executed—by asking, “How can we make a difference in the normal course of business—how to do something without really doing anything—to make this more than a moment?”
  • Part of the answer to that question involved moving a portion of non-operating cash from one set of banking partners to other financial institutions.

The Netflix plan. Netflix is taking a first step by putting $35 million into two vehicles:

  • $25 million will be managed by the Local Initiatives Support Corporation (LISC), which will invest in Black financial institutions serving low- and moderate-income communities and Black community development corporations.
  • $10 million will go to Hope Credit Union in the form of a so-called transformational deposit to fuel economic opportunity in the South. This is a two-year CD with a 30-day call option in case Netflix needs the liquidity.

Big Picture. In general terms, companies looking to make an impact have three pillars to consider:

  1. Depositing cash into banks that directly serve Black communities.
  2. Using Black-owned institutions for financial transactions such as bond issues or stock buybacks.
  3. Direct investment of debt, equity or contributions in kind (e.g., technology, training and building housing).

There are obstacles to making investments that benefit communities. Investment policy constraints are among the biggest.

  • Most firms need peer benchmarks to ok carve-outs for depositing significant amounts of excess cash with smaller institutions and to approve equity investments that are said to have much more of a multiplier effect than loans financed by bank deposits.

Inspired by Netflix. A treasurer who attended the Netflix webinar and the NeuGroup VIS said his company, inspired in part by Netflix, is now looking to support Black-owned community development financial institutions (CDFIs) via options that include:

  • Making deposits directly into minority depository institutions (MDIs) that serve Black communities. This requires due diligence, partly because of the relatively small asset size of many Black-owned banks.
  • Using an intermediary similar to LISC that can help spread the company’s investment across a bigger group of Black-owned MDIs. “That’s what everyone is grappling with—trying to get adequate scale and diversification and some level of diligence,” the treasurer said.

Other paths to progress. The treasurer is also looking into options discussed by other companies who spoke at the VIS. They include:

  • A structured fund similar to one described by a member from a large technology company.
    • That tech company also uses the Certificate of Deposit Account Registry Service (CDARS) with a CDFI in New Orleans.
    • And the company makes use of the Insured Cash Sweep (ICS) service that involves hundreds of institutions.
  • A separately managed account (SMA) used by another company. The account is managed by RBC’s Access Capital, which helps financial institutions comply with the Community Reinvestment Act.
    • The SMA’s fixed-income investments include highly-rated issues from GSEs that support single-family loans and small businesses. The treasurer exploring his options called this “an elegant solution.”

Investment policy changes. The treasurer said it’s highly likely his company will need to amend its investment policy to accommodate whatever decisions senior management ultimately make. That will require approval by the CFO; the finance committee and the board will be notified.

  • During the Netflix webinar, Ms. Alwyn said, “We actually did have to get an exception to our investment policy for a certain portion of our cash in order to be able to do this. Because it is honestly taking on a quite a different risk profile than we’re used to. We decided that we need to take on a little bit more risk if we want to create change.”

Advice for peers. Ms. Alwyn said the company had to “carve out a specific portion” of its non-operating cash to devote to this initiative and “we kept that small.” She suggested that other treasury teams contemplating similar moves may want to think about:

  • Ratings from external agencies.
  • Duration requirements.
  • What size bank you’re willing to do business with.
  • “Getting comfortable with what level of risk you’re willing to take on as a company.”
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Juneteenth and Beyond: NeuGroup Member Companies Take Action on Racial Justice

Treasurers at major retailers discuss what’s been done so far and what lies ahead.

Calls for major societal change in the wake of the killing of George Floyd have sparked many corporations, including NeuGroup member companies, to take a range of actions in support of change and racial justice. For some, those actions included the observation of Juneteenth, which commemorates the end of slavery in the US.

Treasurers at major retailers discuss what’s been done so far and what lies ahead.
 

Calls for major societal change in the wake of the killing of George Floyd have sparked many corporations, including NeuGroup member companies, to take a range of actions in support of change and racial justice. For some, those actions included the observation of Juneteenth, which commemorates the end of slavery in the US.

  • At a NeuGroup virtual meeting for retailers last Friday on changing regulation and business norms post-crisis, a member from a major American retailer described his company’s quick decision to make Juneteenth (June 19) a company holiday.
  • Noting that the company doesn’t typically move as quickly, he credited its fast action to its cross functional crisis leadership team which is approaching the company’s reaction to recent events as it would a crisis such as a hurricane or COVID-19.
  • The company kept stores open but paid time and half to hourly workers on Juneteenth; other, eligible workers had the option to take the day off with full pay; and the company’s headquarters offices were closed.
  • “As we pivoted to this issue, we had to decide if we wanted to follow or lead,” the member said. “We wanted to lead.” 

Education and sincerity. One participant, who is African American, encouraged others on the call to better educate themselves on matters of slavery and black history, noting that few on the call knew the meaning of Juneteenth until recently.

  • This treasury professional said that what matters is sincerity and action, not talk, taken to address underlying problems. She said there is a difference between “what you know is expedient and what is taken to heart, what is sincere and what is a press release.”

 A good start. Another participant noted the pride he felt in seeing how both his current and former employers have tackled the issue of race head-on, including the CEO of the company where he works now urging conversation and learning. “I couldn’t be prouder of how people have responded,” he said.
 
Accelerated change.  In the last few weeks, the national conversation shifted from COVID-19 to racial justice crisis, focused on diversity and inclusion and black lives.

  • That, observed NeuGroup founder Joseph Neu, highlights the extent to which COVID-19 has forced business thinking to be open to accelerated change and the urgency for companies and finance teams to embrace a faster pace of change for good.

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Treasurers Rise to the Challenge of Managing Teams Remotely

One treasurer shares how he keeps staff united and upbeat—and offers his take on leadership during a crisis. The COVID-19 pandemic has forced many treasurers to confront the challenges of managing finance teams remotely.

  • At a recent NeuGroup virtual meeting of mega-cap companies, one treasurer shared his approach to keeping his team cohesive, as well as an observation about how people perform during a crisis.

Together apart. To build a sense of togetherness and maintain unity when everyone is in a different place, the treasurer created a virtual “war room” where every morning each of his direct reports speaks up and updates the group on critical information including domestic and foreign cash levels.

One treasurer shares how he keeps staff united and upbeat—and offers his take on leadership during a crisis.

The COVID-19 pandemic has forced many treasurers to confront the challenges of managing finance teams remotely.

  • At a recent NeuGroup virtual meeting of mega-cap companies, one treasurer shared his approach to keeping his team cohesive, as well as an observation about how people perform during a crisis.

Together apart. To build a sense of togetherness and maintain unity when everyone is in a different place, the treasurer created a virtual “war room” where every morning each of his direct reports speaks up and updates the group on critical information including domestic and foreign cash levels.

  • He holds another war room call at the end of the day to learn, for example, about any cash shortfalls and ask his direct reports about the calls they’re holding with their teams and how the broader treasury group is functioning.
  • He also sends an email update to the entire treasury staff at the end of the day to reinforce the feeling that they are members of a team. He includes a fun fact about himself (first concert, favorite food, etc.). And he has received positive responses by sharing how he spends his workday.
    • “They are very interested in what your day looks like,” he said, adding that he would likely share some of what he got from the NeuGroup meeting that day.

Fun stuff. To keep things light and spirits high during an extremely tough time, the treasurer had people wear something fun for St. Patrick’s Day. (Another member jokingly suggested having an “ugly sweater day.”)

  • Every Friday, as part of the end-of-day call, the team has a virtual happy hour. The overall goal, he said, is to create a “good environment” in the virtual workplace.  

Crisis response. In mid-March, two weeks or so into working from home, the treasurer had observed that some members of his team had not yet stepped up as leaders or started thinking outside the box as they navigated “unchartered waters” created by the pandemic.

  • “Most people tend to do what they are comfortable with during a crisis, rather than hit it head on,” he said. “Top leaders tend to shine during a crisis.”
  • To help maintain focus and motivation, the treasurer does a weekly review, listing the major accomplishments from the treasury/risk team.
  • He also pays tribute to individuals who hit milestones, like a work anniversary, or who go “above the call of duty.”
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Closing a Quarter for SOX Can be Difficult in New, Remote World

An internal auditor describes what his company has done to successfully close a quarter when some physical tasks can’t be done.

Part of Sarbanes-Oxley, the internal controls act released in 2002, requires a corporate’s chief executive and financial officers to certify financial and other information contained in the issuer’s quarterly and annual reports. But what happens in a crisis? What if some of that info requires someone in place to record inventory or in-person meetings when employee movement is heavily restricted during the current pandemic?

