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Improving Share-of-Wallet Management With Better Bank Scorecards

How treasury teams making share of wallet decisions evaluate banks based on quantitative and qualitative measures.

One treasury team tallying up the fees it pays banks in exchange for their commitments to the company’s revolving credit facility recently added a new category to its bank scorecard: deemed compensation on cash. Calculating it involves comparing the interest rate the corporate receives on cash held at a given bank to a benchmark rate such as fed funds.

  • A member of NeuGroup for Global Cash and Banking explained the change at the group’s fall meeting in San Francisco in a broader discussion about bank scorecards, which some treasury teams use as they make share-of-wallet decisions. That’s the slice of the total pie of fees a company pays individual banks for being in their revolver.

How treasury teams making share of wallet decisions evaluate banks based on quantitative and qualitative measures.

One treasury team tallying up the fees it pays banks in exchange for their commitments to the company’s revolving credit facility recently added a new category to its bank scorecard: deemed compensation on cash. Calculating it involves comparing the interest rate the corporate receives on cash held at a given bank to a benchmark rate such as fed funds.

  • A member of NeuGroup for Global Cash and Banking explained the change at the group’s fall meeting in San Francisco in a broader discussion about bank scorecards, which some treasury teams use as they make share-of-wallet decisions. That’s the slice of the total pie of fees a company pays individual banks for being in their revolver.

A comprehensive scorecard. In addition to deemed compensation, the member’s scorecard tracks the fees the corporate pays to banks for capital markets transactions, custodial services, trust services, FX, the revolver, payment processing fees and other charges.

  • “We total all that up and compare it to the revolver facility for each bank,” the member said. “Then we gauge what should their wallet share be. Then, are we over or under? And some of that is business driven, but some is more in our control.”
  • The scorecard impressed other members, several of whom mentioned its comprehensiveness. One called it “super cool” and another said, “I wish we had that as well.”

Behind the scorecard. The member makes the scorecard in Excel after pulling data from the company’s treasury management system. But establishing that process took some work. “Our bank wallet was a very manual process. At a treasury all-hands meeting we discussed how much time we were wasting manually gathering bank wallet inputs from each area of treasury,” the member said.

  • “We then discussed what an ideal bank wallet process would look like and made a commitment to automate. Most of the information was already feeding into our TMS, Quantum. We just needed to find it and build a query that we could easily run each quarter.
    • “That was a huge lift for us, being able to get the data ourselves instead of relying on banks.”
  • The member added that the scorecard is a work in progress. “We’re constantly looking to make iterations to this. And figure out ways to improve it.”

Bank fee discrepancies. In response to a question from a peer, the member said finding discrepancies in bank fees and doing bank fee analysis is not easy. “We do not have a bank fee analysis tool implemented yet, so it’s very manual,” he said. “And so yes, there are discrepancies in there.

  • “One of the things that we’re hoping to alleviate by implementing Redbridge later this year and into next year is getting rid of that manual work. But then also being able to take those data points to the bank very easily and say, ‘Hey, this is what we negotiated, this is what you charged. What’s going on? You know, help us understand.’”

More on deemed compensation. The member elaborated on the deemed compensation calculation that treasury is doing on a quarterly basis. “We take the difference between the average benchmark interest rate for the quarter and the average rate the bank paid us. We then take that difference and apply it to our average balance at the bank; that dollar amount is ‘lost interest’ to us and deemed compensation for the bank.

  • “We’re calling that compensation for them because they’re earning money off of us. And so we’re going count that as a bank fee.”
    • He added, “To the extent that we aren’t receiving the full fed funds rate, for example, we can always move funds elsewhere or make the case the bank is underpaying us when compared to their peers.”
  • Asked by NeuGroup Insights what prompted this move, the member explained: “There was a business decision made to set aside a portion of funds that would not earn interest—customer funds being held for KYC compliance, legal holds, sanctions, etc.
    • “Our leadership frequently asked how much interest we had given up over a period of time, so we started tracking it. The banks were very keen to hold these funds for us as it was pure profit for them. That’s when we had the idea to quantify the lost interest, call it compensation for the bank and add it to our wallet.”

Interest income. A related but separate issue is whether banks are walking their talk on returns. “We track interest income very closely,” the member said. “We’re making sure that what the bank is saying they’re paying us is actually what they’re going to pay us and when they’re going to pay it.

  • “We found there was actually a quite a bit of discrepancy between what they said and what they did. Banks automate interest payouts so when there were discrepancies they really had to dive deep into their processes in order to explain exactly how they were calculating interest.
    • “It really seemed like just as much of an eye-opening process for our banking partners as it was for us. So that is something we used to help strengthen the relationship and help make sure we were putting our funds with the with the correct partner.”

Qualitative scoring. In addition to quantitative measures to make share-of-wallet decisions, many members are using, beginning to use or contemplating more systematic qualitative evaluations of their banks. Surveys and questionnaires are common. Some teams are going outside treasury to ask other functions that interact with banks about the quality of service and the value of insights banks bring business units or business development teams, for example.

  • Others, like the member whose scorecard created buzz, are limiting the input to treasury functions. “We have a questionnaire that we circulate amongst treasury annually and so it asks each person within treasury to rate the relationship, rate customer service resolution management, perceived cost any kind of technology issues, things along those lines,” the member said.
  • “There’s a big buy-in from our treasurer,” he added. “If I’m getting bad service and it’s not getting better, that’s a lever and you move funds from bank A to bank B. And my treasurer has been very supportive with that.
    • “If we’re having problems with the bank, even if they provide us the best price, we can make a change. It’s just having the data to back it up and being willing to have those difficult conversations with the banks.”

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The AI-Powered Future of Decision-Making: A Risk Expert’s View

How AI can improve risk assessment and decision-making, helping corporates move faster and smarter.

Rising premiums coupled with elevated rates of natural disasters are forcing corporates to make smarter, faster decisions around risks and coverage levels. But the avalanche of data that ERM and insurance teams must sift through to improve decision-making can also slow down the process.

  • In a new NeuGroup Insights video clip from an upcoming episode of the Strategic Finance Lab podcast, Brian Hagen, a seasoned corporate risk and insurance expert, offers a compelling vision for a future populated by so-called AI agents that aid senior leadership in high-stakes decisions, enhancing their ability to digest this data and act with confidence and speed.
  • Mr. Hagen, an adjunct professor of enterprise risk management at California State University, Fullerton, has spent decades refining how organizations quantify and navigate risk. His career spans leadership roles at Decision Empowerment Institute and Strategic Decisions Group, where he has helped businesses across industries—from biotech to energy—optimize strategic choices.

Framing the data. In the video, which you can watch by clicking the play button below, Mr. Hagen discusses one of his key concepts of decision-making: the “decision frame.” In an era of information overload, not all data is equally useful. A decision frame structures a problem, risk or opportunity, outlining what’s relevant and what’s not.

  • “We’re really inundated with information,” Mr. Hagen explains in the podcast. “I use the expression ‘decision relevant’—what actually matters to the decision at hand?”
  • Once a decision frame is established, organizations can determine the necessary inputs to assess risk and opportunity accurately. In the full conversation, he discusses how in insurance, for example, this means moving beyond generic coverage recommendations to evaluating policies based on an organization’s specific risk exposure.

How AI can improve risk assessment and decision-making, helping corporates move faster and smarter.

Rising premiums coupled with elevated rates of natural disasters are forcing corporates to make smarter, faster decisions around risks and coverage levels. But the avalanche of data that ERM and insurance teams must sift through to improve decision-making can also slow down the process.

  • In a new NeuGroup Insights video clip from an upcoming episode of the Strategic Finance Lab podcast, Brian Hagen, a seasoned corporate risk and insurance expert, offers a compelling vision for a future populated by so-called AI agents that aid senior leadership in high-stakes decisions, enhancing their ability to digest this data and act with confidence and speed.
  • Mr. Hagen, an adjunct professor of enterprise risk management at California State University, Fullerton, has spent decades refining how organizations quantify and navigate risk. His career spans leadership roles at Decision Empowerment Institute and Strategic Decisions Group, where he has helped businesses across industries—from biotech to energy—optimize strategic choices.

Framing the data. In the video, which you can watch by clicking the play button below, Mr. Hagen discusses one of his key concepts of decision-making: the “decision frame.” In an era of information overload, not all data is equally useful. A decision frame structures a problem, risk or opportunity, outlining what’s relevant and what’s not.

  • “We’re really inundated with information,” Mr. Hagen explains in the podcast. “I use the expression ‘decision relevant’—what actually matters to the decision at hand?”
  • Once a decision frame is established, organizations can determine the necessary inputs to assess risk and opportunity accurately. In the full conversation, he discusses how in insurance, for example, this means moving beyond generic coverage recommendations to evaluating policies based on an organization’s specific risk exposure.

Brian Hagen, enterprise risk expert

AI: decision partner, not replacement. Mr. Hagen envisions AI as an active participant in decision-making conversations, assisting rather than dictating. He says that AI chatbots or agents will help teams frame decisions, analyze past events and conduct real-time risk assessments. Instead of weeks-long analysis, critical decisions can be resolved in hours.

  • But crucially, AI won’t be making the final call. “That doesn’t mean the systems are making the decisions,” Mr. Hagen emphasizes. “It just means the decision process will keep getting better with these systems informing us.” AI will streamline scenario analysis and sensitivity testing, enabling decision-makers to focus on judgment, strategy, and leadership.

Looking ahead, in the podcast, you’ll hear Mr. Hagen discuss his decision-making philosophy, ways that informed decision-making have paid off, and his new venture: an AI-powered insurance analytics platform called GENAIDA.

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The Impact of Tariffs: NeuGroup’s 2025 Treasury Outlook Survey

The effects of tariffs and changes in immigration policy on inflation, the economy and rates top the list of impacts.

President Trump’s announcement last Saturday of 25% tariffs on imports from Mexico and Canada seemed to confirm the expectations of the vast majority (87%) of respondents to the 2025 NeuGroup Outlook Survey who said tariffs would have the greatest impact on them of any changes under the new administration (see chart).

  • “When he announced them over the weekend, it’s like everyone’s hair was on fire, and yet, we’ve been talking about this for months,” one treasurer at a mega-cap multinational told NeuGroup Insights.
  • On Monday, Mr. Trump put the tariffs on Mexico and Canada on hold for 30 days. A 10% additional tariff on Chinese imports remains—at least for now (China retaliated).
  • “The whole thing just leads to an incredible amount of uncertainty and unpredictability,” the treasurer said. While most corporates will wait before making major changes to supply chains, he added, “companies like ours are going to take whatever steps we need to take to get ready to ask for exemptions of certain goods.”

