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Here and Now: The Benefits of Right-Time Finance for FP&A

At a time when agile enterprises are in favor, OneStream suggests finance functions live more in the moment.

Accounting functions tend to look backward, with reporting that’s subject to close processes and consolidation. Planning and forecasting, on the other hand, is looking forward, seeking to support business partnerships by helping managers predict what’s coming.

  • Covid—especially the early period of the pandemic, which was arguably the most forecasted and re-forecasted period in modern history—has helped emphasize the importance of focusing more on the here and now.

At a time when agile enterprises are in favor, OneStream suggests finance functions live more in the moment.

Accounting functions tend to look backward, with reporting that’s subject to close processes and consolidation. Planning and forecasting, on the other hand, is looking forward, seeking to support business partnerships by helping managers predict what’s coming.

  • Covid—especially the early period of the pandemic, which was arguably the most forecasted and re-forecasted period in modern history—has helped emphasize the importance of focusing more on the here and now.
  • The goal is to find signals of opportunity or risk that will help proactively drive performance with higher velocity, even in circumstances that are uncertain or subject to rapid change.
  • This also fits with the digitalization of business, where it pays to be agile and pivot quickly in response to new circumstances and what the most recent data signals about what’s coming.

Rise to the occasion. With that backdrop, John O’Rourke, OneStream vice president of communications and brand marketing, said the finance journey for financial planning and analysis (FP&A) is reaching an inflection point.

  • “This is a moment for right-time finance, where FP&A should be proactively reading performance signals and helping the businesses be agile and respond to change on a more frequent basis, such as daily or weekly,” he said.
  • This shift to right-time finance for FP&A was one of the key takeaways from day one of the NeuGroup for Financial Planning and Analysis pilot meeting sponsored by OneStream, which provides an intelligent finance platform for the modern enterprise.
  • According to Mr. O’Rourke, “Decision-makers can no longer wait until month-end or quarter-end to get access to financial and operating results. They need access to key performance data and metrics about customers, suppliers and working capital on a more frequent basis so they can make decisions that impact future results.”
  • What separates right-time data from its cousin real-time data is that data needs to be transformed to information by putting it in context and adding financial intelligence so business leaders have access to the right info at the right time in the right format and don’t just make knee-jerk decisions in response to each new data point that comes in.
    • In other words, FP&A still needs to help identify the trends and signals in the noise to help business leaders make the right decision at the right time.

Stress testing agility. Drawing on results from the FSN 2021 Survey on Agility in Planning, Budgeting and Forecasting, Mr. O’Rourke encouraged members to stress test the agility of their organizations against three benchmarks. Implicit in each of these benchmarks is enhancing FP&A’s ability to accelerate insights.

  • Velocity. The time needed to reforecast earnings and revenue should be less than a week, and that forecast should provide a look at the year ahead that can be relied upon with confidence.
  • Accuracy. Companies should be able to forecast earnings and revenues to within +/-5%, even with a speedy reforecast. However, members noted that this percentage may be too low for some businesses.
  • Change management. Companies should be able to make a minor change to their budget and roll out that change to budget holders’ templates within half a day. They also should be able to make a simple change to their hierarchy in that same timeframe.

How to improve. Clearly it helps to have capable people and software, but adopting a rolling forecast and zero-based budgeting is shown to significantly improve FP&A agility.

  • Rolling forecasts (see chart above): Per the FSN survey, 70% of respondents deploying rolling forecasts (and just 19% did) were able to reforecast in under a week (vs. 63% for those who only reforecast quarterly).
    •  Almost half of rolling forecasters had +/-5% or better accuracy (vs. 35% of quarterly updaters) and 71% could make a minor change to budget/forecast model within a half day (vs. 57% of the quarterly updaters).
  • Zero-based budgeters also outperform: 84% of them can reforecast in under a week (vs. 51%) with 58% having +/-5% or better accuracy on earnings forecasts (vs 28%; and 60% vs. 35% for revenue forecasts). Also, 62% of ZBBers could make a change within a half day (vs. 27%).

Final thought. Mr. O’Rourke says it’s still important to have an accurate and timely period-end financial close process, so that book-of-record financial and operating results can be delivered as rapidly as possible to internal and external stakeholders. 

  • And it’s becoming increasingly important, he said, “to have agile planning and forecasting processes that help managers adjust resource allocations based on changes in your company or industry”. 
  • But many organizations are now also providing more frequent snapshots of operating metrics to managers, some daily or weekly, to help identify key trends and signals in the business that can support midstream decision-making.
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Financial Risk Reporting: A Spectrum of Committees and Dashboards

Chatham Financial and members of NeuGroup for Life Sciences Treasurers discuss varying ways to report on risk.

One size does not fit all when it comes to how, why and when treasury teams at multinationals interact with financial risk committees of the board of directors—assuming a corporate has a financial risk committee. A fair number don’t.

  • That subject and the risk management dashboards treasurers need, want and use to report to financial risk committees, audit committees and the CFO were part of a session at the NeuGroup for Life Sciences Treasurers H1 2021 meeting sponsored by Chatham Financial.

Chatham Financial and members of NeuGroup for Life Sciences Treasurers discuss varying ways to report on risk.

One size does not fit all when it comes to how, why and when treasury teams at multinationals interact with financial risk committees of the board of directors—assuming a corporate has a financial risk committee. A fair number don’t.

  • That subject and the risk management dashboards treasurers need, want and use to report to financial risk committees, audit committees and the CFO were part of a session at the NeuGroup for Life Sciences Treasurers H1 2021 meeting sponsored by Chatham Financial.

A wide range of practices. Chatham executives presented an analytic framework capturing the spectrum of how companies develop policies and processes concerning risk committees. Focal points and relevant questions include:

  • Scope of mandate: Is the committee approving, reviewing or directing decisions around risk at the program level, general financial risk level or enterprise level?
  • Composition: Is the committee limited to a minimal number of members including the CFO? Chatham said some companies believe smaller groups may be more nimble. On the opposite side of the spectrum are larger committees with cross-functional members.
    • “It flexes with time or circumstances,” Chatham’s Amanda Breslin said.
    • Members agreed that reporting risk was an important responsibility, but that it needed to be done efficiently.
    • One member said having a lot of smart people in the room talking about the same thing has its benefits; but being sensitive to managing their time was also important and that a smaller group (i.e. CFO, chief accounting officer, treasurer) could be the core of any risk committee.
  • Communication: How frequent and how granular or big picture are the presentations of information to committee members or C-suite executives?
    • One member’s company does not have a financial risk committee and presents to the audit committee of the board on a quarterly basis.
    • Another member basically takes the same approach, but presents to the audit committee when needed, especially if the item requires board approval, like investment policy guidelines.

Reality check. One member said an FX audit on his first day revealed that a number of policies had requirements for internal governance that existed on paper but “not in real life.”

  • Ms. Breslin said that situation is not uncommon, in part because policies adopted in the past are copied from a template and may not reflect changing needs. “We see scaling up and back depending on the needs,” she said.
  • Members agreed about the importance of aligning what’s in policies with meetings.
    • If the policy mandates regular meetings to discuss risk, those should be scheduled and conducted, especially if the company has experienced significant growth as the result of strategic M&A.

Diving into dashboards. Chatham shared a model program-level risk dashboard with members showing a range of views of cash flow exposures and hedges. (See chart above.) “The scope of the mandate will typically drive reporting needs,” according to the presentation. Elements may include:

  • Hedge coverage relative to policy
  • Period-over-period exposure changes
  • Accounting effectiveness
  • Estimated remeasurement impact
  • Forecasts vs. actuals
  • Trading activity reports

Fully automated cash reporting. One treasurer showed peers his fully automated dashboard, which is able to show the CFO how and why cash levels change by legal entity in every one of 30 countries where the company operates, including the top 10 balances across the globe. Updates can be run in 15 minutes, a speed that impressed peers.

