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Cash & Working Capital

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: [email protected]. 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:…
Justin Jones
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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…
Justin Jones
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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…
Justin Jones
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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…
Justin Jones
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BankingCash & Working CapitalNeugroup
April 8, 2021

Tapping the Power of In-house Banks to Turn Cash Puddles into Pools

Mega-cap treasurers and PwC discuss multiple benefits of IHBs and some complexities of structuring them. Treasurers not sold on the value of in-house banks (IHBs) often tell Damien McMahon, a partner at PwC, “We have cash pooling already, and therefore we have a kind of in-house bank,” he recently told a group of NeuGroup members from mega-cap companies. In reality, though, many of the treasurers may have what Mr. McMahon called “cash puddles,” not cash pools. PwC and treasurers from two…
Justin Jones
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Cash & Working CapitalRisk ManagementTalking Shop
March 25, 2021

Talking Shop: How Do You Use Counterparty Exposure Information?

Member question: “Does your organization review counterparty exposure? If so, how do you use this information? “What exposure types do you include? Cash, bank products, derivative contracts, other?“I understand that there are some organizations that set limits to how much exposure can be outstanding per counterparty. Does anyone have this practice in place?” Peer answer 1: “I monitor this frequently and have limits tied to my overall assets. Here are some items we look at for our liquidity providers: JurisdictionRegulatory environment…
Justin Jones
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BankingCash & Working CapitalTalking Shop
March 18, 2021

Talking Shop: Do You Have One Banking Partner for AR and AP?

Member question: “In the US, do you have one banking partner for AR and AP, or do you split the business, with one bank for AR and a separate bank for AP? “For those that split the business, is this a share of wallet decision or an operational decision? Are there any operational pain points associated with having two banking partners?” Peer survey results: The majority of survey respondents use a single bank, with about one-third splitting the business. Peer…
Justin Jones
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Cash & Working CapitalTechnology
March 11, 2021

Future State: Data Lakes, Straight-Through Processing and APIs

Takeaways from NeuGroup’s TMS working group featuring discussion of automation, consolidation of ERPs and more.Straight-through processing (STP) that involves several systems, including payments and bank connectivity, sounds great. But members at a recent NeuGroup TMS Tuesday working group session agreed that efforts to accelerate STP first require a more detailed plan for the overall technology end state of treasury infrastructure. For example, one member said his company is still unsure if it would be best to further integrate all payment…
Justin Jones
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Capital AllocationCapital MarketsCash & Working Capital
March 11, 2021

Do Stock Buybacks Create Value or Just Return Capital to Investors?

Members at companies with excess cash discuss whether share repurchases generate economic value for shareholders.ConocoPhillips on Wednesday announced it is resuming its share repurchase program, citing its “long-standing priority to return greater than 30% of cash from operations to shareholders annually.” The company is not alone: A recent NeuGroup Peer Research Survey showed that 82% of respondents consider the return of excess capital the primary objective of their company’s share repurchase program. Only 9% said creating shareholder value was the…
Justin Jones
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Cash & Working CapitalInvestment Management
March 11, 2021

Counting Cash: Many Companies Will Maintain or Up Cash Levels in H1

An ICD survey also shows steady and growing use of money market funds and higher interest in ESG products.Cash on corporate balance sheets reached a record in 2020, topping $2 trillion, as companies responded to economic uncertainty created by the pandemic. New data from money market fund portal ICD suggests that a majority of corporates do not plan to cut cash levels in the first half of 2021. 61% of the 150 treasury clients surveyed by ICD plan to maintain or…
Justin Jones
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