Capital MarketsCash & Working Capital
June 15, 2021

Convertibles, Speed and Capital Structure: A Tech Banker’s Take

An interview with Lucia Greenblatt, managing director of technology banking at MUFG, on a SAAS company’s financing journey. The optimal capital structure for a high-growth technology company may change significantly as its business develops and its financing options increase—one reason corporates that issue convertible bonds early in their trajectory often replace them with alternatives more suited to mature businesses with investment-grade (IG) credit metrics or ratings That takeaway sprang from a session at a recent meeting of NeuGroup for Growth-Tech…
Cash & Working CapitalSenior Executive
May 27, 2021

No Walk in the Park: Overcoming Resistance To Embrace a Cash Culture

One treasurer’s rocky quest to shift his company’s focus from P&L to cash.When one NeuGroup member saw an opportunity to elevate treasury’s role within the company while focusing its overall view of cash, he took it—but the journey was no walk in the park. He encountered some resistance from leadership and the FP&A team, but was able to work with them to reconcile two methods for cash flow forecasting and take a more active approach to cash management.The member, the treasurer at…
BankingCash & Working CapitalCOVID-19
May 27, 2021

Too Much Money: Banks Struggle With Surging Deposits

Banks awash in deposits need to prioritize active accounts making use of services that generate fees and revenue.Originating loans as the pandemic recedes and the economy revives is a major challenge for banks today—but so is the surge in deposits since spring 2020 and just what to do with them given the lack of precedent. Consumer and commercial deposits increased by more than $3 trillion, or roughly 20%, since the onset of pandemic through the end of December, according to…
Cash & Working CapitalRisk Management
May 20, 2021

A Look at the Inflation Crystal Ball: Morgan Stanley’s View

Morgan Stanley economist Ellen Zentner says people are becoming “more convinced that inflation is a real thing.”The outlook for inflation and interest rates is a hot topic as the US recovery picks up steam. Here’s the view Morgan Stanley recently outlined for bank treasurers at a recent NeuGroup meeting: Inflationary pressure will almost certainly continue, but even with upwards of $2 trillion in additional capital from the Biden administration’s Build Back Better initiative likely to arrive early next year, the Federal…
Cash & Working CapitalTechnology
May 6, 2021

In Search of a Cash Forecasting Model for Use Across the Enterprise

One corporate in search of simplicity opted for developing a solution in-house vs. using third-party vendors.An indispensable lesson from the pandemic is that revenues can drop unexpectedly and precipitously, and so cash forecasts must consider multiple scenarios and learn from the past. An assistant treasurer (AT) from a global industrial company explained at a recent NeuGroup meeting sponsored by Societe Generale how his company is improving cash forecasting with machine learning and other new technologies. A precise forecast was not…
Cash & Working CapitalRegionalTalking Shop
May 6, 2021

Talking Shop: Processing Fees for a Domestic Cash Pool in China

Editor’s note: NeuGroup’s online communities give members another forum to find answers to their questions. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: Member question: “Has anybody set up a China domestic cash pool? I would like to understand market practice on the bank’s processing fee for this. “ is charging us a 0.1% processing fee on the outstanding borrowed balance in the domestic cash pool. Can someone give me a benchmark for this?” Peer answer:…
Cash & Working CapitalFX
April 22, 2021

Improvements in Forecasting Open Doors for Hedge Changes

A move from a current-year to a rolling forecast allows one risk manager to fine-tune the cash flow hedging program.A new CFO can mean a little change—or a lot. In the case of one NeuGroup member who manages FX risk, the new CFO drove an initiative to ensure budget forecasts would have a longer horizon and be available earlier. Over the course of two years, this has enabled an evolution from a program that only hedged a year out from…
Cash & Working CapitalTechnology
April 22, 2021

Overcoming Resistance: Integrating Data in Cash Flow Forecasting

Treasurers at mid-cap corporates looking to use large-scale data analysis to enhance cash flow forecasting are finding colleagues hesitant.The advantages of using sophisticated data analysis in cash flow forecasting are clear to a growing number of treasurers intent on improving accuracy and eliminating human error. But implementing and executing a data-driven approach often requires collaboration with teams outside treasury, such as AR and credit collections—and some NeuGroup members are meeting resistance. Solid support from leadership and showing the benefits of…
BankingCash & Working Capital
April 20, 2021

Treasury’s Eternal Question: What is the Right Level of Liquidity?

Wells Fargo’s risk-adjusted liquidity ratio offers insights on how corporates view liquidity during recessions.Setting a target for a company’s ideal liquidity level is never easy. Corporates use a variety of metrics and liquidity ratios to get it right. But what happens when events like the global financial crisis or the pandemic push the economy into recession and force corporates to go into crisis mode? In theory, given that most companies revenues and expenses drop somewhat during a recession, they should…