  • Designing and implementing the system took between six and eight months, the treasurer said. It includes data that flows directly from the company’s banks to its TMS system to the dashboard.
  • One member said his dashboard was not as robust and was not fully linked to internal systems so he receives monthly, rather than daily, updates. 
  • Another member receives weekly dashboard reports, but said the process was manually intensive.
  • A third treasurer said his dashboard is quite good and has all the information he needs, but it is a monthly report that’s not automated and requires accounting to close.
  • One member’s TMS provider had been quite helpful in developing a useful dashboard, she said.
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A Bank Connectivity Crystal Ball: The Future Promise of Open APIs

Perspective on where APIs are adding value from a global bank that’s ahead of the curve.

A banker at a top US global bank invited to a recent session of NeuGroup for Global Cash and Banking said real-time balance (intraday) reporting is the bank’s most popular API, followed by payment transaction tracking. Regarding “as a service” offerings:

  • Real-time reporting will be part of the bank’s larger vision for reporting as a service to provide real-time balances and FX rates.
  • That will be complemented by FX as a service to provide trade booking alongside rates and mass pay initiation globally with separated FX trades at market rates.

Perspective on where APIs are adding value from a global bank that’s ahead of the curve.

A banker at a top US global bank invited to a recent session of NeuGroup for Global Cash and Banking said real-time balance (intraday) reporting is the bank’s most popular API, followed by payment transaction tracking. Regarding “as a service” offerings:

  • Real-time reporting will be part of the bank’s larger vision for reporting as a service to provide real-time balances and FX rates.
  • That will be complemented by FX as a service to provide trade booking alongside rates and mass pay initiation globally with separated FX trades at market rates.
  • Global payments will fit into its payments-as-a-service offering, which starts with real-time payments and confirmations, automated status updates and payment tracking, along with beneficiary validation and payments investigations.
  • Payments will carry over to accounts receivable (AR) with receivables as a service to help with invoice management and automated reconciliation.
  • Administration and onboarding as a service will provide account and administrative visibility for authorized signers and deactivation when they leave the organization.
  • Account management then extends to liquidity as a service to integrate virtual account management, account structure reporting and more via open APIs.

End-to-end operations. From a corporate finance function perspective, the promise of APIs may also be seen in the ability to connect more finance operations end-to-end.

  • By integrating internal systems and external as-a-service offerings, CFOs can bring more processes under one view, if not one leader, across treasury, AR and AP, and more often with SSCs or other centers of excellence in the mix, too.

Streamlining and real-time workflow automation. More workflow and process streamlining across finance operations will also magnify the extent to which people and other resources can shift from administrative transaction processing to value-added work involving analysis and solution support for the businesses.

  • As a NeuGroup member presenting noted, “We currently have technology analysis and admin functions for all our different bank connectivity platforms.” 
    • Every one of those that can be eliminated frees up resources for other things.

Obstacles to progress. What is standing in the way of the future promise of APIs is their uptake across the global banks, whether on their own or as part of SWIFT gpi on the payments side. To some extent, this will depend, among other things, on:

  • How successfully banks implement APIs to transform banking services, on their own and with fintech partners.
  • How other parts of the ecosystem, including the treasury systems providers, service bureaus and aggregators, deploy APIs vs. other means of bank connectivity optimization.
  • How quickly API-driven solutions free treasury and finance staff from transaction administration to focus on analysis and business support.
  • How quickly corporate IT functions get comfortable with API access across their corporate firewall.
  • How quickly data compliance teams looking across customers in various jurisdictions with different data governance models can sort out what data can be accessed via the APIs.

One step forward… None of these items will be cleared easily or immediately. Treasurers also should be prepared to take an occasional step back to eventually move forward.

  • One member noted that his company had implemented direct API bank connectivity recently only to have its corporate IT security team pull the plug on it because it was deemed too high risk.
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Talking Shop: Selecting Signatories on Global Bank Accounts

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “The signatories on your global bank accounts are most accurately reflected by which of the following choices?”

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “The signatories on your global bank accounts are most accurately reflected by which of the following choices?”

  • Treasury staff only.
  • Treasury staff plus non-treasury staff in the region of the account.
  • Non-treasury staff who are in the region of the account.

Peer responses:

Peer answer 1: “We have split the global treasury team into US and non-US. US staff are signatories on US accounts. The non-US treasury team is not a signatory in the US but is for the rest of the world.”

Peer answer 2: “Unless prohibited by local laws and regulations, signatories who are authorized to open, close and modify accounts are limited to a small number of corporate treasury directors and above.

  • “If local check signers are required, we differentiate with the bank to allow certain local personnel to authorize checks—however, they cannot take other actions with the accounts.”

Peer answer 3: “Generally, for opening, closing and modifying accounts and services, we prefer to have corporate signers which includes the treasurer and four other finance leadership (VP-level) team members.

  • “However, as some countries have different requirements, we do make adjustments; and typically in these cases, we utilize a treasury team member or local finance director. Globally, we require two authorized signers for all such activity (whether required by the bank or not).”
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Diving Into the NFT Deep End: Auctions, Crypto Risk and ESG Concerns

One AT helped marketing capitalize on the nonfungible token craze while minimizing financial and reputational risk.

Amid all the buzz and flurry of headlines around nonfungible tokens (NFTs), the actual process of creating, selling and maintaining them is somewhat cloudy. When one NeuGroup member was thrown into the deep end by his company’s marketing team, he had only six weeks to swim his way to the surface and prepare treasury for a public NFT auction.

One AT helped marketing capitalize on the nonfungible token craze while minimizing financial and reputational risk.

Amid all the buzz and flurry of headlines around nonfungible tokens (NFTs), the actual process of creating, selling and maintaining them is somewhat cloudy. When one NeuGroup member was thrown into the deep end by his company’s marketing team, he had only six weeks to swim his way to the surface and prepare treasury for a public NFT auction.

  • NFTs are unique digital assets that can be bought and sold. Similar to most cryptocurrencies, they rely on a digital ledger known as a blockchain. The member is an assistant treasurer for a company with an internationally recognized brand that wanted to capitalize on IP recognition in the form of these digital collectibles.
  • The company planned to auction off a brand-related collectible and needed to figure out how to handle the cryptocurrency that would be used to pay for it. (The collectible ended up selling for crypto worth hundreds of thousands of dollars.)
  • Though there were a number of complications, the member said he sees “a huge upside” to NFT business.

What to do with the crypto. With only six weeks to prepare, the AT had to adapt quickly. “We were thankful we were brought in so we could at least ask our questions,” he said.

  • “Our marketing and licensing group had already done a lot of research,” but the planned deadline approached rapidly.
  • “It had gotten to the point where now they needed to talk about what they’d do with any cryptocurrency they’d be receiving.”
  • The company’s licensing team planned to sign on with a cryptocurrency exchange to assist with the auction and convert the crypto received into dollars.

Passing the risk to an ad agency. But the AT quickly found out that using a crypto exchange comes with a number of risks associated with holding crypto, most notably its extreme volatility.

  • After connecting with NeuGroup member peers who had experience selling NFTs, he learned that some artists and marketing agencies that corporates work with can eliminate the need to use an exchange.
  • “We found out that most of the ad agencies in the NFT space are willing to take on the crypto risk for you,” the AT said. He made an agreement for the cryptocurrency to go to the agency he was working with, which would then convert it into dollars and—in this case—donate it to a charitable partner.

Don’t forget about royalties. At the recommendation of other NeuGroup members, banking partners and more research, the member’s company decided to use OpenSea, a digital marketplace, to auction the NFT. The platform is built on the Ethereum blockchain, and only accepts payments in its native token, ether.

  • Coded into the token is a royalty contract, so each time it’s sold, the artist and the company get a percentage of the ether associated with that sale.
  • “So that opened it up to: Are we ready to accept cryptocurrency?” he said. “For now, the answer is no. I didn’t want the cryptocurrency risk.”
  • “We worked with our legal department to write in the code that it is also the agency’s job to receive the crypto on the royalties and make the conversion to dollars,” he said.

ESG and the backup plan. Though the member vetted the ad agency he was working with to handle the ether, he wanted treasury to have a backup plan—in the form of a crypto exchange, as it turned out.