The effects of tariffs and changes in immigration policy on inflation, the economy and rates top the list of impacts.

President Trump’s announcement last Saturday of 25% tariffs on imports from Mexico and Canada seemed to confirm the expectations of the vast majority (87%) of respondents to the 2025 NeuGroup Outlook Survey who said tariffs would have the greatest impact on them of any changes under the new administration (see chart).

  • “When he announced them over the weekend, it’s like everyone’s hair was on fire, and yet, we’ve been talking about this for months,” one treasurer at a mega-cap multinational told NeuGroup Insights.
  • On Monday, Mr. Trump put the tariffs on Mexico and Canada on hold for 30 days. A 10% additional tariff on Chinese imports remains—at least for now (China retaliated).
  • “The whole thing just leads to an incredible amount of uncertainty and unpredictability,” the treasurer said. While most corporates will wait before making major changes to supply chains, he added, “companies like ours are going to take whatever steps we need to take to get ready to ask for exemptions of certain goods.”

The risk factor. The challenges posed by tariffs are likely a key reason respondents to the NeuGroup Outlook Survey ranked political, legislative and regulatory risks first among the top five risks they face in the year ahead. Several respondents mentioned tariffs in the comments section of that question, noted Joseph Bertran, Senior Director of Research at NeuGroup, who conducted the survey.

  • “The responses to these two questions clearly validate NeuGroup members’ concerns about tariffs, as they’ve shared anecdotally and in other surveys,” Mr. Bertran said. “Tariffs are clearly top of mind for treasury teams that manage FX and interest rate risk and must forecast cash flow and manage liquidity.”
  • As the chart shows, respondents ranked the effects of corporate tax rate changes on cash repatriation or international money flows second, selected by 57% of respondents—30 percentage points behind tariffs and immigration. Members were asked to select up to five areas that will drive the most change.

Knock-on effects. Asked how tariffs may affect treasury, another treasurer of a mega-cap multinational said, “The knock-on effects for FX, rates, equities and the resulting volatility are something that all treasurers will have to deal with.” He added, “Beyond that, this is something that will impact so many areas across a company’s business and treasurers will need to understand the impacts on cash flows, investment, pricing.”

  • The broad implications of potential tariffs prompted the first treasurer’s company to form a multifunctional team including tax, treasury, supply teams, legal, government relations and representatives of the business units. But the sudden, surprising timing of the tariffs presented some challenges.
  • “Everybody’s a stakeholder in this thing and I will admit it’s been a little bumpy trying to coordinate ourselves and figure out who’s got the lead on things and even identifying what are those things that we need someone to take a lead on,” the treasurer said.

Supply chain focus. That said, the goal is clear: “What we’re trying to do is identify and be able to pinpoint the supply chains to be able to ensure we know where there’s potential risks,” he explained. “That gets difficult because we have a lot of third-party suppliers in the U.S. who themselves are sourcing goods from, for example, Mexico.

  • “If we’re buying from a third-party supplier, we may not know where they’re getting their stuff. Presumably, their cost or cost of tariffs will get passed on to us.”
  • A related concern: “Right now, the Mexican tariffs are off. But what if you’re buying from a Mexican supplier who themselves had purchased from a Chinese company? Do the China tariffs apply or not? So there’s those sorts of scenarios.”

FX exposures. Amol Dhargalkar, Global Head of Corporates at Chatham Financial, said supply chains—not FX exposures—are the right place for corporates to start assessing risk. “Before considering FX risk, the larger considerations for organizations are impacts on their supply chains in both the short and long term,” he said.

  • “Ultimately, discussion and implementation of tariffs has an impact on the dollar,” he noted. “Expectations of the dollar strengthening require organizations to review their FX programs for effectiveness. We’ve seen quite a few large companies reviewing their programs in 2024 and early 2025 in preparation for this moment.”
  • Mr. Dhargalkar summed up a sentiment echoed by treasurers and others waiting for new developments and announcements on U.S. trade policy: “It’s still unclear if tariffs are here to stay or just a negotiating tool.”
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Talking Shop: Treasury’s Control of Foreign 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].


Corporate treasury teams at multinationals with hundreds if not thousands of bank accounts need to control the opening and closing of accounts, know the identities of account signatories and have visibility to the cash in them. At the same time, managing every operational account from headquarters on a day-to-day basis in every part of the world is not likely to be feasible or efficient.

  • The balancing act necessary in bank account management (BAM) requires drawing lines as finance and treasury organizations work to further centralize as they automate operations, standardize processes and manage risk. Centralization can take many forms and often involves regional treasury centers that report to corporate treasury leaders in the U.S. Here’s some more context for the NeuGroup member question below:

How it works at one multinational. An assistant treasurer and NeuGroup member at a mega-cap multinational offered this perspective: “For a highly scaled organization like ours, a majority of payments happen through regional/centralized banking service centers and via our global banking partners with strong controls in place.

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].


Corporate treasury teams at multinationals with hundreds if not thousands of bank accounts need to control the opening and closing of accounts, know the identities of account signatories and have visibility to the cash in them. At the same time, managing every operational account from headquarters on a day-to-day basis in every part of the world is not likely to be feasible or efficient.

  • The balancing act necessary in bank account management (BAM) requires drawing lines as finance and treasury organizations work to further centralize as they automate operations, standardize processes and manage risk. Centralization can take many forms and often involves regional treasury centers that report to corporate treasury leaders in the U.S. Here’s some more context for the NeuGroup member question below:

How it works at one multinational. An assistant treasurer and NeuGroup member at a mega-cap multinational offered this perspective: “For a highly scaled organization like ours, a majority of payments happen through regional/centralized banking service centers and via our global banking partners with strong controls in place.

  • “However, there are certain local tax payments that need to be done only via approved banks (which are typically nationalized and local). In those cases, we have given the country CEO/CFO/legal counsel the signing authority and we ask our regional banking centers to oversee these transactions.
    • “All new bank account opening is centrally managed/approved by our regional banking team and regional treasurer.”
  • A cash management expert at a global bank noted a trend that “local subs are not allowed to open accounts without approval from central treasury; this is being done to limit the number of bank accounts and reduce opening accounts with non-core banks.”

Member question: “What is the best practice for overseeing foreign subsidiary bank accounts? Should corporate treasury control all such accounts or have the treasurer or AT as a signatory or on the incumbency certificate?

  • “Our treasurer must approve new bank accounts; all accounts are tracked in Kyriba, and we manage access to online banking. However, a legacy of our highly decentralized operating model is that the majority of our accounts do not have corporate signatories.
  • “For those of you requiring a corporate signatory, such as the CFO, treasurer or AT, are there operational difficulties with doing so, such as FBAR reporting?”

Peer answer 1: “It depends on several factors. Consider the number of foreign banks and whether you have the resources in corporate treasury to manage the accounts. Do you have treasury members overseas to be able to manage the accounts or would it be done from the U.S.?

  • “Two-thirds of our accounts are overseas, predominately in Europe and they are managed by the finance team (no full-time treasury resource). Per our policy, to open or close a bank account, permission from either the treasurer or CFO is required; also, the treasurer and CFO and one other person from corporate are signatories on the accounts.
  • “We also maintain a global bank list of accounts and signers, which is reviewed quarterly.
  • “In addition to having corporate signatories, we also have administrator rights on all the electronic platforms. There may be a few countries where it is difficult to add a corporate signer because the person may need to appear at the bank in person.
  • “The other issue is KYC: more signers, more gathering of documents!”

Peer answer 2: “We strive for 100% of bank accounts and treasury functions being managed by one corporate treasury team. This gives us the benefit of establishing standardization and best practices as much as possible. We have found a lot of internal financial control risk when accounts are managed one-off by non-corporate treasury members.

  • “We do have regional teams dedicated to managing accounts in their respective regions, which gives them comparative advantage from a local rules and regulations knowledge and time zone standpoint. I can see where this would be challenging if you are not staffed globally.
  • “Last, we centralize all our information in Kyriba (TMS), which is where all our bank accounts, cash flows, balances and signers are managed. Kyriba has been extremely helpful in centralizing all our critical treasury information and standardizing/establishing best practices.”
  • This member further clarified her group’s responsibilities: “My team does not mange any ERP postings or reconciliation. We don’t even have access to the ERPs for the businesses. But we do oversee the daily inflows and outflows for forecasting and funding purposes.
    • “It would be extremely hard to optimize our cash (invest, etc.) without us being involved in the daily cash management. We definitely don’t reconcile each one individually; it’s more high level—how much are we receiving and how much are we paying out?”

Peer answer 3: “We manage the opening of foreign bank accounts; no bank accounts can be opened without treasury approval; we manage access to online banking centrally. We do, however, use local signers on the account and on the incumbency certificate. We will typically have someone in the U.S. added as well, but it typically makes it a lot easier to have our local finance directors sign.”

Peer answer 4: 
“Corporate treasury manages the opening of all bank accounts. We have treasurer/AT, assistant controller and director of our procure-to-pay team as standard signatories for all our bank accounts.

  • “FBAR isn’t a blocker but it is an operational lift. Treasury supports the FBAR reporting (tax leads it) for all these individuals. We don’t currently have a TMS so we rely on bank reports for the FBAR reporting. You may need to check your bank’s data retention policy to ensure you are able to pull the required data to support FBAR reporting. I am told this will become easier as we implement a TMS.
  • “One operational hurdle we do face though is having to get all the KYC documents notarized frequently while opening international bank accounts. And in some cases, we need to post the notarized documents to the banks before the account can be opened. Tricky in our case as all our signatories are remote and dispersed.
  • “And as you consider modifying new signatories, be mindful of the bank mandate requirements in various geographies. In Spain, for example, bank mandates (or banking power of attorney docs) need to be registered with a regulatory body and that process takes months before we can modify the signatories. The length of my response reflects some of my frustration with this entire process!”
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Exploring the TMS Spectrum: From Legacy Systems to Modern Tools

NeuGroup members talk openly about TMSs, weighing traditional systems against modern, lighter-lift tools.