An internal auditor describes what his company has done to successfully close a quarter when some physical tasks can’t be done.

Part of Sarbanes-Oxley, the internal controls act released in 2002, requires a corporate’s chief executive and financial officers to certify financial and other information contained in the issuer’s quarterly and annual reports. But what happens in a crisis? What if some of that info requires someone in place to record inventory or in-person meetings when employee movement is heavily restricted during the current pandemic?

Practice. One answer is the punchline to the joke, “How do you get to Carnegie Hall?” Practice, practice, practice. That’s essentially what one member of NeuGroup’s Internal Audit Peer Group has done over the past few years. The company developed a robust business continuity plan where SOX was a particular focus and has used it a few times over the years for natural disasters and has audited the plan several times. So with COVID-19, “We’re in pretty good shape,” the member said.

Take a photo. Despite the company being comfortable with remote working, there still are challenges to closing the quarter amid the global pandemic. This includes practices like obtaining “wet ink” signatures, getting people in place for inventory observation or cut-off testing for shipping.

  • In this case, the auditor said, the company “did what it could when it came to inventory.” Local managers took photos of inventory before they were told to leave the premises. And managers were able to obtain wet signatures while keeping in mind social distancing rules. Where this couldn’t be done, e-signatures like those provided by DocuSign were allowed.
    • In one of NeuGroup’s treasury peer group zoom meetings recently, one practitioner in Europe said his relationship banks were permitting DocuSign functionality for 90 days.
  • Preparation. The member’s company listed all the controls it thought it wouldn’t be able to use when people couldn’t access company buildings or managers had little access to each other.
    • “We identified the controls and have been able to postpone some reporting,” he said. “It’s going to be an interesting quarter, but I think we’ll be able to close with no problems.”
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DIY: Forming Mentoring Circles That Lead to Sponsorship

More takeaways from the Women in NeuGroup meeting featuring three senior executives at one company.

The Women in NeuGroup (WiNG) virtual meeting held last week highlighted the use of mentoring circles as a building block for sponsorship—where someone senior to you in the company advocates for your advancement. Our first story described how the process works at one major American multinational, as described by three senior executives. Below are more takeaways from the meeting as distilled by Anne Friberg, senior director of peer groups at NeuGroup.

  • Yes, you can build your own. It doesn’t really require corporate sponsorship to build mentoring circles like the one featured at the WiNG event. You can start your own with women (and men) whom you know and just go for it. The one stumbling block may be to get budget approval for things like traveling along with mentors to other company facilities, for example, but most of the suggested actions don’t incur much cost. (Of course, almost no one is traveling now, but that will change some day.)
  • Don’t be afraid to ask someone to be a mentor (or even sponsor). The worst that can happen is they say no. The key is not to let that dent your confidence, and the silver lining is that it also opens up for a conversation of what it would take for them to consider mentoring or sponsoring you.

More takeaways from the Women in NeuGroup meeting featuring three senior executives at one company.

The Women in NeuGroup (WiNG) virtual meeting held last week highlighted the use of mentoring circles as a building block for sponsorship—where someone senior to you in the company advocates for your advancement. Our first story described how the process works at one major American multinational, as described by three senior executives. Below are more takeaways from the meeting as distilled by Anne Friberg, senior director of peer groups at NeuGroup.

  • Yes, you can build your own. It doesn’t really require corporate sponsorship to build mentoring circles like the one featured at the WiNG event. You can start your own with women (and men) whom you know and just go for it. The one stumbling block may be to get budget approval for things like traveling along with mentors to other company facilities, for example, but most of the suggested actions don’t incur much cost. (Of course, almost no one is traveling now, but that will change some day.)
  • Don’t be afraid to ask someone to be a mentor (or even sponsor). The worst that can happen is they say no. The key is not to let that dent your confidence, and the silver lining is that it also opens up for a conversation of what it would take for them to consider mentoring or sponsoring you.
  • It can get awkward with close associates. What if you started out at the same level with a long-time colleague, but now you’re in a more senior role and you’re mentoring that person? And what if you really feel you cannot in good conscience sponsor this person for a promotion or joining your team? Remember the key tenets of productive mentor and sponsor relationships: They require trust, honesty, communication and commitment. When you’ve known someone for a long time and may be friends outside work, this is hard.  But—gulp—take a deep breath and be honest about why you cannot sponsor someone, and be generous about sharing what you believe the areas of improvement required for your sponsor support are.
  • Prepare yourself for being sponsored. Not everyone is as aware as they would like about their own skill set or what’s required for being “discovered” and sponsored. If that sounds like you, it may pay to take an assessment from StrengthsFinder or similar services. That way, you can be more confident in putting yourself forward for something that suits your strengths, or seek out opportunities where you may need to dig deeper and develop an area that’s less of a strong suit for you to balance out your skill set. And mind you, a sponsor who’s gotten to know you may well see strengths and capabilities more clearly than you do.
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Using Mentoring Circles to Cultivate Organic Sponsorship for Women

Mentoring circles can help women find sponsors who can advocate for their career advancement.

Three women who are senior finance executives at a major multinational corporation described how their company organically builds sponsorship using so-called mentoring circles to support the development needs of high-potential talent. The three spoke this week at a Women in NeuGroup virtual meeting.

  • One of the women described mentoring circles as groups of 10 to 20 people led by more senior employees to discuss topics of common interest and engage in activities to support career development.

Mentoring circles can help women find sponsors who can advocate for their career advancement.

Three women who are senior finance executives at a major multinational corporation described how their company organically builds sponsorship using so-called mentoring circles to support the development needs of high-potential talent. The three spoke this week at a Women in NeuGroup virtual meeting.

  • One of the women described mentoring circles as groups of 10 to 20 people led by more senior employees to discuss topics of common interest and engage in activities to support career development.

Sponsor vs. mentor. “A mentor talks with you, and a sponsor talks about you.” That concise phrase captures a key difference between the two roles, as described in the panelists’ presentation. In addition:

  • A mentor helps you navigate your career, provides guidance, acts as an advisor or sounding board.
  • A sponsor uses strong influence to help you obtain high-visibility assignments, promotions; advocates for your advancement and champions your work and potential to senior leaders.

Why sponsorship matters. The presentation cited research showing:

  • 70% of individuals with sponsors felt more satisfied with their career advancement.
  • Women with sponsors are 22% more likely to ask for “stretch” assignments.
  • Women are 54% less likely than men to have a sponsor.

A Catalyst report also notes that among the benefits of sponsorship are increased loyalty and tenure and a willingness to give back by mentoring and sponsoring others.

Personal stories. One of the women cited her promotion from the senior director level to an officer role as the best example of how she benefited from sponsorship. She said a colleague took a calculated risk in recommending she take his job because he believed in her based on the work she did. Her advice: “You have to work for mentorship and sponsorship; it doesn’t just come to you.”

  • She and the other panelists agreed that doing a great job in the position you’re in is critical in building the trust necessary for a mentor to become a sponsor.

Sponsors cannot be assigned. No matter how structured and well-thought-out a program to advance the careers of women and other under-represented groups, you can’t force sponsorship. So the presenting company uses mentor circles “to create an environment” where a sponsor relationship can develop organically.

  • The structure of the mentor circles at the company promote various opportunities to talk, travel and work together, allowing mentors to learn enough about their mentees to make a decision to sponsor some but not all of them. That means the sponsor uses her own reputational capital to influence decisions about promotions for the mentee.

Agree on expectations. Panelists and participants agreed that the best mentorship relationships begin with a clear intentions and goals. “Be very deliberate about it,” one panelist said. “It’s important to have a shared set of expectations.” She recommends seeking mentors in other areas of the company to whom you would not normally have access. Another panelist said that it pays to be flexible and find both women and men to serve as mentors and sponsors.

Know when to end the relationship. One panelist praised a former mentoring circle leader who was clear in saying, “Your name has been given to me, I want to invest in you; but when this is not valuable, let’s admit that and move on and give someone else the spot.”

Transparency matters. Some participants described being surprised at learning—after the fact—that someone had played the role of sponsor for them in supporting their advancement.

  • One woman only found out after she left her previous company that she had people in her corner who were very supportive of her work and capabilities. That could have made all the difference for her motivation to leave or stay.
  • In general, she said, knowing she has a sponsor will motivate her and make her feel nurtured. Absent that knowledge, it’s possible to “misinterpret how the organization feels about you,” she said.
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Org Charts and Beyond: How Leaders Help Prepare Teams for Change

Many treasurers want to give team members the skills to move to other areas or companies.