  • The company needed to prepare for a scenario, however unlikely, “in case something goes wrong and I get the phone call that says ‘Hey, something happened with the agency and whoever was supposed to receive it; something went wrong—where can we put this [crypto]?’”
  • As NFTs have gained traction in recent months, the technology behind it has seen significant backlash from the public due to the energy consumption required. To offset this, the company’s marketing team initially had looked at working with an exchange that had a high ESG rating.
    • But the banks the AT consulted with strongly advised against working with that exchange, saying, “you want to stay away,” he said.
  • The member worked with a different exchange recommended by the banks and treasury “opened up an account just to see what the controls look like. We didn’t even have to have a deposit.
  • “We were up-and-running in like a day, it was very easy. We didn’t trade anything; our finance and tax folks were pleading with us not to” due to the extreme volatility and accounting complexities of the currencies.

Hazy future. Public concern around the environmental impact of NFTs and cryptocurrencies makes it tricky for corporates to hold crypto, even if they’re willing to weather the risk of volatility.

  • For now, the member plans to continue with the current process of never holding the crypto and donating all proceeds, wary that turning profits from digital collectibles could contradict the company’s other ESG-related efforts.
  • “We’ve got to figure out where the world lands with the ESG lens on this type of activity. Right now, it’s still frowned upon,” he said. “Until there’s a clear path ahead and someone makes it so that this sort of business is not destroying the environment or having a huge footprint, we’re going to be constantly looking to offset to any reputational impact.
  • “If we could ever get comfortable, and it evolves in a way that’s not impactful, this could be a new revenue stream for us as the next evolution of collectibles.”
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Hunting for Yield With Crypto-based Lending Amid Regulatory Fog

Corporates seeking better returns on cash by lending crypto weigh falling rates and regulatory uncertainty.

News this week that the SEC is investigating Coinbase Global over a lending program and may sue the company could have a chilling effect on corporates that were considering buying and then lending cryptocurrency to pick up yield.

  • But the fact remains that corporate treasuries have been challenged for years to find investments in which to park cash that provide attractive, positive returns.
  • And a small but increasing number of companies has been finding respite by providing loans collateralized by digital assets such as bitcoin.

Corporates seeking better returns on cash by lending crypto weigh falling rates and regulatory uncertainty.

News this week that the SEC is investigating Coinbase Global over a lending program and may sue the company could have a chilling effect on corporates that were considering buying and then lending cryptocurrency to pick up yield.

  • But the fact remains that corporate treasuries have been challenged for years to find investments in which to park cash that provide attractive, positive returns.
  • And a small but increasing number of companies has been finding respite by providing loans collateralized by digital assets such as bitcoin.
  • One treasurer whose company owns bitcoin and has lent small amounts said, “Given our small size in this area and our counterparties, I don’t think this [Coinbase news] brings any undue risk for us. Clearly there’s a path here where the lending products get shut down, but I wouldn’t lose any sleep over that.”

The Genesis window. Practically nonexistent two years ago, such lending has grown rapidly. Genesis Global Trading, a top digital asset trading firm and custodian, publishes a quarterly report that provides a look into the still nascent market.

  • Despite bitcoin plummeting 41% in Q2, Genesis’ total active loans outstanding fell just 8.1%, to $8.3 billion, as interest in the market continued to grow. “Mark-to-market depreciation in book value was offset by organic loan portfolio growth,” the report says.
  • It doesn’t say who those lenders were, but the firm’s Q1 report said corporates jumped to first place in terms of trading, making up 27% of total activity.
  • “The entrance of companies like Tesla, MicroStrategy and Square led to a wave of interest from corporates looking to work together with Genesis Treasury for their own treasury allocation efforts,” the report says.
    • The firm’s originations by the end of Q2 had risen by more than eight times year over year, and by more than 60% since Q1.

Regulatory risk. Uncertainty about regulation is just one reason many companies are steering clear of buying cryptocurrency, let alone lending it. That said, many in the crypto industry welcome more clarity from regulators.

  • “At Genesis, we see emerging regulatory clarity as a plus for institutional investors,” the Q2 report says. “However, in the short term, uncertainty around the details of eventual crypto regulatory moves adds risk and was likely one of the factors behind Q2’s lackluster crypto market performance.”
  • A spokesman for Genesis declined to comment on the possible implications of the SEC’s investigation of Coinbase.

Cash vs. crypto lending. Genesis notes cash loans collateralized by crypto dominated in Q1, but demand fell following the collapse in spot/futures spreads since May.

  • Digital asset lending took the lead in Q2, matching the needs of corporates that have purchased crypto currencies over the last year, whether to diversify investments or support their own businesses’ forays into digital payments.
  • “We’re only looking at crypto lending, the key benefit being that we have idle bitcoin and can earn a return,” said one treasurer, adding the company has “committed some small amounts.”

Returns fall. Steve Swain, CEO of Gibraltar-headquartered Lendingblock, a digital asset lending platform, said that more lenders than borrowers has pushed down rates by more than half compared to 18 months ago, to between 2% and 4%, depending on the borrower and type of digital currency.

  • Those returns are still attractive compared to more traditional cash investment alternatives, and lending crypto instead of cash offers a premium.
  • Genesis acknowledged the pressure on rates, but said borrowing demand typically increases in a bearish market, and in the Q2 “crypto lending rates have moved a bit higher.”

More risk. Mr. Swain, whose firm recently licensed its software to Singapore-based exchange operator and Nasdaq-listed EQONEX Group, said the borrowers’ market has pushed down loan collateral levels significantly from the 150% common previously, in some cases close to par.

  • Collateral levels depend on the type of borrower and crypto currency, said Jennifer Liu, head of lending at Anchorage Digital. Specializing in digital asset lending, the digital asset platform’s bank subsidiary was conditionally granted the first national trust charter by the OCC earlier this year.
  • The treasurer cited collateral levels at close 125%, although he did not provide information on lender rates.
  • Ms. Liu added that most of the loans Anchorage facilitates are collateralized by bitcoin or Ethereum, the largest digital assets by volume. She added the firm models each loan that is approved by its risk-management committee, and its bank holds the collateral so it can be quickly liquidated in the event of margin calls.
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Tapping APIs to Power Better Bank Connectivity

Progress on connectivity with APIs starts with payments and administrative efficiency, GCBG members learned at a recent meeting.

Members of NeuGroup for Global Cash and Banking got a realistic assessment of the state of bank connectivity with open APIs at a recent meeting sponsored by ION Treasury, a top provider of treasury management systems.

  • ION’s perspective, an example from a member company and comments from a global bank considered ahead of the curve with APIs provided a view of the current landscape of API connectivity and the technology’s potential.

Progress on connectivity with APIs starts with payments and administrative efficiency, GCBG members learned at a recent meeting.

Members of NeuGroup for Global Cash and Banking got a realistic assessment of the state of bank connectivity with open APIs at a recent meeting sponsored by ION Treasury, a top provider of treasury management systems.

  • ION’s perspective, an example from a member company and comments from a global bank considered ahead of the curve with APIs provided a view of the current landscape of API connectivity and the technology’s potential.

State of play. APIs have been heavily hyped as transforming treasury, but the reality is that these are still the early days of API transformation. An in-session poll revealed that just 26% of members were using APIs, but 47% indicated that they expect to soon.

  • As ION noted, the bank connectivity part of APIs is all about timeliness and improving the security, cost, automation and reliability of connections (the four pillars of connectivity—see chart) between banks and corporate treasuries.
  • The improvement is relative to existing connectivity via service bureaus and other aggregators, connectivity networks (including SWIFT), host-to-host direct links and e-banking portals and workstation connections.
  • Of course, each of these means of connectivity will also likely deploy API connections. However, they may not do so in an open way that allows new ways for fintechs and other third parties to create new business opportunities on top of banks and banking infrastructure.

SWIFT payments: a current focal point. The SWIFT Global Payment Innovation (gpi) initiative can help implement broader API adoption in bank payments globally. However, in its current state it is mainly about imposing standards on banks to increase transparency on payment fees, along with providing end-to-end payment tracking and confirmation closer to real time.