Treasury leaders committed to transformation face a slew of technology choices, ranging from traditional, fully integrated treasury management systems (TMSs) to newer, lighter-lift solutions from fintechs that may be more flexible and less clunky. Teams must weigh their needs based on size and complexity against the purchase price as well as the time, effort and costs of implementation, maintenance and updates. Some opt for all-encompassing platforms while others seek more nimble and customizable tools.

  • That compelling context helps explain the high level of interest for a recent NeuGroup virtual session that drew more than three dozen highly-engaged members from companies of varying sizes. They joined to benchmark, share tips, exchange frank feedback about their experiences, and discuss the road ahead.
  • The lively TMS discussion was led by NeuGroup senior executive advisor Paul Dalle Molle, who runs NeuGroup for Growth-Tech Treasurers. “Emerging companies often don’t have a TMS, but also don’t want to buy a full-blown one,” he noted during the session.

NeuGroup members talk openly about TMSs, weighing traditional systems against modern, lighter-lift tools.

Treasury leaders committed to transformation face a slew of technology choices, ranging from traditional, fully integrated treasury management systems (TMSs) to newer, lighter-lift solutions from fintechs that may be more flexible and less clunky. Teams must weigh their needs based on size and complexity against the purchase price as well as the time, effort and costs of implementation, maintenance and updates. Some opt for all-encompassing platforms while others seek more nimble and customizable tools.

  • That compelling context helps explain the high level of interest for a recent NeuGroup virtual session that drew more than three dozen highly-engaged members from companies of varying sizes. They joined to benchmark, share tips, exchange frank feedback about their experiences, and discuss the road ahead.
  • The lively TMS discussion was led by NeuGroup senior executive advisor Paul Dalle Molle, who runs NeuGroup for Growth-Tech Treasurers. “Emerging companies often don’t have a TMS, but also don’t want to buy a full-blown one,” he noted during the session.

Standalone stalwarts. Many members said they rely on established, standalone TMS platforms like GTreasuryKyriba, ION’s Reval and Wallstreet Suite, and FIS’ Quantum and Integrity.

  • “We found that the more established TMS companies were willing to be on-site and help guide us through everything,” one member noted. “The functionality and usability of their systems seemed straightforward and user-friendly.”
  • Implementation and upgrade challenges emerged as recurring pain points, especially for users of legacy systems. One member emphasized the need for expertise when upgrading: “It requires a team that knows how to manage FX, hedge accounting, risk exposure and cash positioning—and how to configure the system for all these activities.”
  • The cost of updating systems is another hurdle. Tools that offer periodic upgrades can minimize the need for large-scale changes. “Platforms that include updates in annual subscription fees save significant time and resources,” one member said.

Embracing ERP modules. Many companies are gravitating toward treasury modules offered by their ERP providers, drawn by the promise of seamless integration, improved performance and reduced IT resource demands.

  • Among these options, the SAP treasury module leads the way, because it connects to its cutting-edge ERP S/4HANA, a system many enterprises are adopting.
  • One member in the midst of a SAP treasury module implementation shared, “In my company’s financial environment, which is dominated by SAP, the expected benefits are an ease of integration, data visibility and data harmonization.” For some members, these benefits offset any challenges they face with the modules.

Smaller-scale alternatives. Some medium-sized companies and subsidiaries of large multinationals are turning to streamlined, less costly options. Among the tools used by those attending the session are Treasury4Trovata and JPMorgan’s Cash Flow Intelligence (CFI).

  • Several members discussed positive experiences with Treasury4, whose modules enable data-based decision-making. The most commonly used of the fintech’s tools is Entity4, which focuses on a legal entity management; cash management and payment modules are also available.
    • One member praised the Treasury4 technology team’s willingness to listen to customer feedback and aid with customization.
  • Trovata and CFI include proprietary AI models, which aim to improve and automate cash forecasting. Members cautioned that the models don’t get up to speed overnight.
  • CFI, which is available to existing JPM customers, was praised by some members for its affordability and light lift.

Navigating TMS trends. The session reinforced a fundamental takeaway: There is no one-size-fits-all solution for treasury technology. Companies must weigh their resources, priorities and long-term goals to decide between ERP treasury modules, standalone TMS platforms, fintech tools or combinations.

  • For more, watch a video recap by Mr. Dalle Molle, the session leader, as he discusses the range of systems members are using, the frustrations they face and how trends like cloud-native ERP treasury modules and fintech innovations are shaping the future of treasury management.
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Managing FX Risk in Asia: When Onshore Hedging Is the Right Call

The benefits of a hedging method that may be underutilized by corporates managing FX risk in China and elsewhere.

The ability to hedge exposure to currencies onshore in China and other Asian markets instead of being limited to using offshore, non-deliverable forwards (NDFs) allows corporations to potentially reduce the costs of managing FX risk. That takeaway emerged during a presentation by MUFG at the NeuGroup for Tech Treasurers 2024 Tech Summitt sponsored by the bank in November.

  • “Having the setup so that you can access the onshore market when it is in your favor is absolutely something that we’re seeing more and more corporates do,” said MUFG’s Matthew Fennessy, Head of Global Subsidiary Sales and Acquisition Strategy in Asia.
  • There are, however, challenges to overcome before you can take advantage. They include global time zones, know-your-customer (KYC) hoops and documentation of the transactions being hedged. These are among the reasons not all corporates make use of onshore hedging.

The benefits of a hedging method that may be underutilized by corporates managing FX risk in China and elsewhere.

The ability to hedge exposure to currencies onshore in China and other Asian markets instead of being limited to using offshore, non-deliverable forwards (NDFs) allows corporations to potentially reduce the costs of managing FX risk. That takeaway emerged during a presentation by MUFG at the NeuGroup for Tech Treasurers 2024 Tech Summitt sponsored by the bank in November.

  • “Having the setup so that you can access the onshore market when it is in your favor is absolutely something that we’re seeing more and more corporates do,” said MUFG’s Matthew Fennessy, Head of Global Subsidiary Sales and Acquisition Strategy in Asia.
  • There are, however, challenges to overcome before you can take advantage. They include global time zones, know-your-customer (KYC) hoops and documentation of the transactions being hedged. These are among the reasons not all corporates make use of onshore hedging.

Why it works. For corporates that can access onshore FX markets (companies with subsidiaries in China and other countries with restricted currencies), the opportunity to reduce hedging costs arises from exchange rate disparities between onshore and offshore markets. Some of the disparities have surfaced as interest rates in the U.S. rose.

  • When those disparities balloon, windows open that make hedging onshore a clearly better choice. Mr. Fennessy provided the example below comparing the USD/CNY (onshore) rate and the USD/CNH (offshore) rate. The difference shown is what FX traders would call 9.9 “big figures.”

Given those rates, a U.S. corporate converting 500 million Chinese yuan to USD via a 1-year forward would face this math:

  • CNY: 500 million / 6.9968 = $71,461,239.42
  • CNH: 500 million / 7.0958 = $70,464,218.27
  • Benefit of $997,021.15 with onshore hedging.

Be prepared. “In the case of China, we’ve seen the difference between onshore and offshore one-year hedges diverge by 12 big figures at times in the past few months,” Mr. Fennessy said.

  • “As more uncertainty continues to play out in this space, we expect more instances of this divergence continuing and even expanding. Make sure that you are set up to be able to access these markets when these windows do open,” he advised.
  • “As we face uncertainty around cross-border trade and the impact on global currencies, we’re seeing more and more dislocation between onshore and offshore markets in place like China, India, Taiwan and Thailand.
    • “If clients have established the necessary partners to enable them to access both markets, it is simply a matter of assessing both onshore and offshore pricing at the time of hedging and choosing the more favorable pricing.”

Timing is everything. Changing market dynamics mean corporates looking to hedge in Asia may find what made sense three months ago no longer holds. Mr. Fennessy gave the example of a corporate client in the tech space buying a factory in Taiwan priced in TWD.

  • “When they initially looked at the transaction in June, the market setup was such that if they had hedged at that point then the onshore market would’ve been a cheaper method than offshore,” he said.
  • “As it happened, the transaction was put on ice for a couple of months; when the client came back in September to revisit the transaction the market had switched and now it was cheaper to hedge offshore than it was onshore.”
  • Another complicating factor: strength in the U.S. dollar and how it plays out in the offshore vs onshore markets.

Not so fast. Taking advantage of the disparities in onshore and offshore currency rates requires work by treasury teams and may not be worth the time and effort for some companies. For starters, it may require changing the FX risk management policy.

  • More importantly, corporates have to work with a bank in country to get their onshore entities through KYC and other regulatory hurdles. And they may have to document the transactions they are hedging for local authorities. This all takes time.
  • Time of day is another factor, Mr. Fennessy said. “You can get a price from MUFG Manila or MUFG China. And you can access that on behalf on your onshore entity. The problem is you need to be doing that at 10 p.m. at night on the East Coast. And so that’s where the challenge is—that these markets have an open and close.”
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Treasury as Value Creator: Insights From WestCap’s Laurence Tosi

The WestCap founder joins Joseph Neu and Treasury4 co-founder Ed Barrie to discuss the importance of a treasury mindset.

Many modern treasury teams are being challenged to move beyond traditional roles and embrace new opportunities to create value. But treasurers at smaller or newer companies may first need to make the case for investing resources and time in treasury so the team can create value by optimizing the company’s cash and thinking more strategically about the flow of funds.

  • That topic and others were discussed at a recent virtual session led by NeuGroup CEO Joseph Neu featuring WestCap founder Laurence Tosi and Treasury4 co-founder Ed Barrie. The conversation touched on how treasury can serve as a value-creation engine without introducing unnecessary risk by trying to be, say, a profit center.
    • WestCap is a private equity firm that in 2023 led a $20 million funding round for Treasury4, a fintech developing finance and treasury solutions.
  • In a video clip from the session you can watch by hitting the play button below, Mr. Tosi responds to a NeuGroup member who asked how a treasurer could encourage an inexperienced or reluctant CFO to embrace a treasury mindset. His answer begins with what tack not to take.

The WestCap founder joins Joseph Neu and Treasury4 co-founder Ed Barrie to discuss the importance of a treasury mindset.

Many modern treasury teams are being challenged to move beyond traditional roles and embrace new opportunities to create value. But treasurers at smaller or newer companies may first need to make the case for investing resources and time in treasury so the team can create value by optimizing the company’s cash and thinking more strategically about the flow of funds.