NeuGroup members at a recent Treasurers’ Group of Thirty meeting delved into the nuances of treasury department organizational structures and how they meet specific company needs. Participants enjoyed seeing on a screen exactly how other treasury teams have been put together and why. And they had a laugh when one person didn’t recognize his own org chart.

  • But many members clearly feel the weight of managing relatively small teams with highly specialized skills where advancement is difficult, turnover is high among analysts, and competition for skilled talent is fierce, resulting in shallow benches at some companies.
  • Given that set of circumstances and other factors, some treasurers feel duty bound to prepare their staffs for the future and change by ensuring they have the training and experience to move ahead.

PE realities. The treasurer of a private-equity owned company noted the inevitable: “We’re going to get sold someday, so how do I make sure that [team members] have all the skills necessary to look good for their next job?” he said.

Many treasurers want to give team members the skills to move to other areas or companies.

NeuGroup members at a recent Treasurers’ Group of Thirty meeting delved into the nuances of treasury department organizational structures and how they meet specific company needs. Participants enjoyed seeing on a screen exactly how other treasury teams have been put together and why. And they had a laugh when one person didn’t recognize his own org chart.

  • But many members clearly feel the weight of managing relatively small teams with highly specialized skills where advancement is difficult, turnover is high among analysts, and competition for skilled talent is fierce, resulting in shallow benches at some companies.
  • Given that set of circumstances and other factors, some treasurers feel duty bound to prepare their staffs for the future and change by ensuring they have the training and experience to move ahead.

PE realities. The treasurer of a private-equity owned company noted the inevitable: “We’re going to get sold someday, so how do I make sure that [team members] have all the skills necessary to look good for their next job?” he said.

  • He seeks to provide staff engaged in otherwise segregated duties with exposure to different areas within treasury, so they’re “marketable” outside their current functions. “We talk to the private-equity [staff], and about the goals we’re setting as team; we share everything,” he said.
  • NeuGroup meetings play a role in educating team members, he said, noting that his company recently hosted the cash management peer group.
  • He recently switched the roles of two employees, the directors of treasury operations and of liquidity and capital markets.
  • The treasurer looks for cross-functional opportunities, such as the capital markets director working on a project with the tax team.

Transformation opens opportunities. Mergers mean change, and a peer group member who started as treasurer at a company digesting a transatlantic merger has required staff to have a “sense of urgency and the ability to knock down barriers, find solutions and execute,” or depart.

  • Some professionals had been in treasury functions for a decade or more, leaving a shallow bench that in part will be rebuilt with recruits hired fresh out of college. They will be trained across treasury “infrastructure,” including bank account statements and management, TMS and bank portal, with the goal of moving them up.
  • The treasurer also communicates openly to staff about his own departure: Whenever that arrives, it will provide opportunity for advancement to others. “Until that happens, my job is to provide training and career development, so they have the right sorts of skills to go somewhere internally or externally and be successful.”
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Mike Likes It, but Would Your Team Vote for an Open-Office Plan?

Open-office plans like the one Mike Bloomberg adopted at City Hall have fans and skeptics. Where do you stand (sit)?

Presidential hopeful Mike Bloomberg in December tweeted the picture above of the “bullpen” office he had as New York City mayor and wrote, “I’ll turn the East Room into an open-office plan, where I’ll sit with our team.”

No one can say if that will ever happen, of course. But the subject of open-office plans definitely sparked interest at a NeuGroup meeting this month when one member asked how others organize their office space.

Breaking down walls. One member surprised peers by saying that within a few months his company will move completely to open space, with no walls between people, and that arrangement will apply also to top executives, including the CEO, CFO and legal counsel.

Open-office plans like the one Mike Bloomberg adopted at City Hall have fans and skeptics. Where do you stand (sit)?

Presidential hopeful Mike Bloomberg in December tweeted the picture above of the “bullpen” office he had as New York City mayor and wrote, “I’ll turn the East Room into an open-office plan, where I’ll sit with our team.”

No one can say if that will ever happen, of course. But the subject of open-office plans definitely sparked interest at a NeuGroup meeting this month when one member asked how others organize their office space.

Breaking down walls. One member surprised peers by saying that within a few months his company will move completely to open space, with no walls between people, and that arrangement will apply also to top executives, including the CEO, CFO and legal counsel.

  • “If you want to exchange confidential information, there will be a room, but you won’t be allowed to sit there all day,” he said.
  • Another member called his firm’s environment open, “but we do have individually assigned desks, so we’re not completely free.”

Backlash. The concept of open-space seating has been around for decades, especially among technology companies that have viewed open-space environments as conducive to exchanging ideas.

  • More recently, however, there has been something of a backlash, with studies like one in 2018 by Harvard researchers showing that open-space workplaces can significantly reduce employee productivity.

Alternatives. Another meeting participant’s company had expressed interest in open space, but for now employees remain in cubicles with low walls, and managers have offices.

  • Its finance arm’s building is being renovated, however, and the result will be low-wall cubicles and every manager’s office will be the same size, no matter their rank.

Still, meeting members suggested most treasury departments remain conservative on the seating front, with team members sitting in cubicles with high walls—a “legacy thing,” as one person put it.

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Appealing to Millennials and Gen Zers: The Academic Perspective

Insights from the Foster School of Business on what today’s MBAs want—and what treasurers have to say.

Corporates who want to hire MBA finance graduates face a highly competitive market and are well served by knowing what the current crop of millennials and Gen Zers value most when weighing job offers. That was among the key takeaways from a presentation by faculty and administrators at the University of Washington’s Foster School of Business to the members of a group of treasurers at mega-cap companies. Here’s what matters most:

Insights from the Foster School of Business on what today’s MBAs want—and what treasurers have to say.

Corporates who want to hire MBA finance graduates face a highly competitive market and are well served by knowing what the current crop of millennials and Gen Zers value most when weighing job offers. That was among the key takeaways from a presentation by faculty and administrators at the University of Washington’s Foster School of Business to the members of a group of treasurers at mega-cap companies. Here’s what matters most:

  • Strategic thinking
  • Business decision-making
    • A Foster School assistant dean later elaborated: “New graduates are seeking jobs in strategic positions that impact a company’s present and future direction. They are savvy in technology, use of communication networks, and see both the present and the future in how they think, so where they can exercise these attributes and skills makes a difference to them.  They think with innovation in mind and have a global sense of their potential impact.”
  • Cross-functional teams
  • Salary
    • The average salary for Foster’s 2018 MBA finance graduates was about $115,000, plus a signing bonus of $25,000.
  • Flexibility/work balance.
  • Promotions.
    • In an earlier session, one treasurer asked his peers if they found that new hires expected a promotion every year. He said that’s unrealistic and his approach is to tell people the company is “going to get you where you ultimately want to go,” but don’t expect a promotion every year. Another treasurer said finance has a 70% retention rate and warned, “You’ll lose them if they’re not advancing.”
  • Frequent feedback. The Foster School professors added that MBAs want contact with senior leadership.

How to engage potential recruits. The Foster School presentation recommended members take these actions to appeal to MBA students:

  • Give a guest lecture or serve on a panel at the school.
  • Host a group of students for a tour or talk.
  • Sponsor a spring analytics project.
  • Mentor a student.
  • The obvious: Hold on-campus recruiting events.

The corporate perspective. Not all the treasurers present said they favored MBA graduates. In fact, one member said MBA grads who are on rotations in the company’s leadership program usually don’t return to finance roles because they “want to do exciting business stuff, sexy biz dev stuff.” It’s easier, he said, to retain undergraduates who start in finance. “I love the leadership program when we get undergrads,” he said.

  • Another treasurer asked, “How do we make finance sexier?” He noted that corporates are often competing against investment banks for top talent.
  • The first treasurer said that when he does hire MBAs, he takes graduates from “second tier” schools who did well and are intent on proving themselves, as opposed to trying to recruit Ivy League MBAs. “Let them go to McKinsey or Goldman Sachs,” he said.
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Activist Investors Who Care About More Than One Kind of Green

Founder’s Edition, by Joseph Neu

Takeaways from a fireside chat with ValueAct founder Jeffrey Ubben.

Based on a head’s up from a top Wall Street activist defense adviser, I went to an event earlier this month hosted by Refinitiv and Reuters Breakingviews that featured a fireside chat with ValueAct co-founder Jeffrey Ubben. Mr. Ubben has stopped trying to increase his net worth and is now focused on making the world a better place (at least according to his worldview). One of the vehicles for him to do this is the ValueAct Spring Fund launched in 2018, which invests in companies aiming to address environmental and social problems.