  • Case in point. The member example backs this up. Like many large corporates, this multinational deployed a variety of means and systems to connect to banks to make and reconcile payments. This created a complex web of payment file transfers.
  • Payment file streamlining. To streamline that web, the company brought in a service bureau to connect it to all of its global banks via SWIFT, replacing a separate TMS-to-bank connection in the US and a bilateral transfer between its major global transaction banks and foreign operations.

APIs where they make sense. According to the member implementing the payment file streamlining project, APIs will be deployed where they make sense. As priorities, he listed:

  • Interfaces between treasury systems and bank administrative systems (though these depend on internal IT approval).
  • Interfaces between treasury systems and other corporate systems (to streamline workflows for investment, FX and delegation of authority to act on the behalf of affiliates).
  • Intraday balance reporting from financial institutions (a step toward real-time or statement-less reconciliation and liquidity management).
  • Bank portal user entitlements (to eliminate tokens and manage user access to include automated removal of users when they leave).
  • Bank account validation services (to help ensure compliance with controls on accounts from opening to signatories and closing).
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Talking Shop: Measuring Counterparty Exposure on Outstanding Trades

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “For companies that trade derivatives on a non-collateralized basis, how do you measure your exposure to counterparties on outstanding trades (e.g., impact from one standard deviation movement?) and how is this factored into your overall counterparty risk assessment?

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “For companies that trade derivatives on a non-collateralized basis, how do you measure your exposure to counterparties on outstanding trades (e.g., impact from one standard deviation movement?) and how is this factored into your overall counterparty risk assessment?

  • “We are currently looking to move away from collateral postings on our derivative trades. In order to do so, we want to ensure we first have a methodology in place for calculating and managing the additional exposure this would create with banks we trade with.
  • “Also, we’re looking to determine the process for consolidating this derivative exposure along with other exposures we have with these banks (e.g., bank deposits).”

Peer answer: “Most of our hedges are relatively short-dated. For our longer-tenor trades, we deliberately diversify across many banks.

  • “Currently, we’re a bit simple in that we view counterparty risk on the trades based on notional outstanding and mark to market, and only focus on derivatives—at least for now. Quarterly, we review the credit ratings and collateralized debt securities for our counterparty banks.”

NeuGroup Insights: The peer answering the question also brought up a presentation at a NeuGroup meeting last fall where members heard about “an outstanding way of measuring/monitoring counterparty risk” from one of their peers.

  • You can read our article about this proactive approach to measuring and managing FX and other counterparty exposures, “An Early Warning System to Flag Excessive Counterparty Credit Risk,” by clicking here.

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Send in the Robot: Automating Bank Account Signatory Maintenance

One corporate’s solution uses RPA and ServiceNow to solve the problem of updating signatories on bank accounts.

Treasury teams at multinational corporations with scores of banks and hundreds of bank accounts often struggle to find out in a timely manner when the people who are signatories on those accounts—spread across the globe—change jobs or leave the company. That’s a problem.

  • One member of NeuGroup for Global Cash and Banking recently described to peers how her company solved the problem by creating a solution using robotic process automation (RPA) and technology from ServiceNow. The result: real-time monitoring of employee movements and an automated, centralized ticketing system.

One corporate’s solution uses RPA and ServiceNow to solve the problem of updating signatories on bank accounts.

Treasury teams at multinational corporations with scores of banks and hundreds of bank accounts often struggle to find out in a timely manner when the people who are signatories on those accounts—spread across the globe—change jobs or leave the company. That’s a problem.

  • One member of NeuGroup for Global Cash and Banking recently described to peers how her company solved the problem by creating a solution using robotic process automation (RPA) and technology from ServiceNow. The result: real-time monitoring of employee movements and an automated, centralized ticketing system.

The scope of the problem. Treasury had no reliable source informing the team when the employment status of bank signatories changed. Team members used paper-based notification and approval processes, adding to delays and errors.

  • Treasury manually compared its data to HR data annually to identify needed updates. The data gathering and reconciliation process was tedious and took months, the member said. By the time it was complete, the information was already out of date.
  • Numbers reveal the scope of the challenge and the immense potential benefit of using technology to wrestle the bank compliance and maintenance monster to the ground. The company operates in more than 55 countries and has:
    • More than 100 banks.
    • More than 600 bank accounts.
    • More than 650 account signatories.
    • More than 150 entities.
    • About 6,000 relocations or terminations annually.

Steps to the solution. The company’s process was manual, rules-based and repetitive. “We thought this was a good candidate for the robot,” the member said.

  • The team devising the RPA plan consisted of treasury cash management staff, an RPA developer who works for the company (using software from UiPath) and a developer who works for ServiceNow.
  • The solution involves using a robot to identify role changes and terminations by comparing HR data held in SAP to a list of active signatories in treasury’s bank account management database, marked BAC (bank account compliance) on the chart above.
  • An app from QlikView pulls the data from the two databases and then the robot automatically writes tickets in ServiceNow, directing treasury to take any necessary action.
  • A detailed process map established the workflow approval process within the system.
  • The team’s case study and financial evaluation indicated the expected return on investment from the project “was quite huge”—more than 250%, the member said.
    • Ancillary benefits identified included a timely update of bank records, prevention of financial loss and complying with a recommendation from the audit team.

Tweaking ticketing. The solution required using both a standard API for ServiceNow and a custom API to reduce the amount of time needed to create the ServiceNow tickets.

  • The team separated the data in ServiceNow into two categories: tickets per person (cases) and associated accounts (tasks) as sub-tickets.
  • The ticketing system created a centralized location to track all requests, eliminating the need for spreadsheets.
  • It also helped clarify priorities by creating visibility for all requests and eliminating duplication of effort.
  • Requests are now prioritized according to urgency instead of order of receipt.
  • It provided built-in data reporting, allowing the development of dashboards to track KPIs, including the number of updates completed monthly, outstanding items and average time to completion.

Results, future. Once implemented and running for the first time, the solution generated 280 tickets that impacted 390 bank accounts where the signer had some type of HR position change or termination.

  • The RPA tool now runs daily, generating an average of 12 tickets a month.
  • The company has biweekly meetings with ServiceNow developers to discuss issues including workflow, email notifications, auto closure of tickets and viewing access.
  • Future updates may include adding Power BI to extract data from SAP and the company’s bank account management database.
  • Treasury is considering using the same process developed for signatory management for bank portal access.
  • Many other groups at the company may use a version of the tool to manage other risks.
    • The solution is being reviewed for use by the legal department to identify HR changes for personnel with powers of attorney.
    • It may also be used by the company’s shared service center and internal audit to track other types of access and authorities.
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Leaning into ESG: How a Portfolio ‘Tilt’ Can Pay Off

State Street experts recommend how to optimize an investment portfolio for both ESG and credit quality.
 
It’s a complicated world of ESG scores and standards, especially when managing an investment portfolio. At top of mind for NeuGroup members putting corporate cash to work: should they prioritize ESG performance or maximize returns? Hint: it’s not too much to ask for both.

  • At a recent meeting of NeuGroup for Cash Investment 2, Will Goldthwait and Karyn Corridan, ESG investment experts from State Street Global Advisors, shared the advantages of tilting a portfolio toward companies with higher ESG scores, and why that may be more beneficial than an exclusionary approach.
  • According to State Street data, there is a strong correlation between a money fund’s ESG score and its overall credit value, a testament to the benefits of tilting—though it requires an investor trust the ESG scorer’s approach and methodology.

State Street experts recommend how to optimize an investment portfolio for both ESG and credit quality.
 
It’s a complicated world of ESG scores and standards, especially when managing an investment portfolio. At top of mind for NeuGroup members putting corporate cash to work: should they prioritize ESG performance or maximize returns? Hint: it’s not too much to ask for both.