  • That topic and others were discussed at a recent virtual session led by NeuGroup CEO Joseph Neu featuring WestCap founder Laurence Tosi and Treasury4 co-founder Ed Barrie. The conversation touched on how treasury can serve as a value-creation engine without introducing unnecessary risk by trying to be, say, a profit center.
    • WestCap is a private equity firm that in 2023 led a $20 million funding round for Treasury4, a fintech developing finance and treasury solutions.
  • In a video clip from the session you can watch by hitting the play button below, Mr. Tosi responds to a NeuGroup member who asked how a treasurer could encourage an inexperienced or reluctant CFO to embrace a treasury mindset. His answer begins with what tack not to take.

Transforming treasury. Mr. Tosi’s philosophy of treasury as a value creator dedicated to optimizing processes, enhancing visibility and aligning cash flows with business needs stems from his experience revamping treasury functions as CFO at Blackstone and Airbnb.

  • Mr. Tosi described how optimizing processes at Airbnb through technology and data led to significant value creation. By effectively managing the large amount of cash reserves from travelers’ advance credit card payments, treasury generated hundreds of millions of dollars annually.
    • This was achieved not through taking risks, but by ensuring the cash was well invested, hedged and earned returns during the holding period.
  • Often, he added, companies silo treasury from broader financial operations, leading to inefficiencies and missed opportunities. For example, at Blackstone, alternative asset managers overlooked critical areas like foreign exchange and cash investments.

The WestCap-Treasury4 partnership. WestCap is not just investing in Treasury4. It wants to implement the fintech’s treasury solutions and cloud-based platform at the companies in its private equity portfolio. “We said let’s build a treasury platform that we can share with all the companies, so we can create sustained value creation within the businesses without having to duplicate technology efforts,” Mr. Tosi said.

  • The goal is to provide a one-stop-shop treasury tool that can handle each company’s treasury needs. It’s an approach Mr. Tosi used at Blackstone. While there, he spearheaded a project called Blackstone Treasury Solutions that provided a single set of treasury technology tools to the entire suite of companies in Blackstone’s portfolio.
  • At WestCap, before connecting with Treasury4, Mr. Tosi encountered obstacles. “We went through that dog and pony show,” he said. “The search started with the frustrations we had with existing treasury systems—we just didn’t like any of them. None of them were complete because they weren’t built by treasurers.”
  • Enter Treasury4 co-founder Ed Barrie, whose treasury career includes stints at at Microsoft, Itron and Tableau Software—where he built treasury from scratch—and the other co-founders of Treasury4. Their deep knowledge of treasury terrain is exactly what Mr. Tosi wanted.
  • “We finally found the seasoned professionals at Treasury4 and said, ‘That’s a platform we can develop together over the next few years that we’ll put every single WestCap company on.’”
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Smart Pension Play: Examine Outsourced Chief Investment Officers

As assets in closed pension plans decrease, OCIO transactions become more appealing for corporates.

Turning to an outsourced chief investment officer (OCIO) to assume investment management and some fiduciary responsibilities for a pension plan makes a lot of sense to a growing number of corporations. Some have seen defined benefit plan assets shrink significantly as plans close or freeze and new hires are directed to 401(k)s.

  • Under those circumstances, the salaries and other expenses necessary to maintain an in-house investment management team that selects external asset managers become “harder to justify,” one member of NeuGroup for Pensions and Benefits said at a fall meeting sponsored by Insight Investment.
  • The member’s company recently turned to an OCIO to lower the cost of managing its pension assets and free up treasury resources to help the corporate address its main priorities. “Managing pensions is not our core business,” they said.

As assets in closed pension plans decrease, OCIO transactions become more appealing for corporates.

Turning to an outsourced chief investment officer (OCIO) to assume investment management and some fiduciary responsibilities for a pension plan makes a lot of sense to a growing number of corporations. Some have seen defined benefit plan assets shrink significantly as plans close or freeze and new hires are directed to 401(k)s.

  • Under those circumstances, the salaries and other expenses necessary to maintain an in-house investment management team that selects external asset managers become “harder to justify,” one member of NeuGroup for Pensions and Benefits said at a fall meeting sponsored by Insight Investment.
  • The member’s company recently turned to an OCIO to lower the cost of managing its pension assets and free up treasury resources to help the corporate address its main priorities. “Managing pensions is not our core business,” they said.

Scale and savings. The asset managers and actuarial firms with an asset consulting background managing large OCIO pools today can secure lower fees for investment products. By leveraging the OCIO’s scale, sponsors achieve better pricing than they can negotiate independently, helping to preserve plan assets and enhancing returns for participants.

  • One member noted, “These basis points make a huge difference in the long run—every basis point saved means that there is less drag on the assets in the plan.” Those savings may also offset the fees that sponsors pay OCIO managers—which are based on assets under management.
  • Beyond the savings, OCIO partners can bring a level efficiency to the management of the plan that most sponsor companies simply cannot achieve given a lack of internal resources. Presenter Gordon Fletcher, Senior Defined Benefits Strategist at WTW, noted, “These plans can be a burden on treasury and finance staff; they have to work on them in addition to their day jobs.”

Sharing fiduciary risk. Mr. Fletcher’s colleague, Jon Pliner, Head of Delegated Portfolio Management at WTW, said another key driver of the OCIO trend is lowering a corporate’s fiduciary risk. By appointing the OCIO as the named fiduciary, sponsors create a governance buffer between themselves and potential legal challenges. As one member said, “In Europe, it’s death by regulation, and in the U.S. it’s death by litigation.”

  • Several members said if a lawsuit should arise, having an asset management firm with deeper pockets listed as a fiduciary gives some sense of security to the sponsor company.
  • But while the OCIO assumes significant fiduciary duties, sponsors cannot fully offload legal or regulatory risk. “There is no way to offload all responsibility, but there is a fair amount you can share with a partner,” Mr. Pliner said.

Picking a partner. Corporates considering an OCIO should know the major players competing in this growing business: Mercer, Goldman Sachs, BlackRock, Aon and WTW are the top five OCIO managers based on assets. One consideration when picking a partner: weigh the benefits of choosing actuarial firms versus those focused solely on asset management.

  • The company that has completed an OCIO transaction sought firms with expertise beyond asset management, with an eye towards long-term planning. “Our gut feeling was that we were in better shape with the actuarial firms versus the pure asset manager firms because the discussion would also cover items like liabilities, net position, pension endgame options, and pension risk transfer (PRT) transactions,” the member said.
  • Another member asked if large investment firms are in the business mostly to sell their products. Mr. Pliner responded, “In some instances they may offer their investment products, but that’s not a blanket statement. You need to understand where they are getting paid and that incentives are aligned—as with any vendor relationship.”
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Gen AI’s ‘Inherent Superpowers’: An Innovation Expert’s Vision

Insights from Mastercard’s Nima Sepasy on finance use cases for solutions built with emerging tech like generative AI.

Finance leaders who may be a tad tired of questions from senior executives or board members on how they plan to put the magic of generative artificial intelligence to work should not let the hype overshadow this reality: Gen AI has “inherent superpowers” they can tap to reach higher levels of accuracy, efficiency and transformation in areas including cash forecasting, liquidity management and cross-border payments.

That’s one takeaway from a Strategic Finance Lab podcast interview about AI, machine learning and other emerging technologies with Mastercard Senior Vice President for Innovation, Insight and Engagement Nima Sepasy. You can listen to his conversation with NeuGroup Insights editor Antony Michels now on Apple and Spotify.

Insights from Mastercard’s Nima Sepasy on finance use cases for solutions built with emerging tech like generative AI.

Finance leaders who may be a tad tired of questions from senior executives or board members on how they plan to put the magic of generative artificial intelligence to work should not let the hype overshadow this reality: Gen AI has “inherent superpowers” they can tap to reach higher levels of accuracy, efficiency and transformation in areas including cash forecasting, liquidity management and cross-border payments.

That’s one takeaway from a Strategic Finance Lab podcast interview about AI, machine learning and other emerging technologies with Mastercard Senior Vice President for Innovation, Insight and Engagement Nima Sepasy. You can listen to his conversation with NeuGroup Insights editor Antony Michels now on Apple and Spotify.

Nima Sepasy, Mastercard

Mr. Sepasy leads a team within Mastercard’s innovation arm devoted to identifying use cases and finding opportunities to apply Gen AI and other cutting-edge technology to create solutions that solve problems and deliver real value to merchants, consumers, banks, fintechs, and governments. Mastercard currently has about 300 AI models in production.

Despite fatigue with AI hype, “we’re seeing enterprises really understand there are practical applications they could be building today,” Mr. Sepasy says. “Enterprises are experimenting in a multitude of ways and they’re really understanding where we are in terms of market readiness; they’re starting to move away from too many pilots into a much more focused development zone. And we’re seeing real value being delivered both within Mastercard and with our partners and customers.”

The key to reaching a zone where technology enables innovation that leads to practical solutions, is—as many NeuGroup members are well aware—data. Mr. Sepasy calls the overarching concept “datafication”—the transformation of every aspect of an organization so it can use, analyze and leverage data for insights in new ways.

“Quite often when I have conversations with our customers and they ask me, ‘how do I get more AI-enabled,’ really the first step is investing in data quality, security and integration,” he says in the podcast. “Then, use that bedrock to be able to really leverage AI into these new solutions and capabilities.”

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Treasury’s Better Idea Enables Product Team To Please Customer

Asked by the business to open a customer bank account, treasury proposes a better approach, a win for everyone.

Bringing a better idea to a product team responding to a customer’s request served as a powerful demonstration of one treasury team’s strategic value and ability to enable business partners to succeed. This example of treasury using its expert insights on financial transactions and processes emerged during a conversation at the NeuGroup for Tech Treasurers 2024 Tech Summit.

  • And while the company’s industry—financial services—may explain some of treasury’s success in showcasing its value, the point is that the practice of bringing superior ideas, approaches and methods to the business should be replicated by other leaders committed to proving that treasury is not a reactive or passive function dedicated to liquidity and risk management. Instead, it’s engaged, proactive and has a growth mindset.

Asked by the business to open a customer bank account, treasury proposes a better approach, a win for everyone.

Bringing a better idea to a product team responding to a customer’s request served as a powerful demonstration of one treasury team’s strategic value and ability to enable business partners to succeed. This example of treasury using its expert insights on financial transactions and processes emerged during a conversation at the NeuGroup for Tech Treasurers 2024 Tech Summit.