Founder’s Edition, by Joseph Neu

Takeaways from a fireside chat with ValueAct founder Jeffrey Ubben.

Based on a head’s up from a top Wall Street activist defense adviser, I went to an event earlier this month hosted by Refinitiv and Reuters Breakingviews that featured a fireside chat with ValueAct co-founder Jeffrey Ubben. Mr. Ubben has stopped trying to increase his net worth and is now focused on making the world a better place (at least according to his worldview). One of the vehicles for him to do this is the ValueAct Spring Fund launched in 2018, which invests in companies aiming to address environmental and social problems.

  • Inspired by Silent Spring. According to Ubben, the Spring Fund name was inspired by the Rachel Carson environmental science book published in 1962.
  • What makes the fund unique. It’s run by one of the leading activist investors at a firm with $16 billion under management that’s famous for, among other thing, forcing its way onto the board of Microsoft, proving mega-caps were not off limits. “It takes a profit maximizer to know a profit maximizer,” Mr. Ubben said. Bringing an activist mindset to an environmental and social investment mandate has appeal, and Mr. Ubben has raised $1 billion in capital so far.

Here are some key insights from Mr. Ubben:

  • Larry Fink’s letter ups the ante substantially. BlackRock Chairman and CEO Larry Fink’s latest annual letter to CEOs ups the ante on sustainability, calling for “a fundamental reshaping of finance.”
  • Building on multi-stakeholder and corporate purpose mandates. Climate risk as investment risk and putting sustainability at the center of investment mandates may be the most powerful driver of the multi-stakeholder, corporate purpose mandate that Mr. Fink helped usher into modern thinking in his earlier letter.
  • Sustainability is a way to get the long term back. The constituency to support sustainability includes at least two-thirds of CEOs who see it as a way to win back a long-term view from shareholders—give me more than a quarter to reallocate capital to save the world before showing returns on that investment. There are probably one-third of those that are really driven to save the world.
  • Profit maximization over decades. To make the case for profit-driven investment in sustainability, investors need to understand that the time frames must extend 30 to 40 years. Decisions made based on current values, versus terminal values, will lead to investments that will destroy capital over the next generation. They are not conducive to long-term profits.
  • Change the investor base. Thus, companies that want to embrace sustainability and long-term profitability in their corporate purpose need to move toward investors who share that purpose.
  •  This is the window to move. Not only is more research convincing more people to believe in climate risk and the need for action, but the cost of capital in the current lower-for-longer interest rate environment is conducive to making new investments and reallocating capital. As Mr. Ubben notes, we have moved from the traditional situation of being short financing to being short human, social and environmental capital.
  • The effort is capital intensive. Ultimately, the transition to sustainability will be capital intensive. Such a capital-intensive effort will require the capital structures of existing large companies. For this reason, Mr. Ubben is not a fan of villanization.
  • Big Oil capital budgets needed.  One of his investments is in Nikola Motor, for example, which is developing hydrogen fuel cells for long-haul trucking.  To move to this future, there needs to be substantial capital invested in refueling platforms and distribution. “We will need the capital budgets of a Shell or a BP to do this over the next 30 to 40 years,” he said.
  • Shifting value propositions. While shifting to long-term value propositions is one necessity for the fundamental reshaping of capitalist economies, another is a change in perception of value and unit economics. As an example, Mr. Ubben said that if biodiesel becomes mainstream, it would make sense for McDonald’s to pay customers to order french fries to generate more used frying oil to convert into fuel.
  • Utilities need pristine governance.  The grid is the most important asset in the energy economy, including a clean energy one. So it’s imperative that utilities embrace a multi-stakeholder model and adopt the best possible governance. If customers have no choice but to be utility customers, then the economy must rely on regulators and government to sustain their ESG viability. This drives Mr. Ubben’s activist investment in Hawaiian Electric Industries and his calls for a management shake-up. He favors performance-based ratemaking for utilities, encouraging them to become asset light and deploy micro grids.

Ultimately, it’s impossible to know if green activist investors like Mr. Ubben are motivated mostly by a philanthropic desire to fix a system they helped create and make capitalism work for society, or are using the increasing embrace of ESG to profit from green activism. It’s probably a bit of each. Regardless, finance professionals at multinationals have no choice but to pay attention and take action.

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Squeezed for Time: Internal Auditors Presenting to Audit Committees

How auditors make sure their voices are heard when their time before the AC is limited.

Internal auditors often get squeezed for time when it comes time to appear before the audit committee (AC) of the board of directors.

  • Given that reality, some members of NeuGroup’s Internal Auditors’ Peer Group (IAPG) have devised other ways to make sure their views are heard—or read—by members of the AC. Following are some takeaways on the subject discussed at a recent IAPG meeting.

How auditors make sure their voices are heard when their time before the AC is limited.

Internal auditors often get squeezed for time when it comes time to appear before the audit committee (AC) of the board of directors.

  • Given that reality, some members of NeuGroup’s Internal Auditors’ Peer Group (IAPG) have devised other ways to make sure their views are heard—or read—by members of the AC. Following are some takeaways on the subject discussed at a recent IAPG meeting.

Short shrift. NeuGroup members say their appearances before the AC may be limited to just 15-20 minutes. In one member’s case, the AC also is the finance committee—and finance presents first.

  • This means the audit report comes at the end of the session and becomes more of a quick overview “on themes and trends.” Thus, this auditor struggles to promote the continuous improvements the internal audit function has accomplished.

Readers make leaders. Another member says her AC is “very diligent” about reading the material audit sends the committee ahead of time. This includes reading the appendices, slides and other supporting documents. That gives her confidence the AC sees the audit function’s accomplishments.

  • Otherwise, the auditor said it is “hard to put all we’ve accomplished into 20 minutes,” adding that she still has to “speed talk” her way through the presentation.
  • Another member intersperses his report with bullets “here and there” showing what the audit team has accomplished.

Pole position. Some companies rotate the sequence of reporting. If yours doesn’t, consider suggesting it. Because if you’re at the beginning of the AC’s session, which can include financial reporting, cyber, tech and other operational issues, you can get more time.

Work-arounds. Several members said they have good relationships with AC members and can follow up with them after the meetings (or between AC meetings) to go into more detail about what the audit team is up to.

  • One lucky member said that audit meets with the AC beyond the typical quarterly meetings. She said she meets with the committee nine times in a year, which means at five of those meetings she can share more of what audit is doing.
  • Another member said they do “four plus 10-K” for a total of five AC meetings.
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Test Your Knowledge of Treasury! A Trivia Contest to Attract Talent

One treasurer uses a quiz to educate, promote communication and build interest in treasury among finance teams.

Treasury teams often struggle to attract talent when competing with more glamourous finance functions. Part of the problem is a lack of understanding of what treasury does.

  • To build awareness and interest in treasury and enhance communication with other finance teams at his company, one treasurer created a contest to test the knowledge of senior leaders.
  • He described the quiz at a recent meeting of NeuGroup’s Treasurers’ Group of Thirty, sponsored by Standard Chartered.

One treasurer uses a quiz to educate, promote communication and build interest in treasury among finance teams.
 
Treasury teams often struggle to attract talent when competing with more glamourous finance functions. Part of the problem is a lack of understanding of what treasury does.

  • To build awareness and interest in treasury and enhance communication with other finance teams at his company, one treasurer created a contest to test the knowledge of senior leaders.
  • He described the quiz at a recent meeting of NeuGroup’s Treasurers’ Group of Thirty, sponsored by Standard Chartered.

Treasury 101. As many as 40 contestants compete for a small prize by answering a multiple-choice questionnaire called Treasury 101 that consists of 20 to 25 questions on subjects including:

  • Treasury organization
  • Cash management
  • Strategic objectives
  • Corporate finance
  • Risk management
  • Insurance

Time’s up. After the contestants have selected an answer, the subject matter expert tells them which one is correct and spends a few minutes providing more color, the treasurer explained.

  • “For instance, ‘How many people work in treasury?’ We might say 20, and then show the staff’s geographical dispersion or an organization chart showing who they are and what everybody does.”
  • As for results, he said, “We tend to find that most attendees have very little knowledge of the treasury function in general.”

The serious objective of having fun. The treasurer said the contest has three objectives:

  1. “To educate others about who is treasury and what we do.
  2. “Establish interest in treasury and create a bench of potential talent who might be interested in a career in treasury.
  3. “Have some fun and interaction with other finance departments.”