  • At a recent meeting of NeuGroup for Cash Investment 2, Will Goldthwait and Karyn Corridan, ESG investment experts from State Street Global Advisors, shared the advantages of tilting a portfolio toward companies with higher ESG scores, and why that may be more beneficial than an exclusionary approach.
  • According to State Street data, there is a strong correlation between a money fund’s ESG score and its overall credit value, a testament to the benefits of tilting—though it requires an investor trust the ESG scorer’s approach and methodology.

Understanding tilts and taking a stance. Historically, ESG investment mandates applied exclusionary screens to equities that contradicted the holders’ social or moral values (like tobacco companies). However, concern about missing upside and the larger global stance on environmentalism and human rights has shifted the way some investors think about ESG investing.

  • “What’s changed in the last couple years is tilting a portfolio, and not being exclusionary,” Mr. Goldthwait said. “I think, ultimately, that is beneficial to ESG efforts here in the US.”
  • By looking at what funds include, rather than what they exclude, asset managers (like State Street) can focus on financial materiality, credit worthiness and the wider sustainability strategies of fund composition.
  • Looking at European companies, “we can see that over there, clients are like ‘I want carbon-free, right now, let’s do it,’” Mr. Goldthwait said. “I don’t think the US is quite there yet, we’re sort of in the process of trying to understand what that return construct looks like.”

Higher scores, stronger credits. Flipping to an inclusive approach and tilting asset allocation has allowed State Street to push performance while keeping within the perimeters of a client’s moral compass and to prioritize safety, liquidity and yield.

  • State Steet’s ESG scoring system, named Responsibility Factor or R-Factor, uses Sustainability Accounting Standards Board (SASB) frameworks to evaluate the performance of a company’s ESG business operations and governance.
  • “When we first looked at applying it to a money market fund, what we found, very interestingly, is there’s a strong correlation between companies that have a higher R-Factor score and our maturity restrictions set by our credit analyst,” Ms. Corridan said (see chart above).
  • “By having a fund that integrates ESG considerations, it’s essentially giving you a portfolio with a higher credit quality.”

Transparency, trust and communication. But many corporates said they are still sitting on the ESG sidelines trying to make sense of scores and various benchmarks, repeating in various NeuGroup meetings that it’s a real challenge to weed through the noise and get an apples-to-apples comparison when evaluating investment options.

  • Compounding this difficulty is that asset management firms are weighting ESG components differently, including measurements like R-Factor.
  • Members agreed that it is important for them to be able to have frequent dialogues with their asset managers to appropriately understand their investment approach and how their funds are tilted (overweight) to equities or exclusionary (underweight) to ESG.
    • In addition, asset managers should provide full transparency as to how their investment accounts tilt so that corporates may trust and believe in their process.
  • “The future state: is if ESG is successful, it’s going to be successful by picking companies that ultimately help perform on your traditional metrics also delivering high-performing ESG scores,” Mr. Goldthwait said.
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Talking Shop: Approval Level For Executing Hedging Contracts

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “I know we talked about this at some point this year, but I wanted to see if you all would help me benchmark. What level of approval/review/sign-off is required prior to executing your hedging contracts?”

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “I know we talked about this at some point this year, but I wanted to see if you all would help me benchmark. What level of approval/review/sign-off is required prior to executing your hedging contracts?”

Peer answer 1: “Our treasurer signs off on each monthly tranche of cash flow hedges we execute, as per our policy. We don’t require a monthly sign-off on balance sheet hedges.”

Peer answer 2: “For balance sheet hedges and cash flow hedges, the treasurer approves the trades. The assistant treasurer, or a delegate, approves true-ups.

  • “If we were to make substantial changes to the hedge programs, then we would inform and seek the approval of the CFO prior to making those changes.”

Peer answer 3: “Two authorized FX traders are required to review and approve any FX trades. Options require treasurer or assistant treasurer approval.”

Peer answer 4: “Our CFO approves the cash flow hedge strategy monthly, or more frequently if market movements warrant a different strategy.

  • “Balance sheet hedges are governed by our policy and don’t require separate CFO approval.
  • “I review every executed trade at the end of the month to ensure they are aligned with approvals (CF hedges, balance sheet hedges, spot deals, etc.).”
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Next Steps on the Road to Libor’s End: ARRC Chair Tom Wipf Looks Ahead

In part two of his video interview with Joseph Neu, Tom Wipf discusses operational challenges, SOFR’s strengths and more.

Keeping track of developments in the long-running financial market drama called the Libor transition has been anything but easy.

  • The number of complex issues at play can be overwhelming—everything from fallback language, interest calculations and credit spread adjustments to term rates, timelines and deadlines.

That’s one reason NeuGroup created a Libor transition working group and has facilitated scores of discussions on the ins and outs of the Secured Overnight Financing Rate (SOFR), the replacement interest rate endorsed by the Alternative Reference Rates Committee (ARRC).

  • Just this week, the ARRC welcomed Refinitiv’s prototype publication launch of the ARRC’s recommended spread adjustments and spread adjusted rates for cash products.
  • In late July, the ARRC recommended CME Group’s forward-looking SOFR term rates—an important development for many NeuGroup members that will be discussed at numerous peer group meetings this fall.

NeuGroup’s goal is to help members negotiate the transition away from Libor and make sure their voices are being heard by regulators, the ARRC and others overseeing this monumental change.

  • To do that, we’ve kept in close touch with the ARRC and its chairman Tom Wipf, who is also a vice chairman at Morgan Stanley.
  • Last week, NeuGroup founder and CEO Joseph Neu sat down with Mr. Wipf to discuss what he’s learned over the last seven years (he joined the ARRC in 2014 and became chair in 2019) and what remains to be done.
  • You can watch the initial segment of the interview here.

In the second part of the discussion, below, Mr. Wipf addresses some of the operational issues presented by SOFR that the ARRC had to confront as it got feedback from nonfinancial corporates and other market participants.

  • And a word to the wise: At the end of the video, Mr. Wipf notes that no new financial contracts can use Libor after the end of 2021, “150-some-odd days away.” Well, a week has passed and it’s now about 140 days away!

In part two of his video interview with Joseph Neu, Tom Wipf discusses operational challenges, SOFR’s strengths and more.

Keeping track of developments in the long-running financial market drama called the Libor transition has been anything but easy.

  • The number of complex issues at play can be overwhelming—everything from fallback language, interest calculations and credit spread adjustments to term rates, timelines and deadlines.

That’s one reason NeuGroup created a Libor transition working group and has facilitated scores of discussions on the ins and outs of the Secured Overnight Financing Rate (SOFR), the replacement interest rate endorsed by the Alternative Reference Rates Committee (ARRC).

  • Just this week, the ARRC welcomed Refinitiv’s prototype publication launch of the ARRC’s recommended spread adjustments and spread adjusted rates for cash products.
  • In late July, the ARRC recommended CME Group’s forward-looking SOFR term rates—an important development for many NeuGroup members that will be discussed at numerous peer group meetings this fall.

NeuGroup’s goal is to help members negotiate the transition away from Libor and make sure their voices are being heard by regulators, the ARRC and others overseeing this monumental change.  

  • To do that, we’ve kept in close touch with the ARRC and its chairman Tom Wipf, who is also a vice chairman at Morgan Stanley.
  • Last week, NeuGroup founder and CEO Joseph Neu sat down with Mr. Wipf to discuss what he’s learned over the last seven years (he joined the ARRC in 2014 and became chair in 2019) and what remains to be done.
  • You can watch the initial segment of the interview here.

In the second part of the discussion, below, Mr. Wipf addresses some of the operational issues presented by SOFR that the ARRC had to confront as it got feedback from nonfinancial corporates and other market participants.

  • And a word to the wise: At the end of the video, Mr. Wipf notes that no new financial contracts can use Libor after the end of 2021, “150-some-odd days away.” Well, a week has passed and it’s now about 140 days away!
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Connecting the D&I Dots: How IntraFi Helps Corporates Make an Impact

One corporate used IntraFi Network’s services to access FDIC insurance on a large deposit.

