Accounting & DisclosureRisk ManagementTalking Shop
October 13, 2020

Talking Shop: How Well Does Quantum Manage Interest Rate Swap Accounting?

Member question: “For those who use Quantum as their TMS, do you also leverage Quantum for hedge accounting, and if you do, does Quantum (in your opinion) manage interest rate swap accounting well? “We have been using Reval for a while, but just wanted to know if people have been able to leverage Quantum V6+ for hedge accounting, including interest rate swaps.” Peer answer 1: “When we put our interest rate forward starting swaps in place a few years back, Quantum…
Cash & Working CapitalCOVID-19Risk Management
October 8, 2020

Retailers Assess Capital Structure Amid Signs of Rebound

As the economy revives, companies pay down revolvers, resume buybacks and assess counterparty risk. At a recent NeuGroup meeting of treasurers at retailers, sponsored by U.S. Bank, members discussed stock repurchase programs, paying down revolvers and monitoring the impact of capital structure changes on leverage ratios and credit ratings. Members discussed moving from preparing for worst case scenarios in April and May (by increasing liquidity, initiating new revolvers) to more recent moves made in anticipation of returning to more normal operations.…
Cash & Working CapitalInvestment ManagementRisk Management
September 17, 2020

Weighing Reward vs. Risk, Cash Investors Make Moves or Hunker Down

Some take advantage of opportunities to pick up yield; others play it safer and stick to government money funds.The Covid crisis has illuminated where corporate cash investors sit on the risk tolerance spectrum—a point underscored in a Virtual Interactive Session sponsored by ICD this week that gave some NeuGroup members a clearer picture of where they stand relative to their peers.Career risk vs. opportunity for yield. Hearing what some peers have done “reinforces how conservative we really are,” said one…
Risk ManagementTechnology
August 27, 2020

Blockchain’s Increasing Popularity Raises Internal Control Issues

Applying the COSO framework addresses risks but raises some new ones. Despite its mysterious origins, distributed ledger technology (DLT) is increasingly viewed by companies as vital to remain competitive. From an internal control (IC) standpoint, the technology has significant potential to reduce risk and improve efficiency but also introduces new risks, prompting a recently published report on how to apply the leading IC framework when adopting DLT, also referred to as blockchain. “We wanted to put this guidance out there…
Cash & Working CapitalRisk Management
August 20, 2020

Balancing Act: The Realities of Working Capital Management

NeuGroup members and C2FO discuss the Fed, credit risk and negative cash conversion cycles. Working capital management has taken on increased significance during the pandemic, and two members of NeuGroup’s Tech20 Treasurers’ Peer Group discussed the subject with an executive from C2FO at a NeuGroup Virtual Interactive Session this week. Here are some takeaways from the session by NeuGroup founder and CEO Joseph Neu. The growing importance of data. C2FO’s platform is a great way to use working capital efficiently…
ComplianceRisk Management
August 6, 2020

When an Auditor Puts on the Consultant’s Hat

How much and when should internal auditors report about projects outside of their audit plan? Internal audit is increasingly being called upon to get more involved in nontraditional types of engagements—projects that don’t fall within the scope of the audit plan. These might include counsel, advice, facilitation, data analytics and automation. From company to company, managing these projects varies, according to members of NeuGroup’s Internal Auditors’ Peer Group. In a recent virtual discussion with IAPG members, the question was whether they…
COVID-19FXRisk Management
July 28, 2020

What Dollar Weakness and ‘Japanification’ Mean for FX Hedging Strategies

Corporate financial risk managers should be reassessing long-held assumptions as they look to redo their hedging.Add a weakening US dollar to the growing list of reasons risk managers at multinational corporations need to take a long, hard look at their hedging programs and strategies. That takeaway emerged at a NeuGroup Virtual Interactive Session last week featuring Societe Generale global strategist Albert Edwards, known for his provocative mid-1990s “Ice Age” thesis of bonds outperforming stocks.Christophe Downey, a director in the bank’s…
Capital MarketsRisk Management
July 9, 2020

Why Swapping Fixed-Rate Debt to Floating Is Still Worth Considering

Wells Fargo shared insights on liability management at the pilot meeting of NeuGroup for Capital Markets.At a spring meeting of NeuGroup for Capital Markets, sponsored by Wells Fargo, several members said they had used interest-rate swaps to shift more of their debt to floating rates, a move that paid off as rates fell in the second quarter amid the pandemic. A few participants had regrets about having swapped from floating to fixed rates.One member said his team is “spending a lot…
Capital MarketsRisk Management
July 2, 2020

Preparation Pays Off for Microsoft in Debt Exchange Offer

Liability management success: Microsoft received exchange interest of $12.5B, 56% of the targeted notional amount. Treasury teams managing their debt portfolios have a menu of liability management transactions to choose from, including bond tenders, open-market repurchases, consent solicitations and debt exchanges. To use most of these tools, corporates need to offer investors a reasonable amount of time to decide, ranging from five to 20 business days. So a successful liability transaction such as a debt exchange depends, in part, on a…
Risk ManagementTreasury Management
June 25, 2020

What the Experiment With Modern Monetary Theory Means for Risk Managers

Treasury and finance teams need to adapt to the reality of different thinking about debt and deficits. By Joseph Neu“We’re not even thinking about thinking about raising rates,” Fed Chairman Jerome Powell said after the Federal Open Market Committee’s June meeting. This was good timing for me: On the same day, I suggested to clients of Chatham Financial attending a virtual summit that among the accelerating trends treasury and financial risk managers need to prepare for is the current flirtation with…