Positive results. In addition to the game being well attended and well received by participants, the member said the contestants are always a little more knowledgeable and appreciative of treasury’s role in the company after the event.

  • “It’s generated a lot of interest,” he said. And though participants in the game tend not to get too many questions correct, many participants reflect on how much they learned about treasury and how much fun they had.
  • While the game is better organized in an office location where lunch or snacks can be offered, in the current climate, it also works well virtually.
    • Anyone who thinks they can win by turning to the internet should know “they will not find the answers on Google—that’s for sure,” the treasurer said.
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Differing Opinions About Audit Opinions

Internal auditors use a variety ratings or opinions for their reporting, despite a trend of not using them.

There is a growing trend of internal audit departments moving away from using audit opinions, or ratings, to rate the progress of a mitigation effort. The idea is to focus on the audit issue itself and mitigate it. Despite this trend, many auditees and audit committee members are happy with the current system and push back against suggestions to get rid of ratings.

Following an audit of a process, the auditee gets a rating or opinion on the progress they’ve made on fixing the process – the audit issue. Ratings methods differ; some employ colors.  Green generally means good while colors like yellow or orange mean “needs work” or “needs improvement;” red means things are bad and not being addressed at all. “I’ve never seen a red since I’ve been an auditor,” one member said at a recent virtual meeting of NeuGroup’s Internal Auditors’ Peer Group (IAPG).

Internal auditors use a variety ratings or opinions for their reporting, despite a trend of not using them.

There is a growing trend of internal audit departments moving away from using audit opinions, or ratings, to rate the progress of a mitigation effort. The idea is to focus on the audit issue itself and mitigate it. Despite this trend, many auditees and audit committee members are happy with the current system and push back against suggestions to get rid of ratings.

Following an audit of a process, the auditee gets a rating or opinion on the progress they’ve made on fixing the process – the audit issue. Ratings methods differ; some employ colors.  Green generally means good while colors like yellow or orange mean “needs work” or “needs improvement;” red means things are bad and not being addressed at all. “I’ve never seen a red since I’ve been an auditor,” one member said at a recent virtual meeting of NeuGroup’s Internal Auditors’ Peer Group (IAPG). 

In the meeting, members described their various rating scales – no two the same – and said in some cases they were asked to move away from them. One reason for this was that many of the functions being audited focused too much on the rating and not on the underlying issue. “The (audit) finding gets lost,” said one auditor. 

  • But auditors say they get pushback when they discuss moving away from ratings. “Execs like the overall rating because they don’t have to read the whole audit report,” said one IAPG member. Added another member, “Audit reports sometimes have too many pages. [AC members and executives] will read through them and then ask, ‘what’s important here?’ So the ratings and colors are needed.” 

And despite the industry effort to drop ratings, some IAPG members have actually added more rating categories to their scales. Several members who have three ratings for findings, typically along the lines of “satisfactory,” “needs improvement” and “ineffective” or “unsatisfactory,” have added more nuance. In a few cases they have split the middle rating, “needs improvement,” into “moderate improvement opportunity” and “needs significant improvement.” 

Language matters. Members also mentioned that there’s sometimes pushback over the language of ratings. 

  • For one member, the legal department made IA change the red rating “ineffective” to “major improvement needed.” This was because, in the case of a lawsuit, ineffective could be misconstrued and create a problem.
  • Another member mentioned that sometimes auditees, particularly millennials, take issue even if their mitigation efforts are good or get the top rating. In this member’s case, that rating is “satisfactory,” which to some ears sounds mediocre or worse. But the auditor said it’s not his job to say it’s anything more than that. 
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Closing a Quarter for SOX Can be Difficult in New, Remote World

An internal auditor describes what his company has done to successfully close a quarter when some physical tasks can’t be done.

Part of Sarbanes-Oxley, the internal controls act released in 2002, requires a corporate’s chief executive and financial officers to certify financial and other information contained in the issuer’s quarterly and annual reports. But what happens in a crisis? What if some of that info requires someone in place to record inventory or in-person meetings when employee movement is heavily restricted during the current pandemic?

An internal auditor describes what his company has done to successfully close a quarter when some physical tasks can’t be done.

Part of Sarbanes-Oxley, the internal controls act released in 2002, requires a corporate’s chief executive and financial officers to certify financial and other information contained in the issuer’s quarterly and annual reports. But what happens in a crisis? What if some of that info requires someone in place to record inventory or in-person meetings when employee movement is heavily restricted during the current pandemic?

Practice. One answer is the punchline to the joke, “How do you get to Carnegie Hall?” Practice, practice, practice. That’s essentially what one member of NeuGroup’s Internal Audit Peer Group has done over the past few years. The company developed a robust business continuity plan where SOX was a particular focus and has used it a few times over the years for natural disasters and has audited the plan several times. So with COVID-19, “We’re in pretty good shape,” the member said.

Take a photo. Despite the company being comfortable with remote working, there still are challenges to closing the quarter amid the global pandemic. This includes practices like obtaining “wet ink” signatures, getting people in place for inventory observation or cut-off testing for shipping.

  • In this case, the auditor said, the company “did what it could when it came to inventory.” Local managers took photos of inventory before they were told to leave the premises. And managers were able to obtain wet signatures while keeping in mind social distancing rules. Where this couldn’t be done, e-signatures like those provided by DocuSign were allowed.
    • In one of NeuGroup’s treasury peer group zoom meetings recently, one practitioner in Europe said his relationship banks were permitting DocuSign functionality for 90 days.
  • Preparation. The member’s company listed all the controls it thought it wouldn’t be able to use when people couldn’t access company buildings or managers had little access to each other.
    • “We identified the controls and have been able to postpone some reporting,” he said. “It’s going to be an interesting quarter, but I think we’ll be able to close with no problems.”
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Corporate Finance Ranks Most Concerned About 2020 Risks

What, me worry? Yes! Finance execs most worried about risks in the new year.

Corporate finance executives have jumped to the lead in terms of companies’ top executives concerned about the magnitude and severity of risks their organizations face in 2020, with economic conditions and regulatory scrutiny their top concerns.

What, me worry? Yes! Finance execs most worried about risks in the new year.

Corporate finance executives have jumped to the lead in terms of companies’ top executives concerned about the magnitude and severity of risks their organizations face in 2020, with economic conditions and regulatory scrutiny their top concerns.

On a scale of one to 10, chief financial officers’ impression of risk faced by their companies in the year ahead jumped to 6.5 from 6.0 in last year’s survey. That puts them in the lead from fifth place last year, out of seven categories of surveyed executives that comprised board members and six types of C-suite executives. Dr. Mark Beasley, professor and director of the Enterprise Risk Management Initiative (ERMI) at N. Carolina State University, noted that chief audit officers’ assessment of risk also increase noticeably from last year, and chief risk officers’ bumped up slightly, to 6.0 from 5.9.

Chief executives officers and boards of directors instead saw their concerns about risk lesson in this year’s study compared to last year’s.

The research was conducted by ERMI and consultancy Protiviti, and co-authored by Mr. Beasley and Ken Thomas, a managing director in Protiviti’s Business Performance Improvement practice. The survey received responses from 825 C-Suite executives and directors in companies across the globe. The top five concerns for CFOs were:

Economic conditions. Although the second concern overall, CFOs marked economic conditions starting to restrict some growth opportunities as their top concern, a big jump from last year’s survey when it was not even among the top 10 risks.

Regulatory changes and scrutiny. CFOs worry that an emphasis on regulations may increase and noticeably affect the manner in which their companies’ products and services will be produced or delivered. Mr. Beasley noted that the regulations extend beyond financial requirements to areas such as privacy, with European privacy regulations already in effect and those in California arriving in 2020, and increased government scrutiny of business models such as the big technology firms’.

Resistance to change. As innovative technology is deployed at an ever more rapid pace, CFOs are concerned about their organizations’ ability to embrace that change and remain competitive.

Top talent. Related to the previous concern, CFOs are concerned about their companies’ ability to attract and retain top talent in a tightening talent market, and consequently their ability to achieve operational targets. “How does [corporate finance] move from more production-type activities to more machine learning and other artificial intelligence technologies, taking people away from the analytics they used to spend time on and using that talent in the most efficient way,” Mr. Thomas said.