One of the obstacles encountered by NeuGroup members whose diversity and inclusion (D&I) initiatives include supporting banks that serve minority communities is connecting with the right people at those institutions and ensuring the safety of their deposits.

One corporate used IntraFi Network’s services to access FDIC insurance on a large deposit.

One of the obstacles encountered by NeuGroup members whose diversity and inclusion (D&I) initiatives include supporting banks that serve minority communities is connecting with the right people at those institutions and ensuring the safety of their deposits.

  • To address that issue and others, NeuGroup in 2021 showcased how IntraFi Network—formerly Promontory Interfinancial Network—is making it easier and more efficient for corporates to place deposits with minority depository institutions (MDIs) and community development financial institutions (CDFIs), and simultaneously gain access to large-dollar FDIC insurance.
  • NeuGroup D&I sessions included one member who asked IntraFi and Clearwater Analytics, the investment accounting and reporting service provider, to develop and integrate daily data feeds between their systems.

A clear goal, a less clear path. This member’s company found a way to support MDIs and satisfy the company’s goal of protecting its excess cash balances with access to FDIC insurance. 

  • The company worked with MDIs to place its large deposit using IntraFi Network’s Certificate of Deposit Account Registry Service; as a result of the placement, the MDIs received a matching amount of reciprocal deposits in return. Each MDI can use the reciprocal deposits to lend to individuals and businesses in its local community.
  • The member said that although his treasury group had a list of MDIs and CDFIs, connecting with the appropriate staff at many banks proved difficult; calls to 800 numbers got routed to voicemail boxes and progress was also slowed by institutions’ internal fraud and security policies.
  • In retrospect, the member said he wished the company’s treasury team had leveraged IntraFi earlier and better understood “where IntraFi sat in the equation.”

IntraFi and relationship banks. At a recent NeuGroup session, IntraFi executives explained that their service allows corporate depositors to “gain the diversification of thousands of banks and the convenience of dealing with only one relationship institution,” according to their presentation.

  • Jane Gladstone, IntraFi’s president, told members that IntraFi’s network of about 3,000 financial institutions gives each depositor access to up to $150 million of FDIC insurance while working through a single relationship institution.
  • That’s possible because the relationship bank places the large deposit, using the service, into other so-called participating destination banks and each one receives $250,000 or less.
  • The member’s company had deposits placed by several relationship (MDI) banks using the service, and the funds were allocated among other destination banks (see chart).

Solving the reporting puzzle. The member company’s corporate requirements included daily electronic visibility to all IntraFi deposit product transactions and balances via investment reporting. Also:

  • An automated month-end statement available via PDF on relationship bank letterhead (same as a paper statement).
  • Deposit product holdings reported at the participating bank level.
  • To accommodate the member, IntraFi and Clearwater developed the necessary data feeds and implemented them in less than six weeks in.
  • This gave the company daily automated visibility for reporting transparency, accounting automation and risk oversight and management.

Other corporates may benefit. The data feeds not only allow the company to scale its MDI program to additional banking partners, but also can be leveraged by any organization that uses Clearwater and submits deposits for placement by MDIs using IntraFi’s CDARS and Insured Cash Sweep products. They will have a seamless process to “look through” to see deposits placed at each destination bank, the member said. Other benefits he listed include:

  • Accounting interface from Clearwater to the general ledger.
  • Improved reporting resulting in easier compliance with applicable treasury policies.
  • Access to FDIC insurance eliminates potential credit risk on uninsured deposits placed with banks.
  • The ability to scale up the program through increased deposits across multiple participant banks.
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Talking Shop: Digging Into Dual-Purpose Hedges and De-designation

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “Does anyone have dual-purpose hedges (for example, the hedge is originally a cash flow (CF) hedge and then intentionally de-designated to become a balance sheet hedge, with impact after de-designation going to the P&L)?”

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “Does anyone have dual-purpose hedges (for example, the hedge is originally a cash flow (CF) hedge and then intentionally de-designated to become a balance sheet hedge, with impact after de-designation going to the P&L)?”

Peer answer 1: “Yes, we’ve recently switched to a long haul approach and are now de-designating our CF hedges. Due to the timing mismatch between the two programs, I wouldn’t necessarily say we have interplay/dual purpose.”

Peer answer 2: “We do exactly what you have described; our FX cash flow hedges get de-designated when the revenue/ expense is booked, but the hedging instruments that remain on the books are hedges of [FX-denominated] AR/AP created when the revenue/expense was booked.”

Peer answer 3: “Yes, we do what you describe. We hedge the purchase of our inventory, but the hedge matures generally a month later when the product is paid for and we have a cash reimbursement of an intercompany.

  • “We de-designate our cash flow hedges the month-end prior to maturity, such that the remaining P&L goes through a different P&L item.”

Peer answer 4: “We do what you describe. For important currency pairs, we true up the hedge amount once de-designated to match the actual balance sheet exposure.”

Peer answer 5: “We did that as part of our project CF hedging program at [another company]. We used Chatham Direct to handle the handoff between CF and balance sheet programs. Their tool made it quite smooth.”

Peer answer 6: “​Yes, we de-designate the hedges and then they mature; or we enter into trades to close them out the next month.  We hedge quarterly but de-designate monthly.”

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ARRC Chair Wipf on the Libor Transition Marathon: ‘We Have Passed the Wall. We Hope We’re on the Downhill.’

Part one of a video interview by NeuGroup founder and CEO Joseph Neu with Tom Wipf, chair of the Alternative Reference Rates Committee, on what the ARRC and he have learned about Libor and what lies ahead as market participants switch to SOFR.

The transition away from Libor got a major boost in late July after the ARRC announced the recommendation of CME Group’s forward-looking Secured Overnight Financing Rate (SOFR) term rates, following the completion of a key change in interdealer trading conventions on July 26, 2021, under the SOFR First initiative.

With that backdrop, NeuGroup’s Joseph Neu sat down for a video interview this week with ARRC Chairman Tom Wipf to review the seven-year Libor transition marathon and look ahead to what has to happen to reach the finish line. Below is the first of several pieces of the interview NeuGroup Insights will post in the days ahead.

Part one of a video interview by NeuGroup founder and CEO Joseph Neu with Tom Wipf, chair of the Alternative Reference Rates Committee, on what the ARRC and he have learned about Libor and what lies ahead as market participants switch to SOFR.

The transition away from Libor got a major boost in late July after the ARRC announced the recommendation of CME Group’s forward-looking Secured Overnight Financing Rate (SOFR) term rates, following the completion of a key change in interdealer trading conventions on July 26, 2021, under the SOFR First initiative.

With that backdrop, NeuGroup’s Joseph Neu sat down for a video interview this week with ARRC Chairman Tom Wipf to review the seven-year Libor transition marathon and look ahead to what has to happen to reach the finish line. Below is the first of several pieces of the interview NeuGroup Insights will post in the days ahead.

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A Pioneer Plugs Into Energy Sector Sustainability-Linked Financing

Enbridge, the pipeline operator, is the first midstream firm in North America to do sustainability-linked financing. 

Presenting to members of NeuGroup for Oil & Gas Treasury, Sheldon Bueckert, director of treasury at Enbridge, shared his experience helping lead the company’s sustainability-linked bond (SLB) and loan financings, a first for a midstream firm in North America. The session focused on a SLB that Enbridge issued in late June.

Key SLB details. On June 23, 2021, Enbridge hosted 131 investors on a series of marketing calls focused on the company’s sustainability initiatives. Feedback was overwhelmingly positive.

Enbridge, the pipeline operator, is the first midstream firm in North America to do sustainability-linked financing. 

Presenting to members of NeuGroup for Oil & Gas Treasury (sponsored by Societe Generale), Sheldon Bueckert, director of treasury at Enbridge, shared his experience helping lead the company’s sustainability-linked bond (SLB) and loan financings, a first for a midstream firm in North America. The session focused on a SLB that Enbridge issued in late June.

Key SLB details. On June 23, 2021, Enbridge hosted 131 investors on a series of marketing calls focused on the company’s sustainability initiatives. Feedback was overwhelmingly positive.