  • And while the company’s industry—financial services—may explain some of treasury’s success in showcasing its value, the point is that the practice of bringing superior ideas, approaches and methods to the business should be replicated by other leaders committed to proving that treasury is not a reactive or passive function dedicated to liquidity and risk management. Instead, it’s engaged, proactive and has a growth mindset.

The beginning: a bank account. Here’s the story, in broad strokes; the details are less important than how treasury’s actions ultimately paid off for the product group, the customer and treasury itself.

  • A product team at the company asked treasury to set up a new bank account for a customer that wanted to lower its counterparty credit risk.
  • After digging into the details, treasury realized that as part of the financial product/service provided to the customer, the bank account on a given day would see cash flows from the customer; the following day, the corporate would pay what it owed the customer.

The problem and solution. Treasury’s analysis determined that the suggested structure would actually create counterparty risk, require daily wires, and mean the customer lost the use of the funds sent to the corporate.

  • The better setup, treasury concluded, would be net settlement of the flows, eliminating the need for payments by both the customer and the corporate. Net settlement would also make a new bank account unnecessary.
  • Instead of the dual cash flows, the corporate would move a small amount on the day it owed the customer funds—if it owed anything. Often, the treasurer said, no funds need to move.
  • As for additional work, the product would only require setting up new reporting of the net settlement amount.

Using diagrams to overcome resistance. The product team was initially reluctant to push back on the customer’s request for a separate bank account given the length of time it had taken to negotiate a contract. Treasury overcame that resistance; its tactics may prove useful to other finance teams trying to influence business decisions.

  • To make its case, treasury detailed with diagrams the operational risk and burden of opening a new account just for one customer and product flow. One reason: the company’s systems rely on pooled account management for its global funds flows; not every product get its own bank account given the complexity it would create.
  • Opening a new account would also lead to increased reconciliation and bank fee costs. One diagram showed the unnecessary movement of funds between accounts that would result in more work for both the customer and the company.
  • Another diagram illustrated benefits that both the business and the customer would enjoy under treasury’s proposal of simplified fund flows.
  • The upshot: “We convinced them to at least let us speak with the customer about our proposal since we thought it was much better,” the treasurer said.

Success: a happy customer. Treasury laid out its alternative proposal to the customer. “They saw it and thought it made a ton of sense and were very pleased,” the treasurer said. “It simplified things for them, reduced their risk and improved working capital.”

  • As you might expect, this outcome—a happy customer—excited and pleased the product team, the treasurer said. Wins like this go a long way toward treasury developing closer relationships with the business—essential for enhancing the function’s stature.

Not one and done. This was not a one-off success story for treasury and its business colleagues. The treasurer said the product team is “rebuilding the product around our idea” and pitching this as a feature for many other customers.

  • The treasurer said although this specific example may apply to a narrow group of companies, “there are many places where netting makes sense,” including accounts payable (AP), accounts receivable (AR) and other areas.
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Looking Back, Looking Forward: The Best of NeuGroup Insights

What to Watch in 2025. Welcome back! NeuGroup Insights is kicking off 2025 with a look at some of the key treasury and finance themes NeuGroup founder and CEO Joseph Neu will be watching closely this year. It’s no surprise to those of us who know him that Joseph’s list is weighted toward technology that is transforming treasury and bringing the future of finance forward.

What to Watch in 2025. Welcome back! NeuGroup Insights is kicking off 2025 with a look at some of the key treasury and finance themes NeuGroup founder and CEO Joseph Neu will be watching closely this year. It’s no surprise to those of us who know him that Joseph’s list is weighted toward technology that is transforming treasury and bringing the future of finance forward.

But in keeping with our belief that technology exists to serve societies and help individuals thrive, his first entry concerns the people NeuGroup exists to serve: our members. Here, then, are a half dozen top themes for 2025:

  • Role expansions. “I will be watching how the various roles of our members continue to expand and what impact the finance professionals in these expanded roles will have on the overall performance of their organizations.”
  • AI and the tech stack. “I’ll be tracking the impact of so-called AI agents and layers on the tech tools and software employed by treasury. How will the morphing of SaaS solutions play out in the tech stacks of treasury and the rest of the Office of the CFO? If the treasury management system is no longer the principal database for treasury, for example, will companies need a comprehensive TMS anymore?”
  • Dashboard evolution. “How will dashboards that are automated using data repositories evolve in line with the changes outlined above, starting with AI-empowered prompts and conversational engagement?”
  • America First implications. “How will the America First priorities of Trump 2.0 impact the global financial system and how multinational corporations support their businesses globally, especially regarding cross-border flows and traditional frameworks deployed to manage them?”
  • SG&A transformations. “Amid those policy priorities, how will transformation projects respond to continue to scale SG&A functions and adapt them to real-time transaction and data flows?”
  • Banking as a Service. “Will BaaS evolve to benefit treasurers? Traditional banks and asset managers will increasingly support the fintech solutions more agile firms create. I’ll be watching, for example, blockchains with stablecoins as well as the pools of private capital that are supplementing their own capital/capital raising efforts.”

Looking forward, looking back. This week’s email also looks forward by looking back at 2024 and 10 of the best posts produced by NeuGroup Insights, including a podcast exploring the benefits of bringing tech experts on to treasury teams. Indeed, like Joseph’s list, this one features a healthy dose of content exploring how NeuGroup members are making use of technology—and what some want from AI.

  • There are also stories on more tech companies paying dividends, what high-potential treasury talent wants to learn, investing corporate cash, a different approach to buying insurance and more.

Please click here to read the email newsletter with the 10 posts that we consider best based on popularity and topicality. You can find many more insights, videos and podcasts on our website.

Sign up for the email here, and subscribe to the Strategic Finance Lab podcast on Apple or Spotify.

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Cash Flow Collaboration: Bridging Treasury and Procurement

Aligning treasury and procurement can be key to improving working capital management, but that requires skillful change management and relationship building.

As treasury teams face increasing pressure to improve working capital management amid higher interest rates, cash conversion cycles are emerging as a key metric for success. At NeuGroup’s inaugural Working Capital Symposium this fall, attendees highlighted the growing priority of developing strong relationships with procurement to shrink conversion cycles and optimize cash flow—which, as one assistant treasurer aptly put in the meeting, is akin to a “free bond deal.”

  • For many corporates, improving working capital includes extending payment terms and ensuring invoices are paid at those terms—not any earlier. This can cause friction with procurement, whose focus often centers on negotiating favorable pricing at the expense of longer terms and maintaining supplier relationships.
  • At the meeting, working capital experts from meeting co-sponsor J.P. MorganPooja Shah and Kjel Christensen, shared their insights into the challenges and solutions for bringing treasury and procurement in sync. “Extended terms can be really hard for suppliers to manage given the higher borrowing rates and lack of capital available for medium-to-small sized businesses,” Ms. Shah said.
    • Mr. Christensen added: “Procurement does not enjoy doing term extensions. However, this is one lever you can pull to improve your cash conversion cycle.”

Aligning treasury and procurement can be key to improving working capital management, but that requires skillful change management and relationship building.

As treasury teams face increasing pressure to improve working capital management amid higher interest rates, cash conversion cycles are emerging as a key metric for success. At NeuGroup’s inaugural Working Capital Symposium this fall, attendees highlighted the growing priority of developing strong relationships with procurement to shrink conversion cycles and optimize cash flow—which, as one assistant treasurer aptly put in the meeting, is akin to a “free bond deal.”

  • For many corporates, improving working capital includes extending payment terms and ensuring invoices are paid at those terms—not any earlier. This can cause friction with procurement, whose focus often centers on negotiating favorable pricing at the expense of longer terms and maintaining supplier relationships.
  • At the meeting, working capital experts from meeting co-sponsor J.P. MorganPooja Shah and Kjel Christensen, shared their insights into the challenges and solutions for bringing treasury and procurement in sync. “Extended terms can be really hard for suppliers to manage given the higher borrowing rates and lack of capital available for medium-to-small sized businesses,” Ms. Shah said.
    • Mr. Christensen added: “Procurement does not enjoy doing term extensions. However, this is one lever you can pull to improve your cash conversion cycle.”
  • “We basically never talk to clients without touching on working capital,” Ms. Shah said. “Even clients who hadn’t been receptive to working capital discussions in the last few years are coming back to us more proactively. Working capital management is more important now than it may have ever been.”

Breaking silos. Collaboration between treasury and procurement begins with clear visibility and shared tools, members at the symposium agreed. The right technology can break down silos and demonstrate how procurement decisions directly affect treasury’s working capital targets.

  • One member described how her company implemented dashboards and simple Excel calculators to provide procurement with real-time data on how their choices influenced cash flow. “It helped highlight where small adjustments could make a big difference,” she said.
  • Another member shared their success in deploying Power BI dashboards to track how payment terms with different suppliers impact their overall cash flow and financing costs. “We’re able to quantify what’s driving cash flow and see where terms are helping—or hurting—our business,” she explained. “It’s about transparency—once procurement has access to this data, it’s much easier to understand how their choices impact cash conversion.”
  • Beyond technology, members stressed the importance of building relationships. “It’s all about making friends,” one member noted. “Treasury needs to be in the trenches with procurement. We’re not just talking spreadsheets—we’re talking about saving millions of dollars by improving our cash cycle.”

Working capital wake-up call. One treasury senior director at a global retailer illustrated this point with her team’s experience: As the pandemic began, the company successfully hit all-time lows for the cash conversion cycle—essentially, the time it takes to turn inventory and outstanding customer payments into cash.

  • But then the company shortened payment terms to help some struggling partners stay afloat by getting cash into their hands sooner. This included granting thousands of exceptions to normal payment schedules. While this provided much-needed relief to suppliers, it effectively lengthened the multinational’s cash conversion cycle.
    • A colleague of the member said, “While there’s room for exceptions, at one point you realize something’s gone wrong.”
  • Now, the corporate is recalibrating payment terms, collaborating closely with procurement to balance supplier relationships and improve working capital efficiency. The senior director emphasized the importance of this effort by sharing a key stat with procurement: “Each day the cycle is cut down, that equates to $1.4 billion.”
  • The shift involved fostering stronger relationships with procurement, which handled renegotiations with suppliers, and granting fewer exceptions. As a result, the cash conversion cycle improved to 5.1 average days in the most recent fiscal year, from 6.5 the year before (see chart below).