Cyber, of course. Pervasive across companies, cyber-risk concerns keep CFOs awake at night worrying about whether their organizations are sufficiently prepared to manage cyber threats that could significantly disrupt core operations and/or damage the company’s brand. Mr. Thomas noted that finance departments’ increasing use of technology-driven analytics ingests pulls data from multiple sources, heightening the risk. “Companies are moving to more tech-driven activities and operations that rely ever more on sources of data that can be impacted,” he said.

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Talking Shop: Italy’s New Way to Make Public Administration Payments

Member question: “As of the end of Feb., it is mandatory to pay the public administration in Italy through a payment system called PagoPA. To my knowledge, none of the big banks support this. We currently use a local Italian partner bank for this purpose.

  • “Does anybody know if it is also mandatory to pay the public administration through this PagoPA system when paying from a nonresident legal entity outside Italy?”

Member question: “As of the end of Feb., it is mandatory to pay the public administration in Italy through a payment system called PagoPA. To my knowledge, none of the big banks support this. We currently use a local Italian partner bank for this purpose.

  • “Does anybody know if it is also mandatory to pay the public administration through this PagoPA system when paying from a nonresident legal entity outside Italy?”

Peer answer 1: “We are in the process of opening an account with [a European bank] in Italy for this sole purpose. So maybe you can inquire with [them]?”

Member response: “We’ve been in contact with [them] as well, having the impression that some investments still needed to be made at their end to support PagoPA. Notes from our call:

  • “Segregation of duties is not possible yet, i.e., one person entering and one other person approving the payment.
  • “No file upload functionality, it is only feasible to manually enter the payment.”

Peer answer 2: “I have been advised that for certain types of payment e.g., waste water or local taxes, PagoPA is required. However, in the main, the Italian government will accept different payment options, e.g., F24.

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Cash Pools in Asia for Corporates Trying to Access Funds in China

NeuGroup members describe cash pools designed to overcome obstacles and minimize taxes.

Several members of NeuGroup’s Life Sciences Treasury Peer Group have set up cash pools in China relatively recently, a topic they discussed at their fall meeting in 2020 and in follow-up email exchanges with NeuGroup Insights.

  • The pools are generally a means to an end: getting access to the funds in a country where that can be difficult and expensive.

NeuGroup members describe cash pools designed to overcome obstacles and minimize taxes.

Several members of NeuGroup’s Life Sciences Treasury Peer Group have set up cash pools in China relatively recently, a topic they discussed at their fall meeting in 2020 and in follow-up email exchanges with NeuGroup Insights.

  • The pools are generally a means to an end: getting access to the funds in a country where that can be difficult and expensive.

Two-way sweep. One member is using what she described as “a simple RMB cross-border two-way sweep under the nationwide scheme (not the Shanghai Free Trade Zone scheme).” The goal: “To get access to surplus funds that cannot otherwise be repatriated via a dividend without withholding tax implications,” the member explained.

  • “We started operating the pool in mid-2020 and have built up the pooled funds over time to the equity limit that applies to the national structure (50% of aggregate equities of all onshore participating entities).
  • “We took action in the fall to comply with the rule that the continuous net lending/borrowing cannot exceed one year.”
  • The pools are in both Singapore and China. There is an “in-country pool for several entities [tied] to a header account which is swept to a special RMB account,” the member said.
  • “Funds are then lent cross-border to an offshore header account in Singapore. The funds can then go onward from there.”

An in-house bank and hedging. Another member at the meeting described what his company is doing in China as follows:

  • “We set up a cross-border pool between our entities in China and Singapore last year. The objective was to access China cash on a temporary basis. The bank is only acting as an agent; our entity in China is the lender. The entity in Singapore is the borrower in the pool and the in-house bank that funds other entities in Asia and Europe.
  • “It is very challenging to get cash out of China and this pool partially solves that problem.  
  • “The funds are pooled in Singapore from our China entity. Singapore is USD functional and China is RMB functional.  So we hedge the RMB that needs to be converted in USD when they arrive to Singapore.  
  • “Because the functional currency is different for the two entities (USD and RMB), hedging is necessary to avoid losses when the loans in the pool are made and prepaid.”

Context on pools. For some perspective, NeuGroup Insights reached out to Susan A. Hillman, a partner at Treasury Alliance Group and an expert on cash pooling. “The ability to ‘pool’ in China has been around for a long time through a mechanism called an ‘entrusted loan’—whereby an enterprise with excess cash (RMB) puts money on deposit with its bank and receives a rate of interest on this deposit,” she said.

  • “These funds are then loaned by the same bank to an affiliate company at a higher rate. Newer cross-border arrangements are usually managed through a bank loan from an RMB account which allows excess funds to be utilized in the offshore bank account (same bank) in Singapore as a ‘loan’ to the parent,” Ms. Hillman added.
  • The funds can be used “onward from there” with some restrictions on tenor and amounts, she said.
  • “Trying to utilize excess funds in a restricted country without issuing a dividend and the withholding tax consequences has long been a problem and using a bank as an intermediary in the situation through a loan arrangement is common in such countries as Brazil.
  • “So rather than a cash management service, like pooling in Europe, it becomes a bank financing tool subject to the tax rules of any restricted country.”
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Walking the Talk on Diversity and Inclusion: One Company’s Steps

A member of NeuGroup’s European Treasury Peer Group outlines what his company is doing to promote D&I.

The push for increased diversity, inclusion and social justice following the murder of George Floyd last year has rippled far beyond US borders.

  • At a meeting of NeuGroup’s European Treasury Peer Group this fall, one member discussed his company’s conviction that now more than ever is the time “to further strengthen [the company’s] commitment to diversity and inclusion everywhere,” as his presentation put it.
  • This company’s efforts, the member said, have taken D&I “to a new level and given it the traction it deserves,” he said. Some of the steps his company has taken may provide direction to other MNCs.

A member of NeuGroup’s European Treasury Peer Group outlines what his company is doing to promote D&I.

The push for increased diversity, inclusion and social justice following the murder of George Floyd last year has rippled far beyond US borders.

  • At a meeting of NeuGroup’s European Treasury Peer Group this fall, one member discussed his company’s conviction that now more than ever is the time “to further strengthen [the company’s] commitment to diversity and inclusion everywhere,” as his presentation put it.
  • This company’s efforts, the member said, have taken D&I “to a new level and given it the traction it deserves,” he said. Some of the steps his company has taken may provide direction to other MNCs.

Context on targets. Before the member’s presentation, attendees were polled on whether treasury has specific targets to meet D&I objectives. As the chart below shows, only five percentage points separated those companies with targets (47%) from those without (42%).

  • Only a fifth (21%) of the respondents said their companies have specific investment targets to support underprivileged communities through affordable housing and other means.

Build a senior structure to support D&I efforts. The member’s company has a CEO diversity and inclusion council comprised of senior leaders (SVPs and above) across the corporation whose aim is to accelerate progress in D&I efforts. The treasurer is on the council.

  • The council advocates for solutions that support a culture of belonging and inclusion, both internally and externally.
  • The council focuses on several key strategic pillars, including transparency and representation.

Consider using employee resource groups. So-called ERGs are voluntary, employee-led groups whose aim is to foster a diverse, inclusive workplace aligned with the organizations they serve. 

  • ERGs at the member’s company are “key partners in our work to cultivate an inclusive culture for all employees around the world,” the company’s presentation said.
  • “These passionate employees offer their time, expertise and cultural insights to help us improve the workplace and be innovative in the marketplace.”
  • The company refers to the employees as “cultural carriers” who represent “all dimensions of diversity,” including Asian/Pacific Islander, Black, Hispanic, LGBTQ as well as people with disabilities, veterans and women.

Coffee talk. The company’s efforts include holding informal coffee chats with no agenda where employees feel safe to voice their views on racism, inequality and well-being in a confidential and compassionate forum.

  • The goal, the presentation said, is to foster an environment where “everyone feels heard, supported and, most importantly, where these issues can be discussed openly.”
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Unpleasant Surprise Post-Brexit: A New Bank Fee for SEPA Payments

NeuGroup members confront a fee for payments from UK to EU accounts that lands on beneficiaries.

Treasurers are still learning the full impact of the UK’s recent Brexit deal, and several who attended a recent NeuGroup European Treasury meeting shared their reaction to a banking fee that took some of them by surprise.

  • Some corporates making SEPA (single euro payments area) payments from accounts in the UK to the EU are now experiencing an additional fee for receipt, as some banks in the EU slap the fee on payments from accounts outside the EU to beneficiaries in their banks. That’s even though the UK remains a part of SEPA.

NeuGroup members confront a fee for payments from UK to EU accounts that lands on beneficiaries.