  • On June 24, Enbridge announced a USD benchmark offering of a $1 billion 12-year SLB tranche and a $500 million 30-year non-SLB tranche.
  • The SLB included coupon step-ups of 50 basis points and five basis points, both linked to KPIs within the Enbridge SLB Framework.
  • The five basis point step-up will be triggered if Enbridge does not meet its goal of 28% representation of ethnic or racial minorities in the workforce by year-end 2025.
  • The 50 basis point step-up will be triggered if Enbridge does not reduce Scope 1 & 2 emissions intensity by 35% by year-end 2030.
  • Enbridge captured a “greenium” of five basis points for the 12-year SLB tranche
    • Greenium represents coupon/interest savings versus a non-SLB Enbridge offering of the same size and tenor.

Key takeaways:

  • Track record of sustainability reporting. The SLB and the framework supporting it was scheduled with the release of the company’s 20th consecutive sustainability report. Several members noted that they would be more inclined to follow Enbridge’s lead when they had a similar history of sustainability reporting.
  • E, S and G. Enbridge wanted to highlight its commitment across E, S and G in its SLB framework, so it included a KPI from each of the three major components of its published ESG goals:
    • Environmental: 35% reduction in emissions intensity by 2030.
    • Social: 28% racial and ethnic representation in its workforce by 2025.
    • Governance: 40% women representation on the board by 2025.
  • Learning curve for KPI goals. “Don’t underestimate the learning curve for determining ESG goals,” Mr. Bueckert warned. It takes more time than you anticipate. But investors will appreciate the research effort and the explanations behind the KPIs, especially since there is no standard guidance.
    • Much of the time spent with investors will be educating them on the ambitiousness of the goals and how the company plans to achieve them.
    • In some cases, progress against ESG goals may not be linear, so it’s important for both internal and external stakeholders to understand what progress looks like over the forecast period.
    • Also highlighted: the increasing importance of Scope 3 emissions reduction and how companies measure and address their ability to impact these emissions as regulations and standards get set.
  • Second Party Opinion critical for firsts. The Second Party Opinion (SPO) confirming the ambitiousness of the company’s ESG goals is an important factor in an investor’s evaluation of a SLB framework.
    • Enbridge worked with ISS ESG on a SPO for its SLB framework, both because they liked ISS’s approach and their commitment to meet the company’s timelines.
    • In some instances, ISS ESG had no midstream peers or international standards to compare Enbridge’s ESG goals against, so they, too, had to be a trailblazer in assessing Enbridge’s SLB framework.
  • Investor dialogue important. In addition to Enbridge’s history of sustainability reporting, it has a good track record of dialogue with investors related to ESG. It is important to align your ambitions with those of investors.
    • According to Mr. Bueckert, investors have always had access to the company ESG team, so the two days of calls to educate investors on the SLB framework had a solid foundation. Also, investor sophistication on ESG can vary, so it also helps to know where everyone stands before going in.
  • Treasury as facilitator. Treasury acts as a good facilitator of dialogue between the ESG/sustainability team and investors, especially on the debt side. By facilitating investor conversations, treasury gains a better understanding of how it can support the sustainability team with initiatives and vice versa.
    • Finally, treasury is not the expert on the performance of the company against the targets, so it needs to facilitate access to those within the company who are.
  • SLB frameworks are living documents. Establishing treasury’s role in the framework conversation is also important as these will be living documents.
    • As the company meets its goals, these will be replaced with different or higher metrics. Plus, as standards and benchmarks emerge, investor expectations can change.
    • Finally, there is a hope that the S and G goals will be less of an issue in 2025 as diversity initiatives succeed.
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Helping Hand: Using Cashforce to Manage Growth Through M&A

How one treasurer used Cashforce technology to improve forecasting and support growth.

When one treasurer saw that his team was getting too bogged down managing the company’s dozens of bank accounts across 25 entities, he sought out an automated cash management system, but he had a concern: the company is continually growing through mergers and acquisitions, and in the past, new accounts made everything muddy.

How one treasurer used Cashforce technology to improve forecasting and support growth.

When one treasurer saw that his team was getting too bogged down managing the company’s dozens of bank accounts across 25 entities, he sought out an automated cash management system, but he had a concern: the company is continually growing through mergers and acquisitions, and in the past, new accounts made everything muddy.

  • The process of integrating a new entity and any accounts it brings along can be cumbersome—and who knows if their ERP would even be compatible with the automated solution he chooses?
  • He said that Cashforce, a cash forecasting and working capital analytics solution that can work with multiple ERPs, was the answer. “Cashforce’s ability to take feeds from multiple ERP systems was big.”

New accounts, new problems. Before turning to Cashforce, the treasurer had significant capital committed to grow the business through acquisitions. He only had two or three people managing this aspect, and he said the company’s TMS offered little assistance.

  • “Cash is our lifeline,” he said. “To me, the most important thing is knowing how much cash we have and where it is.
    • “We’re not over-leveraged, but we’re leveraged,” he said, so finding a cash management solution that provides quick access to every detail was crucial.
  • But the treasurer said his company doesn’t expect accounts that come with newly acquired companies to work with its preexisting ERP system. Cashforce, which can take data feeds from new ERP systems, was the key.
  • “We needed a cash management solution that integrated with our current ERPs and future ERPs to be able to feed data into the tool,” he said.

Feel the force. Because Cashforce can take those inputs, the treasurer said it could work. But would it actually save enough time, and free up cash through efficient management of working capital? The solution, he said, had four clear advantages that made cash forecasting “a lot more accurate” in just six months:

  1. Ease of use, with data visualization tools that teams can use without having to dig into reams of numbers.
  2. The ability to drill down into the data into transaction-level detail.
  3. The ability to take these now automatically generated data-driven insights to management instead of spreadsheets.
  4. The ability to view daily bank positions.

Feel the force. Because Cashforce can take those inputs, the treasurer said it could work. But would it actually save enough time, and free up cash through efficient management of working capital? The solution, he said, had four clear advantages that made cash forecasting “a lot more accurate” in just six months:

  1. Ease of use, with data visualization tools that teams can use without having to dig into reams of numbers.
  2. The ability to drill down into the data into transaction-level detail.
  3. The ability to take these now automatically generated data-driven insights to management instead of spreadsheets.
  4. The ability to view daily bank positions.

Bonus: data literacy. An added “unofficial” benefit of Cashforce that the treasurer added was change management—the opportunity to get a once data-hesitant team to embrace the possibilities offered by analytics.

  • Though he wasn’t intending on using Cashforce to manage credit and collections, through encouraging his team to dig into the data, “one of the biggest advantages is I got my C&C manager to give me a much more accurate forecast.
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Talking Shop: Debating Soft Tokens for Online Banking Access

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “Do you allow soft/mobile tokens for online banking access instead of physical tokens? If so, do you limit it to personnel with company-issued cell phones?

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Member question: “Do you allow soft/mobile tokens for online banking access instead of physical tokens? If so, do you limit it to personnel with company-issued cell phones?

  • “Did your IT team have any concerns with allowing soft/mobile tokens?”

Peer answer 1: “We currently only issue physical tokens, but we are having the same internal discussion around changing our policy pending review with our IT team.”

Peer answer 2: “We recently have allowed mobile tokens for a few specific banks where only a limited number of treasury and support personnel have access. These individuals are all located within the US and we do require company phones to be used.

  • “We previously had a firm stance against mobile tokens, but our IT security teams have come around to the idea as of late.
  • “We ensure the terms and conditions of the account have strong language around security and similar areas, giving us comfort to proceed with these tokens.”

Peer answer 3: “Our company allows mobile tokens for Bank of America and Citibank. We partnered with our security team to review the security profile of the mobile tokens for each bank—they are not all created equally.

  • “With [one bank] we found their security was not as robust, so we only offered mobile tokens to read-only users. We have not encountered any issues so far.
  • “It’s much easier to manage than physical tokens. We do not limit mobile tokens to company-issued cell phones.”