Change from the top down. As with any major shift in company strategy, getting buy-in from senior leadership is essential to making the case internally on a more disciplined approach to cash flow management. Without it, one member said his company was unable to gain traction with procurement, despite using tools like dashboards and detailed reporting to explain the benefits of extending payment terms.

  • Mr. Christensen shared an example of how he witnessed CFO buy-in change the game for a client company. He told the CFO, who was seeking feedback on potential blind spots, that procurement’s lack of buy-in could prevent the success of working capital initiatives. The following morning, the CFO took decisive action, delivering an ultimatum in a meeting with procurement. As a result, the team hit 98% of its working capital targets, and procurement quickly aligned to the new terms.

Olive branch. Another way to alleviate procurement’s burden is via supply chain finance (SCF), which allows corporates extending payment terms to also extend their low borrowing rate to their suppliers—maintaining healthy supplier relationships in the process.

  • “Certain suppliers, especially in the U.S., have operational challenges,” one member explained. “They struggle with longer payment terms.” SCF helps by leveraging a company’s credit to provide liquidity to suppliers, ensuring that they have access to cheaper funding while optimizing the larger enterprise’s working capital. Ms. Shah referred to this as a “win-win” situation, where companies can meet their working capital needs while maintaining supplier stability and suppliers receive access to early payment and low-cost financing.
  • One member shared that his company has implemented SCF with nearly 100 suppliers globally. In times of economic stress, enhancing working capital without incurring excessive costs is critical. While SCF provides an effective way to support suppliers, it’s important for companies to evaluate how these programs align with their broader strategic objectives.
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Talking Shop: How To Remove Employees’ Bank Portal Access Faster

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].


Context: Multinational corporations with hundreds of bank accounts at dozens of banks spread across the globe face some major challenges. One big pain point: efficiently tracking and updating which employees have access to online banking portals and who among those people are authorized signers.

  • The challenge is twofold: Treasury has to manage whose access and authority needs to be revoked because they’re leaving the company or changing jobs—and time is of the essence. It also must ensure that the banks have updated and accurate information on signers. Much of the time they don’t.

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].


Context: Multinational corporations with hundreds of bank accounts at dozens of banks spread across the globe face some major challenges. One big pain point: efficiently tracking and updating which employees have access to online banking portals and who among those people are authorized signers.

  • The challenge is twofold: Treasury has to manage whose access and authority needs to be revoked because they’re leaving the company or changing jobs—and time is of the essence. It also must ensure that the banks have updated and accurate information on signers. Much of the time they don’t.

As NeuGroup Insights reported earlier this year, many members send innumerable emails to banks to obtain data and correct inaccuracies in bank records that have not been properly updated. That has prompted some members of NeuGroup for Global Cash and Banking to form a subgroup to push banks for digital solutions and standards that will provide real-time visibility to signer data.

Member dilemma:
 “While we are compliant from a SOX standpoint, our IT security team is saying that there is too much of a delay between when someone leaves the company and when their bank portal access is removed. They are asking that portal access be removed same day.

  • “Currently, treasury has no visibility to when someone leaves the company. We rely on a quarterly user audit for removing user access.
  • “The way I think about this: either the manager of the employee leaving would need to notify treasury so that access could be manually removed; or we somehow restrict all portal access so it can’t be reached without being on our VPN or coming from a company IP address.”

Member question: “Do any companies restrict bank portal access via a requirement to be on your VPN or a company IP address? If so, how did you go about enforcing this? I would appreciate any feedback on how we could either restrict user access or better improve our current process.”

Peer answer 1: 
“Regarding visibility upon separation, we leverage a tool called IdentityIQ (IIQ) that is linked to our HR system and will flag folks for review both if they have a job role change or if there is a departure. This is on many key access and systems, not limited to treasury systems.”

Peer answer 2: 
“Our bank portal admin group receives a list from Workday listing all departing employees each day. We compare that list to the list of portal users and initiate removals as needed. We are working on automating the process so that we only receive the report when one of the users on our portal list leaves the company.

  • “We have been doing this for a few years; we had the same concerns regarding employees with hard tokens that had left the company.”

Peer answer 3: “Our employee directory is linked to our access request system such that a departing employee will trigger a ticket to remove all their access. Role changes are only addressed though a periodic user access review conducted by the admin team, with email sent to each user’s manager.”

Peer answer 4: 
“We do a weekly check of ‘leavers’ and ‘movers.’ More importantly, IT now realizes that this type of blanket policy is not appropriate for some third-party applications.

  • “We still try to operate within the principles of the policy, but they should not be treating third-party banking applications the same way as access managed via company systems.
  • “We also require one ‘inputter’ and two approvers for any payments and no one in banking has access to vendor master data so our compensating controls are also important as the risk is lower.”

Peer answer 5: “Another idea is always require all users to use multifactor authentication to log in to the bank portal. This would mean each user would have a soft token on their phone that they would need to use to log in.

  • “Generally, IT can disable those phones remotely even if they are not collected before the employee’s last day. Of course, this will only work if everyone is issued a company phone and if each bank you work with issues a soft token, which is not a case for all companies and all banks.”

Peer answer 6: “We track all online banking users in Kyriba and have an integration to our HR system that alerts us to any users that left the company. We also require VPN for some of our online banking systems, but it hasn’t been consistently set up in the past.”

Member follow-up:
 “How are you enforcing the VPN piece? Or is it the bank that is blocking the user’s access if the login attempt is not coming from your IP address?”

Peer response:
 “The bank blocks access if it is not coming from a white-listed IP address.”

NeuGroup Insights 
in 2021 published a story detailing how one corporate solved the signatory 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.

  • At the time, the NeuGroup member said treasury was considering expanding use of the process for all bank portal access—not just for signatories.
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More Tech Treasurers Weigh Dividends After Mega-Cap Initiations

A majority of tech firms in NeuGroup’s Capital Structure Survey pay dividends and more are considering the move.

Fast-growing technology companies historically pumped profits back into the business to fuel more expansion. Most shunned paying dividends to shareholders, a use of capital seen as a sign of slowing growth. But the tide started turning in 2024 for Big Tech, with Google parent Alphabet, Facebook parent Meta and Salesforce all initiating dividend payouts.

  • “We landed on a modest dividend and for us that opened new tools for returning capital,” said one NeuGroup member at a company that initiated a dividend this year after what they said was “a long journey.”
  • Smaller tech companies are taking notice. A member of NeuGroup for Tech Treasurers said, “We’re taking a fresh look at our share buyback strategy, but with mega-techs recently issuing dividends, that’s worth the conversation.”

A majority of tech firms in NeuGroup’s Capital Structure Survey pay dividends and more are considering the move.

Fast-growing technology companies historically pumped profits back into the business to fuel more expansion. Most shunned paying dividends to shareholders, a use of capital seen as a sign of slowing growth. But the tide started turning in 2024 for Big Tech, with Google parent Alphabet, Facebook parent Meta and Salesforce all initiating dividend payouts.

  • “We landed on a modest dividend and for us that opened new tools for returning capital,” said one NeuGroup member at a company that initiated a dividend this year after what they said was “a long journey.”
  • Smaller tech companies are taking notice. A member of NeuGroup for Tech Treasurers said, “We’re taking a fresh look at our share buyback strategy, but with mega-techs recently issuing dividends, that’s worth the conversation.”

NeuGroup’s Capital Structure Survey—conducted in mid-2024 and sponsored by Standard Chartered—reveals it’s a conversation that has already taken place at a majority of tech firms. As the chart below shows, more than half (53%) of the respondents pay dividends. (That aligns closely with the S&P 500 Index, where 54% of all information technology companies pay dividends.)

Reality check. It’s important to note, though, that while dividend payments are gaining traction in tech and are paid by the majority of respondents, tech firms remain less likely than other industries to pay a dividend: 64% of the 129 companies surveyed in all sectors (44 in tech) reported paying dividends; 70% of non-tech companies pay dividends.

  • The chart shows that a higher percentage of tech companies engage in share repurchases than pay dividends (66% vs 53%). Hardware is the exception, where 83% of respondents pay dividends compared to 69% for share repurchases.
  • This in part reflects the established nature of many hardware firms, though even high-growth semiconductor companies are using their free cash flow to return capital to shareholders via dividends.

The cash catalyst. Strong cash flow and relatively low leverage are fueling much of the increased activity and interest in tech dividends. “Cash reserves for tech companies have grown disproportionately,” said Shoaib Yaqub, Global Head of Capital Structure & Rating Advisory at Standard Chartered. “This is a key driver for dividend payments.”

  • According to Standard Chartered, technology firms in the S&P 500 held an average of $6.6 billion in cash and short-term investments, totaling over $427 billion collectively in the first quarter of 2024.
  • “While the broader tech sector struggled with operating costs at the beginning of the year, there is no doubt the sector remains very lowly levered,” Mr. Yaqub added. “So I see dividend initiation as a step in the right direction—this is just good corporate finance.”

The valuation situation. Factoring in lofty stock market valuations—high price/earnings ratios—is also smart for companies evaluating shareholder return strategies. One NeuGroup member noted that while buybacks can be value accretive for the corporation, they “can also be destructive depending on price. We wanted to explore the other tools. We looked at regular and special dividends.”

  • Another member is weighing the ideal level of dividends and buybacks as its stock price has jumped during the bull market. “We’re hesitating to buy back too much,” he said. “We have always had a dividend, but we’ve kept it at a manageable level. We want to benchmark—should we focus more now on the dividend than repurchases?”

Starting Slowly. Tech firms typically initiate dividend payments cautiously, resulting in relatively modest yields. The majority (60%) of dividend-paying tech companies surveyed by NeuGroup reported yields of 1.5% or lower, a far bigger proportion than the 36% for non-tech companies. That’s consistent with the S&P 500: tech firms have an average dividend yield of 1.5%, compared to 2.24% for non-tech.

Among the factors explaining lower tech yields are a long-held belief that dividends are a long-term commitment that can’t be reversed without sending a very bad signal to investors. “Dividends are a much more permanent layer of capital return and we started small so we can build over time,” one member explained.

  • The perceived permanent nature of the payouts is widespread: As the table below shows, 79% of dividend payers surveyed cited a commitment to maintaining or increasing their dividend.
  • Looked at another way, once you initiate a dividend you don’t lower it when times are tough. Just 5% of survey respondents that pay them said dividends were variable based on profitability.