Treasurers are still learning the full impact of the UK’s recent Brexit deal, and several who attended a recent NeuGroup European Treasury meeting shared their reaction to a banking fee that took some of them by surprise.

  • Some corporates making SEPA (single euro payments area) payments from accounts in the UK to the EU are now experiencing an additional fee for receipt, as some banks in the EU slap the fee on payments from accounts outside the EU to beneficiaries in their banks. That’s even though the UK remains a part of SEPA.

Fighting fees. Members said the SEPA payment fee is an issue particularly with smaller banks in Spain, Italy and Portugal. One treasurer said this issue presented a challenge since he “hadn’t seen this one coming.”

  • Another member, who had dealt with the same problem when making SEPA payments out of an account in Switzerland, also a part of SEPA but not the EU, advised the member to ask that the beneficiary banks reimburse the charge and request that the beneficiary also challenge the fee, so “there is pressure on both sides.”
  • “Our interpretation of SEPA is that this wouldn’t happen,” the member said. “But apparently there is this loophole that can be used” by EU-based banks.

In-house bank? The member said the alternative to paying the fee, if it is not reimbursed by the bank, is to make payments via an in-house bank in the EU if you have one.

  • Otherwise, it may be just as cost-effective to ignore the charges or reimburse the beneficiaries for it, as a company might do if the payments are for employee T&E expenses, for example.
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Raising the Bar: How AI, ML and Big Data Could Fix Cash Forecasts

Asia Treasury members discuss how advanced technology may boost satisfaction with forecasting tools. 

A quick poll at a fall meeting of the Asia Treasury Peer Group sponsored by Standard Chartered underscored both the dissatisfaction of members with their cash forecasting tools and the intensifying scrutiny of cash positions by senior management since the beginning of the pandemic.

  • None of the treasurers polled are highly satisfied with their current set of tools: 60% have low satisfaction and 40% said medium. All of the treasurers said they’re fielding more questions about cash from the C-Suite.

Asia Treasury members discuss how advanced technology may boost satisfaction with forecasting tools. 

A quick poll at a fall meeting of the Asia Treasury Peer Group sponsored by Standard Chartered underscored both the dissatisfaction of members with their cash forecasting tools and the intensifying scrutiny of cash positions by senior management since the beginning of the pandemic.

  • None of the treasurers polled are highly satisfied with their current set of tools: 60% have low satisfaction and 40% said medium. All of the treasurers said they’re fielding more questions about cash from the C-Suite.

Building better tools. In a presentation by Kyriba arranged by Standard Chartered, members heard about the potential for big data, artificial intelligence (AI) and machine learning (ML) to “move treasury into true management of working capital” and improve the accuracy of cash forecasts.

  • As the chart below shows, this vision for building a so-called behavioral model of working capital depends heavily on extracting huge amounts of data from a multitude of sources and collecting it in a data lake.
  • ML allows the model to learn patterns based on innumerable variables—and the effects of one upon another—and then predict future flows with more precision.
  • In breakout discussions, members discussed their data management challenges, including the need to standardize exogenous data before it is fed into a model.

Addressing the AR problem. The presentation included discussion of pain points experienced when forecasting invoice payment dates. “We do not know when our customers are going to finally pay their invoices,” read one example.

  • Another said cash collection “is very blurry,” resulting in a “manual and time-consuming process” to build a cash position for future days, weeks and months.
  • The presentation identified the value proposition as creating an automated process to forecast the payment date of each invoice.
  • Using AI in pilot programs with two corporates, Kyriba said, helped reduce payment forecast variances from 25 days to five days.

Other use cases. In addition to forecasting invoice payment dates, the presentation identified these use cases for companies that use systems built with AI and ML:

  • Assign budget codes to bank movements.
  • Reduce manual cash reconciliations made by users.
  • Detect payment anomalies compared to history.
  • Detect abnormal FX transactions.
  • Suggest financing request to suppliers.
  • Forecast investment and debt.
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The Right Steps on the Path to Optimizing Working Capital Management

MUFG presents a working capital road map for technology companies at NeuGroup’s AsiaTech20 pilot meeting. 

At the inaugural meeting of NeuGroup’s AsiaTech20 Treasurers’ Peer Group, sponsor MUFG led a session titled “Optimizing Working Capital (in Uncertain Times)” and participants discussed challenges including how to get vendors to extend payment terms, the need for efficient collections processes and developing KPIs around working capital.

MUFG presents a working capital road map for technology companies at NeuGroup’s AsiaTech20 pilot meeting. 

At the inaugural meeting of NeuGroup’s AsiaTech20 Treasurers’ Peer Group, sponsor MUFG led a session titled “Optimizing Working Capital (in Uncertain Times)” and participants discussed challenges including how to get vendors to extend payment terms, the need for efficient collections processes and developing KPIs around working capital.

Working capital cycle. MUFG’s presentation identified four areas, and goals for each, in the working capital cycle.

Big Picture. The presentation also set down a path for companies starting on the path to optimizing their working capital management programs. It requires:

Senior attention.

  • Working capital improvement is an ongoing process led by the most senior stakeholders within the company.
  • Holistic organizational transformation requires close cross-functional coordination.
  • Change in culture and organizational buy-in by all stakeholders is necessary.

Organizational change management.

  • Buy-in is needed across various departments, including treasury, sales and procurement teams.
  • Working capital solutions require a deep understanding of systems and processes supporting the company, legal contracts and payment terms affecting working capital, and financial tools used to improve and gain efficiency.

Steps. Here are four steps to take on the path to an optimized working capital management approach, according to MUFG:

Observations from North America. MUFG’s presentation said that over the course of 2020, “companies have seen substantially higher amounts tied up in working capital. Furthermore, several key working capital metrics deteriorated during the year.” In addition:

Pricing pressure.

  • With liquidity scarce and credit concerns, we have seen significant repricing movement across the broader market.
  • Pricing levels have varied from program to program with new pricing around 25 to 50 basis points higher.
  • The industry segments hit hardest by Covid-19 faced the most pressure with significant premiums needed to maintain funding.

Term or tenor extension.

  • Buyers are delaying payments and/or forcing extension of terms to preserve cash.
  • Terms continue to get extended with 90- to 120-day terms becoming more common and customers absorbing higher product costs from suppliers in exchange. In some cases, terms have approached 360 days

Usage and volume.

  • Seller-led programs have had growth in usage over LTM due to longer tenors while volume has decreased.
  • Buyer-led (payable) programs have had an increase in usage as volumes have increased as suppliers are looking for more liquidity.
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Asia Tech Companies Optimistic for Post-Covid Growth

Key takeaways from the AsiaTech20 Treasurers’ Peer Group pilot meeting sponsored by MUFG.

By Joseph Neu

Be prepared for global optimism. The global economic outlook is overwhelmingly positive with Covid-19 vaccines nearing distribution. Plus, a new administration in the US brings an expectation for economic growth to take on a more global scope, with Asia expected to outperform.

Key takeaways from the AsiaTech20 Treasurers’ Peer Group pilot meeting sponsored by MUFG.

By Joseph Neu

Be prepared for global optimism. The global economic outlook is overwhelmingly positive with Covid-19 vaccines nearing distribution. Plus, a new administration in the US brings an expectation for economic growth to take on a more global scope, with Asia expected to outperform.

  • For this reason, tech treasurers in Asia have also pivoted from enduring the crisis through stockpiling capital and liquidity to preparing to go on offense, growing with the recovery and improving their standing in the market—with customers, distributors, suppliers or all three.

Growth dynamics in Asia capital markets. MUFG helped shed light on a number of interesting trends in Asia capital markets of which tech clients are taking advantage.

  • First, the traditional strength of bank lending to tech in Asia remains, especially in Taiwan, China and Australia. Tech treasurers reported success with renewing credit facilities, up-sizing or adding new loans, as well as amending covenants favorably.
  • Bond issuance by Asian tech firms has also grown and they find receptive investors in the US, especially if they get a rating, as well as in Asia. The depth of debt capital markets in Asia continues to grow, according to MUFG, so that issuers seen as investment-grade looking to raise over $300 million or even $500 million can get deals done in Asia.
  • Two drivers of recent capital sourcing: M&A, such as Taiwanese tech manufacturers selling mainland China assets to fund new assets offshore; and Chinese tech firms funding take-private deals as US and other offshore listings draw more scrutiny.
  • Growth optimism and positive sector tailwinds will likely drive broader acquisition financing as well as increasing capex to lean into post-Covid demand.