Peer answer 4: “We have implemented mobile tokens (NOT mobile banking) with Citi and will be rolling out to other banks as well. We do not limit to company-issued cell phones.”

Peer answer 5: “We do allow soft/mobile tokens for banks that offer it. We reviewed it with our IT security team before doing so.

  • “They did have a bunch of questions, but after those were satisfactorily addressed, they allowed us to offer it to employees with and without company-issued cell phones.”

Peer answer 6: “Pre-pandemic, we were hesitant. There’s a slight increase in risk, if there is a delay in removal, that a person with a token on a personal phone takes it with them when they leave the company.

  • “We felt the risk was manageable and now allow mobile tokens.”
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Simple, Repeatable, Scalable = Real Impact on D&I Goals

Women in NeuGroup (WiNG) members discuss advancing D&I objectives, starting with cash portfolio investment partners. 

Talking the talk can be an important first step, but putting words into action is where treasury gets involved in delivering the financial end of ESG and D&I commitments made by organizations.

  • A recent Women in NeuGroup (WiNG) event addressed opportunities to create meaningful impact via the corporate cash investment portfolio.

Women in NeuGroup (WiNG) members discuss advancing D&I objectives, starting with cash portfolio investment partners. 

Talking the talk can be an important first step, but putting words into action is where treasury gets involved in delivering the financial end of ESG and D&I commitments made by organizations.

  • A recent Women in NeuGroup (WiNG) event addressed opportunities to create meaningful impact via the corporate cash investment portfolio.

Diversity in financial partnerships. One way to meet D&I goals is to boost the number of firms engaged to conduct treasury, funding and investment business.

  • Members across the NeuGroup Network have made strides in adding partners, for example, to their bond underwriters as well as buyback and CP programs.
  • Because of traditional criteria such as counterparty risk or minimum assets under management thresholds for investment mandates, this may require a policy update or exception.
  • Women-owned firms represent less than two percent of global asset managers and often fall below existing thresholds for many large corporate investment guidelines.

Member investment cases. Attendees heard from two NeuGroup members who have engaged with NeuGroup’s 2021 WiNG partners, both of which are women-owned: R. Seelaus & Co., an asset manager, and CNote, a technology-enabled investment platform.

  • Apple has allocated a part of its cash investment portfolio to Seelaus. The fees will directly fund salaries for a 12-month internship program at Seelaus, a program designed to give young women the opportunity learn about asset management by rotating through the portfolio management, operations, research, trade execution, compliance, marketing, finance and business development teams.
  • Another NeuGroup member, Micron Technology, has also allocated part of its portfolio to assist underrepresented groups and communities by way of SHE (support housing equality), Seelaus’ agency mortgage-backed security impact investment strategy designed to support home ownership.

Scalable investment in minority community deposits with Mastercard and CNote. As previously reported in NeuGroup Insights, Mastercard has partnered with CNote, whose platform gives investors a scalable way to invest in federally certified community development financial institutions (CDFIs).

  • PayPal, another NeuGroup member company, recently announced an investment commitment to support racial equity, and it includes an allocation to CNote (the Wisdom Fund). 

Scalability and repeatability are key. While D&I and impact investment efforts are in the start-up or ramp-up phase, many of them are taking up a disproportionate amount of time compared to the large cash portfolios at NeuGroup member companies, many of which are large- and mega-caps.

  • To really make an impact, the selection criteria and implementation process needs to be streamlined and each investment scalable. That is the case with both of these investments: you can invest a little or a lot.
    • Without a change in process, the CNote platform enables investments at scale.
    • And a larger mandate with Seelaus can fund more internships, which are repeatable every year as a new class comes in.
  • Repeatability also means “copycatting” is encouraged: why not embrace a model already vetted and tried out by a leading company so that corporates in the aggregate can have a bigger impact?

You have to start somewhere, or you’ll never start. From the point of view of a large corporate with a world-renowned brand, it is tempting to go for a big splash, so starting small may feel insufficiently on-brand.

  • But by choosing partners and models that have the potential to scale and repeat over time, you can build internal support while making adjustments as you go along—such as finding internship recruitment approaches and channels to reach candidates outside your traditional talent pool.

Whose responsibility? WiNG members agreed that reaching D&I objectives isn’t something that should be solely owned by or handed off to women and minority employees.

  • At any company claiming to take the lead on this, the effort should be enterprise-wide: “I want to be shoulder to shoulder with male counterparts; I don’t want to be the one woman in the room and the one to push for diversity,” noted a WiNG participant, an assistant treasurer at a global firm where she is the only women at the treasury leadership level.
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RMB vs. USD: Watching Closely as China Builds ‘Parallel Universes’

Standard Chartered advises keeping an eye on China as accelerating use of the RMB helps the nation separate itself from the pack.

In a recent meeting of NeuGroup for Tech Treasurers centered around China’s economy, Standard Chartered’s global head of research Eric Robertsen kicked things off with an anecdote. Just over ten years ago, a Congo-based wood supplier had its supply of wood bought out by a Chinese business that paid in USD. Just three years later, Chinese businesses were still buying out this supplier but paying in RMB.

Standard Chartered advises keeping an eye on China as accelerating use of the RMB helps the nation separate itself from the pack.

In a recent meeting of NeuGroup for Tech Treasurers centered around China’s economy, Standard Chartered’s global head of research Eric Robertsen kicked things off with an anecdote. Just over ten years ago, a Congo-based wood supplier had its supply of wood bought out by a Chinese business that paid in USD. Just three years later, Chinese businesses were still buying out this supplier but paying in RMB.

  • “I think that narrative is becoming directly applicable to the world today as we think about the evolution of China, Asia and the currency payment world,” Mr. Robertsen said. “What China is doing is creating parallel universes in a number of different areas across a number of different platforms.”

RMB as a reserve currency. Currently, the RMB (CNY) only makes up about 2% of allocated central bank reserve management portfolios, with the dollar at just under 60% and the Euro at roughly 20% (see chart).

  • “And yet, we all know how important China is to global trade,” Mr. Robertsen said. “I argue that the CNY weight is much too small relative to its usage in the overall market. So there is a benign but extremely interesting and structural trend: the growing relevance of RMB and RMB-denominated assets in global portfolios.”
  • One member expressed skepticism that the RMB could be a “freely floating” reserve currency in the near future, despite China’s ambitions. Mr. Robertsen responded that just five years ago, the notion of big inflows into China’s bond market was nonexistent, and today, those flows have increased to such a magnitude that China is actually able to start allowing less restricted outflow of capital.
    • “But I don’t think they’re quite there yet, they’re still not a freely floating currency,” Mr. Robertsen said. “When do they become a reserve currency in practice? Probably five years. The IMF has already labelled CNY a reserve currency but in practice, they still have a way to go.”
  • A more cynical view is that China seeks to replace the dollar as the global reserve currency and that its pursuit of a digital currency is a way to work around the dollar system, but Mr. Robertsen doesn’t subscribe to that theory.
    • “I think what they’d like is to have separate ecosystems, and in each to have their trading partners using RMB exclusively,” he said. “And that also gives them quite a bit of protection should US-China or Europe-China political tensions escalate.”

China for China. Internally, multiple members have said they’ve begun “decoupling” their China operations team from the rest of their global team, essentially treating the nation as its own region to deal with the increasing complexity.

  • “There’s a view that China is big and important, and there is going to be growing investment and capacity to serve China,” one member said. He said the flip side is that there will be increasing investment in supply chain for growth outside China and the rest of Asia.

Supply chain impact. “Manufacturing platforms in China to serve other parts of Asia is something that is trending away,” the member said, but it’s not something that will happen immediately.

  • “What we have seen in our conversations with clients in Asia is that supply chains are being shifted” away from exclusive reliance on China, Mr. Robertsen responded. “There has definitely been a gradual migration to diversify supply chains.”
  • “If you have a corporate campus in Shenzhen of 200,000 employees, moving that to Vietnam doesn’t happen in a heartbeat, these are long-term processes,” he continued. “The idea that corporates will shift entire supply chains from China immediately is misleading,” but the change is happening.
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