Benchmarking. Companies tailor their capital return strategies to their individual business models and stages of maturity. As one member remarked, “What’s interesting in my mind is that there is no one right answer.” That said, the survey shows companies that pay dividends benchmark against their peers and the overall S&P 500. The table shows that 58% of dividend paying technology firms said benchmarking against peers is a key consideration.

That also goes for balancing dividends and buybacks. As one member of NeuGroup for Mega-Cap Treasurers put it, “Looking at peers is important to find the balance of dividend and share repurchase because that is how shareholders look at fair compensation.”

Looking ahead. 
Analysts and investment bankers agree that share repurchases will remain the dominant method for returning capital among tech companies for the foreseeable future. One factor: They see less chance for a higher excise tax on buybacks under the incoming Trump administration. More importantly, growth investors continue to place a high priority on buybacks.

  • The survey showed that 67% of tech companies that do not pay dividends prefer share repurchases because they add more value to shareholders. Mr. Yaqub at Standard Chartered notes that “over the past 10 years, total shareholder returns in tech have been highest among other corporate sectors primarily through underlying share price growth and significant buybacks.”
  • Buybacks are also seen by most corporates as providing more flexibility than dividends. According to the survey, 77% of tech companies that repurchase stock say the top diver of their policy is that they view share repurchases as variable depending on how much excess cash remains after all other needs.
  • Mr. Yaqub expects that perception to change as more tech companies initiate and raise dividends. “I think there is still a view that dividends are sticky, and buybacks are not. I don’t think this is correct anymore—try reducing buybacks and shares will crash similar to if the dividend is cut.”
  • Along with that realization, he says, it’s also becoming clear more tech companies need to find a place for dividends in their capital structures. “It’s time to have a core level of dividend and use the untapped balance sheet a bit more.” And more companies may want to pay dividends with excess cash if inflation starts creeping up amid a tariff war, he says. “Cash on the balance sheet in inflationary environment is value-destructive.”
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Talking Shop: Should Investment Policies Mention the 1940 Act?

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].


Context: No corporation that is not an investment company wants to cross a line that would make it subject to the Investment Company Act of 1940. The ’40 Act regulates mutual funds and other companies that engage primarily in investing and trading securities and may also issue securities. Falling under it would require time-consuming, costly reporting and disclosure to comply with Securities and Exchange Commission rules, among other unwanted consequences.

  • “We have had discussions with our management and legal to agree we do not want to be an investment company and subject to the regulatory oversight and filings,” one treasurer told NeuGroup Insights.

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].


Context: No corporation that is not an investment company wants to cross a line that would make it subject to the Investment Company Act of 1940. The ’40 Act regulates mutual funds and other companies that engage primarily in investing and trading securities and may also issue securities. Falling under it would require time-consuming, costly reporting and disclosure to comply with Securities and Exchange Commission rules, among other unwanted consequences.

  • “We have had discussions with our management and legal to agree we do not want to be an investment company and subject to the regulatory oversight and filings,” one treasurer told NeuGroup Insights.

A key metric in determining that a company is not subject to the Act “is the composition of the assets on its balance sheet and, in particular, whether it owns ‘investment securities’ exceeding 40% of the value of its total assets on an unconsolidated basis, excluding ‘government securities’ and certain ‘cash items,’” according to the law firm Latham and Watkins.

But what if a company is a cash machine that owns lots of securities but not many hard assets? As the law firm notes, “Rule 3a-1 provides a safe harbor from investment company status for issuers that fail the 40% test but are not primarily engaged in an investment business…An issuer seeking to rely on Rule 3a-1 must satisfy two 45% tests:

  • “No more than 45% of the value of the issuer’s total assets (excluding government securities and cash items) must consist of certain types of investment securities.
  • “No more than 45% of the issuer’s net income after taxes (for the last four fiscal quarters combined) must derive from Rule 3a-1 investment securities.
  • “Unlike the 40% test, though, an issuer may compute these two 45% tests on a consolidated basis with its wholly-owned subsidiaries.”

Member question: “Does anyone in the group have a requirement in your investment policy guidelines to comply with Investment Company Act safe harbor tests or something similar? For context, we’re conducting the annual review of our investment policy and are curious whether this is a broadly accepted requirement or not.

  • “For background, our investment policy was originally written by a consulting company that primarily dealt with pension funds. Most of my team has not seen it in prior investment policies from other companies where we’ve worked. If anyone is willing to share if this is or is not something included in your investment policy, it’d be greatly appreciated!”

Peer answer 1: “We do not have those requirements in our investment policy. At the corporate level, our investing activity is immaterial vs. our operating business, and our treasury center subsidiaries do not issue securities. At one point in the past, we had a financial affiliate which issued securities and did not have an operating business. In that case, we made sure that its activities fell under a safe harbor.”

Peer answer 2: 
“Similarly, we don’t have such requirements in our investment policy. We in fact just went through the exercise of drafting an investment policy. What it covers is essentially the kinds of instruments we would invest in, tenors and some operational considerations.

  • “As we were going through the process, we got some inputs from a few of our key banking partners; they shared helpful policy statements and frameworks that we could leverage. I would suggest checking with your existing banks/investment counterparties as an option.”

Member response: “Thank you for the feedback; I shared your comments with our capital markets team. We had similar thoughts to what you mentioned, as our investments are also fairly immaterial compared to our operating business.

  • “It sounds like this was recommended by outside counsel before my team took over our investment policy, so we’re trying to track down why and if we’re OK removing this provision.”

Templates and attention. A member of NeuGroup for Cash Investments told NeuGroup Insights his company has “proprietary templates to ensure compliance with the safe harbor tests of the Investment Company Act of 1940 that were developed in partnership with both internal and external counsel.

  • “The trackers are updated on a monthly basis to ensure compliance; however, this process and workflow is independent of the investment policy and I don’t expect that to change.”
  • A different member said, “We have language in our investment policy statement around the 1940 act that we will periodically review our status.”

Words to the wise. A former member of the group said none of the investment polices he had overseen included references to safe harbor tests related to the ’40 Act. “I wouldn’t mention anything about the Investment Company Act in my investment policy,” he said. “Why call attention to it?” He added that companies concerned about failing the 45% test should seek private counsel from their auditors.

  • A current member offered this perspective: “If you are not close to the line drawn in the Act or think you are exempt, then it makes no difference if it is in the policy.
    • “But if you are close to the line, be very careful—regardless of what the policy says. Even if you think you are appropriately invested, something in the financials could change and trip you up.”
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Building SMA Portfolios Where Managers Play to Their Strengths

One treasury team hopes to add diversification and reduce overlap by giving external asset managers more flexibility.

A member of NeuGroup for Cash Investments wants to change his company’s investment policy so that the same asset-mix mandate that now covers every separately managed account (SMA) is instead applied to the combined portfolio of six SMAs. “This would create more flexibility for us to partner with our group of SMAs and allow each of them to focus on a certain target duration or tier,” the member said at a recent peer group meeting.

  • “This would allow managers to focus on different areas of expertise,” including municipal, corporate and asset-backed securities, he added. And that would reduce overlap between portfolios that currently hold securities from the same issuers, the result, in part, of just one mandate applying to every SMA.
  • “We think that we could diversify our portfolio, get each of the managers focusing in the right area and likely, over time, produce some excess returns on the portfolio,” the member said.

One treasury team hopes to add diversification and reduce overlap by giving external asset managers more flexibility.

A member of NeuGroup for Cash Investments wants to change his company’s investment policy so that the same asset-mix mandate that now covers every separately managed account (SMA) is instead applied to the combined portfolio of six SMAs. “This would create more flexibility for us to partner with our group of SMAs and allow each of them to focus on a certain target duration or tier,” the member said at a recent peer group meeting.

  • “This would allow managers to focus on different areas of expertise,” including municipal, corporate and asset-backed securities, he added. And that would reduce overlap between portfolios that currently hold securities from the same issuers, the result, in part, of just one mandate applying to every SMA.
  • “We think that we could diversify our portfolio, get each of the managers focusing in the right area and likely, over time, produce some excess returns on the portfolio,” the member said.

Flexing and tightening. As part of the investment policy update, the member wants to increase the maximum final maturity of any security held by a SMA from 36 to 60 months and extend the maximum weighted average duration of a manager’s portfolio from 12 to 24 months.

  • In a follow-up interview, he said the changes are not designed to significantly increase the average duration of the combined SMA portfolio; rather, they will enable more nimble management of each manager’s mandate.
  • Spreading his hands far apart, he explained, “Your policy guidelines are way out here. For each of our managers, we’re setting them a little bit narrower; and we can allow them to flex that out or tighten up, depending on the market, the business and other factors.”
  • He acknowledged this will mean more work. “We’ll have to set the parameters and work closer with each of our managers—but we feel we’re already doing that. We have great communication, weekly calls, with all of them.”

Overall duration. The cash investment manager also seeks to have the updated policy provide clarity on the average duration target for the company’s entire cash portfolio, including bank demand deposits, time deposits, money market funds and assets held by SMAs. The existing policy, as noted above, sets a maximum average duration on SMAs, but not the overall portfolio.

  • “I think there comes a point where you need to look at your entire portfolio as a whole,” the member said. “Not that it has to give you an exact amount, but at least something to kind of give you guidelines, which we don’t have right now.
    • “I think there should be some framework there. Memorializing some sort of overall duration target—there could be some value there.”

Extending duration. SMAs account for about 25% of the company’s total cash investments and have had an average duration between nine and 12 months this year, he said. The average duration of the company’s entire cash portfolio—calculated by the member but not required in the investment policy—is about three months, reflecting the shorter duration of the more liquid assets that comprise 75% of total cash.

  • A slide in his presentation compared the member’s SMA duration and returns to those of peers as compiled by a relationship bank. In the past year, the company had outperformed most peers. “My point here is the short duration on our portfolio, roughly three months, hasn’t hurt us,” he said. “But we believe that needs to be addressed for us to keep up our competitive returns going forward.”
  • In other words, the company needs the flexibility to extend duration—another reason the member wants to allow some managers in some cases to have an average maximum duration of two years.
  • “If SMA duration is capped at one year, it may be hard to increase overall duration,” he said. “So the flexibility we’d achieve with a policy amendment would allow some managers to extend and move that overall number upwards.”
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Expanding Treasury’s Role and Influence: A Vision for 2030

A Citi GPS report offers ways treasury can modernize to avoid irrelevance in an increasingly real-time world.