Standardizing processes in preparation for accelerating digitalization. A discussion of organizational change in the wake of Covid-19 revealed that tech treasurers in Asia have benefited from projects to standardize treasury processes ahead of the crisis.

  • One member noted her proximity to a company shared services center and standardizing across integrated financial operations. Alongside this, her staff has been educating themselves on data analysis and automation tools that have also made it easier to improve cash forecasts over the crisis period.
  • Her TMS has not delivered well with data integration, as system APIs on the enterprise side and on the bank side are not as open as they promise. This is where coming up with your own means of data integration, such as RPA, is important.
  • One large fintech company treasurer has taken this even further by using software engineers at his firm to develop a mobile treasury app with three-click access to real time cash and debt levels. The aim of all such efforts is to scale support for rapid tech growth without growing treasury headcount.
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Europe in Flux: Business Decentralization, ESG and Brexit

Key takeaways from the European Treasury Peer Group 2020 H2 meeting sponsored by Standard Chartered.
 
By Joseph Neu

Agile businesses with centralized support functions. Covid-19 and the need for business pivots have, at some companies, sparked calls for the pendulum to swing back toward decentralized business authority to promote agility and swift decision-making.

Key takeaways from the European Treasury Peer Group 2020 H2 meeting sponsored by Standard Chartered.
 
By Joseph Neu

Agile businesses with centralized support functions. Covid-19 and the need for business pivots have, at some companies, sparked calls for the pendulum to swing back toward decentralized business authority to promote agility and swift decision-making.

  • Treasury in turn is asking how best to support decentralized business accountability with the efficiencies and controls of a centralized corporate support function. It’s a perennial challenge. But now there is empowering access to data, new cloud-based technology and digital platforms to transcend distributed business structures.
  • Treasurers should therefore be able to maintain the corporate perspective on risk, cost of funding and liquidity access at scale, to better support business decisions. Globally-connected technology will allow scale to be achieved across far-flung nodes of agile businesses that are likely to deploy similarly cloud-based digital tools.
    • These ensure that data flows to the center, while also parsing out the impact of decisions along the edges that can be mitigated independently by the centralized support functions.
    • And speaking of functions at the center, now is also an opportune time to rethink the nimbleness and distribution of corporate support functions and transcend legacy thinking about what’s treasury, what’s shared services, AP, credit and collections and look at processes that support the businesses end to end.

ESG derivatives to hedge ESG-linked finance. If ESG sustainability-linked finance is the new megatrend, with Europe ahead in the game, then it’s time to think about ESG derivatives, both to manage use of proceeds financing and sustainability- or performance-linked financing. Standard Chartered shared examples of:

  • FX forwards to hedge export pricing in Asia where the FX rate is discounted if targets in support of sustainable development goals are met.
  • Interest rate swaps where the credit spread is linked to the company’s performance against sustainability targets, measured by Sustainalytics.
  • Green cross-currency basis swaps where the payments of either party rise if they do not make good on green initiatives.

Britain has no way out. Almost four and a half years after the referendum, we are still talking about Brexit with just a bit better than a 50 percent chance of a deal in the near term. Perhaps there is no way out of the EU. Members report building up inventory and pulling out excess cash from UK header bank accounts in preparation for the worst, but Britain seems to have gotten lost on the way out and may just end up getting back on the train.

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China’s Digitalization, Quick Covid Recovery and Tension with the US

Key takeaways from the 2020 H2 Asia CFOs’ Peer Group meeting sponsored by Standard Chartered.

By Joseph Neu

2019 as the 2021 baseline. China has been the economy to bounce back soonest from Covid-19 and is up substantially in H2.

Key takeaways from the 2020 H2 Asia CFOs’ Peer Group meeting sponsored by Standard Chartered.

By Joseph Neu

2019 as the 2021 baseline. China has been the economy to bounce back soonest from Covid-19 and is up substantially in H2.

  • Standard Chartered is forecasting 2020 GDP growth of +2.1% for China. Meanwhile, many of our member CFOs for greater China are hopeful that they will get back to flat for the year since some have had stellar Q3s and good Q4 outlooks, which makes 2019 essentially the planning baseline for 2021 growth.
  • With vaccines on the near horizon, how many other businesses will plan for growth using the 2019 baseline? I hope it will be most all of them, so the rest of the world can catch up to China in terms of economic recovery from Covid-19. But is this realistic? This is the key question for CFOs everywhere.

US-China relations driven by fundamentals. Standard Chartered’s perspective suggests that the economic growth of China and the trendline to overtake the US as the largest global economy is driving US-China tensions.

  • With China on pace to surpass the US by 2030 to 2035, no change in the Oval Office is likely to reduce tensions dramatically. What will change is the degree to which the tensions are managed on a multilateral vs. unilateral or bilateral basis.

How now for China’s digitalization advantage? CFOs of large Western corporates in China have been leading in adopting digital tools including RPA, algos and AI to bring digitalization to finance functions. This follows the more advanced digitalization trends that China has seen in consumer payment and retail models.

  • What then should we make of member frustration with the advancement in the digitalization of planning forecasting? Bots and AI have done a great job with processing, reporting and displaying data as well as overlaying controls effectively and efficiently on financial and business data.
  • Progress seems to be plateauing in predicting and forecasting. As a result, several members reported pausing projects to improve planning and forecasting with new digital technology and going back to the traditional budget and planning methods with humans. Watch this space.
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The Benefits for Tech of Having More Than One Headquarters

Key takeaways from the Tech20 Treasurers’ Peer Group 20th Annual Meeting, sponsored by MUFG. 

By Joseph Neu

Treasury at multiple headquarters. Technology companies, whether megacaps or midsized, are experimenting with multiple headquarters which will resume as work from home phases out.

Key takeaways from the Tech20 Treasurers’ Peer Group 20th Annual Meeting, sponsored by MUFG. 

By Joseph Neu

Treasury at multiple headquarters. Technology companies, whether megacaps or midsized, are experimenting with multiple headquarters which will resume as work from home phases out.

  • Treasury will be represented across them, even within the US. Cost and competition for talent are drivers, but also diversity; it can be more challenging to get people of color to move to expensive and majority-white communities where US tech firms tend to be located.

ESG less of a credit rating driver in tech. Credit ratings from the three major agencies are likely less influenced by ESG factors in tech, according to analysts, than most sectors. This suggests a disconnect between the ESG initiatives in which many tech companies have invested significantly. And perhaps these efforts are not swaying their traditional credit ratings.

  • Since businesses with good ESG scores are touted by ESG proponents as better investment risks, the credit rating considerations are worth contemplating further.

More time to sort out decoupling. A significant capital and liquidity concern in key tech sub-sectors has been the cost and cash flow implications caused by shifting supply chains and distribution to customers in and out of China.

  • While a Biden presidency may not shift policy that’s driving US-China decoupling, it is anticipated to slow its pace, allowing for a smoother transition, which would be good news for tech capital budgets and cash flow forecasts exiting Covid.
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James Haddad
Cadence Design Systems, Inc. • Corporate Vice President Finance and Treasurers

"...it's a very collegiate group where we trust each other immensely and there is never a meeting that I leave without picking up at least two or three nuggets of really crucial information for me and how I operate and run my business."

Joachim Wettermark
Salesforce • Executive Vice President, Treasury & Finance Operations

"Tech 20 has been one of the key foundational pillars of my career development over many years...I have many friends in this group and spend a lot of time outside of the formal meetings exchanging ideas...I feel like it keeps me informed as a treasurer and helps me be smarter on trends going on."

Zac Nesper
HP Inc. • Vice President of Treasury

"I always love coming to the NeuGroup sessions with my peers...I belong to the Tech20 group I learn a lot from the other treasurers and I always have takeaways for my team."

Kirsten Nordlof
Autodesk, Inc. • Vice President of Tax, Treasury and Risk Finance

"One of the things I truly, truly appreciate is the ability to benchmark with my colleagues...that information can really only be garnered from conversations with my colleagues here at Tech 20."

Odette Go
Lam Research Corporation • Vice President and Treasurers

"I've been attending benchmarking meetings with the NeuGroup since 2001. I find the meetings super valuable because I'm able to benchmark with colleagues and our frank discussions under Chatham House Rules helped me to see around the corners."

George Zinn
Microsoft Corporation • Vice President and Treasurer

"I have joined the Tech 20 group and benefit from that because I can get a lot of my industry peers together at one time and can discuss topics, challenges and how to come up with solutions and that helps me get all this knowledge all together as support to my career."

Randy Ou
Alibaba (China) Co., Ltd • Treasury Vice President

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