Put aside, if only for a moment, the challenges and opportunities treasury teams will face in 2025. Consider instead what they need to do in the next five years to expand the function’s role and influence. This week, in a report titled Treasury 2030, Citi GPS offered its vision of how treasury can develop into a more proactive, strategic partner enabling business growth. The provocative subtitle: “Modernize or Risk Irrelevance.”

  • Ron Chakravarti, Citi’s Global Head, Client Advisory Group, Services, is one the primary authors of the report, which includes contributions from the consulting firm Zanders. “The future holds so much for high-performing treasuries,” he said in an interview with NeuGroup Insights.
    • “Through astute investments in technology, talent and partner collaboration, treasury teams can become key contributors to company growth.”
  • This report arrives about a year after Citi GPS released Treasury Leadership: Does it Matter?, a study co-authored by Mr. Chakravarti.
    • In a Strategic Finance Lab podcast available on Apple and Spotify, he and NeuGroup founder and CEO Joseph Neu discussed the earlier report’s findings. Among them: companies that deliver superior financial performance also have top-performing treasury leaders and teams.

 

A Citi GPS report offers ways treasury can modernize to avoid irrelevance in an increasingly real-time world.

Put aside, if only for a moment, the challenges and opportunities treasury teams will face in 2025. Consider instead what they need to do in the next five years to expand the function’s role and influence. This week, in a report titled Treasury 2030, Citi GPS offered its vision of how treasury can develop into a more proactive, strategic partner enabling business growth. The provocative subtitle: “Modernize or Risk Irrelevance.”

  • Ron Chakravarti, Citi’s Global Head, Client Advisory Group, Services, is one the primary authors of the report, which includes contributions from the consulting firm Zanders. “The future holds so much for high-performing treasuries,” he said in an interview with NeuGroup Insights.
    • “Through astute investments in technology, talent and partner collaboration, treasury teams can become key contributors to company growth.”
  • This report arrives about a year after Citi GPS released Treasury Leadership: Does it Matter?, a study co-authored by Mr. Chakravarti.
    • In a Strategic Finance Lab podcast available on Apple and Spotify, he and NeuGroup founder and CEO Joseph Neu discussed the earlier report’s findings. Among them: companies that deliver superior financial performance also have top-performing treasury leaders and teams.

Four key characteristics. The 2030 report says that for treasury to move beyond being a liquidity and risk manager and become a strategic business partner and value creator, change must occur. “For many companies, the harsh reality is that their technology infrastructure, organizational construct, and current positioning are not properly equipped to support this vision of treasury.” The report identifies four key areas where change will take place at leading treasury teams:

  1. Center of excellence for financial transactions. “While the management of risk, cash, and funding remain table stakes, treasury needs to be equipped to proactively contribute to the success of the business. We believe this calls for any transaction with financial impact or implication to be governed by treasury.”
  2. Chief returns and risk officer. “Treasury should be at the center of cross-functional alignment in the corporate planning process, bringing to the table its unique end-to-end understanding of risk, returns and cost of capital. Horizontal collaboration between treasury, FP&A, and business development will ensure that top line growth, returns, and risks are all considered.”
  3. Always on, 24/7. “We think treasuries in the future will need a real-time mindset to always get the most from corporate cash. Companies, irrespective of business model, will need to move towards real-time treasury that accelerates the velocity of cash.”
  4. Automation through AI. “AI should be at the core of a new treasury operating system that powers automation, efficiency, accuracy, and data-supported insights. Recognizing the sensitivity of treasury’s role, humans become integral in managing, overseeing, and interjecting the AI when the situation exceeds set parameters.”

More on AI. The paper quotes NeuGroup member Sandra Ramos-Alves, treasurer of Bristol Myers Squibb, on the scope of the challenge and opportunity of AI. “As an organization, we need to have a complete mindset shift and realize that the AI and the technology is not here to replace us. It’s to help us augment our thinking, provide better analysis so that we’re making smart and timely decisions,” she said.

  • Comments from Mr. Neu on AI are also featured. “You as treasurers should be working with your banks, technology partners and consultants to ensure there is the right governance around AI and new technologies to ensure that they are serving the human customers your business aims to serve and supporting the humans ensuring your business is meeting their needs,” he said.
  • “Human change management will be a vital role going forward and preparing for the future of treasury even for 2030 means we are going to need a dedicated change manager in the function—ASAP.”

More calls to action. The Citi GPS paper presents calls to action for banks, technology providers and, of course, corporate treasury:

  • “There is no time for complacency. Treasurers should be bold and position themselves as influencers and develop an ambitious roadmap towards 2030. Articulate the value that treasury can bring to the group to ensure funding and approval for modernization initiatives.
  • “Ensure close alignment with your corporate IT counterparts. Understand where data can support treasury; get involved in the group’s data architecture and make sure treasury requirements are included.
  • “Broaden involvement in adjacent functions. Because the treasurer governs all financial transactions, they should therefore be close to procurement, O2C, and P2P teams. As a result, treasurers need to build knowledge of other group functions to provide thorough business and financial risk management input.
  • “Adopt a mindset of being the trusted financial innovation partner and be a leader in change.
  • “Develop talent. Treasury will change and expand in scope, but the core of what it does today will not disappear. Consider the skill set of the future treasury team, which may need data science, change management, business partnership, influencing, and process re-engineering. Meanwhile, active planning and development will be necessary to retain people while developing the next generation.”
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Rethinking Global Funding Strategies in Liquidity Structures as Geopolitical Risks Rise

Fewer capital injections and intercompany loans to subs, more frequent dividends, and local borrowing helps ring-fence risk and reduce interdependency in markets where corporates face restricted currencies and geopolitical threats. Partnering with global banks with deep knowledge of each country’s regulations and risks can pay off.

The Russia-Ukraine conflict that erupted in 2022 shocked treasury and finance leaders into a heightened awareness of geopolitical risk, a shock compounded by the aftereffects of a pandemic that had exposed overreliance by corporations on global supply chains running through China. War in the Middle East and rising tensions between the U.S. and China over the past year have only added to the pressure on financial risk managers to seek new ways to mitigate threats that are almost impossible to forecast.

“The problem with geopolitical risk is there’s no way to predict what’s going to happen, when it’s going to happen and what the reaction is going to be,” a member of NeuGroup for Mega-Cap Treasurers said recently. “So, it’s completely random, arbitrary and unpredictable. It’s probably the hardest thing that we’re dealing with.”

Suman Chaki, Deutsche Bank’s Global Head of Cash Management Sales and Solutions, has observed treasurers and their teams devoting more time to mitigating these risks. “While geopolitical risks were always a part of the treasurer’s consideration, recent events and ongoing global developments have established a higher likelihood of the significant unforeseen disruptions it can create,” he said.

“The risks are heightened in the more restricted markets which also happen to be the growth markets for global MNCs across most industries,” he added. “Treasurers might need to evaluate if their current liquidity and funding structures, which were traditionally based on cost and balance sheet efficiencies, are still fully fit for purpose in a changing world order where increasing geopolitical risks will need more consideration.”

Fewer capital injections and intercompany loans to subs, more frequent dividends, and local borrowing helps ring-fence risk and reduce interdependency in markets where corporates face restricted currencies and geopolitical threats. Partnering with global banks with deep knowledge of each country’s regulations and risks can pay off.

The Russia-Ukraine conflict that erupted in 2022 shocked treasury and finance leaders into a heightened awareness of geopolitical risk, a shock compounded by the aftereffects of a pandemic that had exposed overreliance by corporations on global supply chains running through China. War in the Middle East and rising tensions between the U.S. and China over the past year have only added to the pressure on financial risk managers to seek new ways to mitigate threats that are almost impossible to forecast.

“The problem with geopolitical risk is there’s no way to predict what’s going to happen, when it’s going to happen and what the reaction is going to be,” a member of NeuGroup for Mega-Cap Treasurers said recently. “So, it’s completely random, arbitrary and unpredictable. It’s probably the hardest thing that we’re dealing with.”

Suman Chaki, Deutsche Bank’s Global Head of Cash Management Sales and Solutions, has observed treasurers and their teams devoting more time to mitigating these risks. “While geopolitical risks were always a part of the treasurer’s consideration, recent events and ongoing global developments have established a higher likelihood of the significant unforeseen disruptions it can create,” he said.

“The risks are heightened in the more restricted markets which also happen to be the growth markets for global MNCs across most industries,” he added. “Treasurers might need to evaluate if their current liquidity and funding structures, which were traditionally based on cost and balance sheet efficiencies, are still fully fit for purpose in a changing world order where increasing geopolitical risks will need more consideration.”

In the NeuGroup 2024 Finance and Treasury Agenda Survey, respondents named geopolitical conditions their fourth biggest risk, behind interest rates, cyber risk and the economy. Geopolitics could easily leap a spot or two in the 2025 survey—related, in part, to the high probability of increased U.S. tariffs on imports from China.

“Are the products in scope or out of scope?” said the mega-cap treasurer, naming potential issues and questions that arise from tariffs. “What does that mean for demand? If demand is changed, what does that mean for hedging? What does that mean then for the dollar?” And if interest rates rise, “that messes with our capital structure and our funding plans. It messes with the costs of our suppliers and their funding. It just goes on and on to every part of the business.”

A 2024 geopolitical risk survey by WTW showed that 72% of respondents experienced losses due to political risk and nearly half reported a political risk loss in excess of $50 million. The types of losses include currency transfer restrictions or inconvertibility, trade sanctions or import/export embargoes, expropriation, and political violence or forced abandonment.

Suman Chaki, Deutsche Bank

Rethinking liquidity structures. Mr. Chaki is among those who argue that the hard lessons corporates learned after losing access to their funds (and banks) in Russia—and the plunge in the ruble against the dollar—should push more treasurers to question the risks embedded in centralized, global liquidity and funding structures that rely on capital injections and intercompany loans from parents to foreign subsidiaries, especially in growing markets within Asia.

“If, for example, I needed funding in China, what did I do in the past?” Mr. Chaki asked from his office in New York. “I borrowed centrally from Germany or from the U.S., where I had the best pricing, using the relationship banks in my revolving credit facility, and I did intercompany funding. I would raise dollars here and fund when my China entity or my Russian entity needed money. Global treasury was centrally managed because I could get a better cost of funding.”

But in today’s world, that better cost of funding must be weighed against the risk of losing access to funds and—of equal or greater importance—swings in FX markets that damage or destroy the value of cash a corporation holds in local currencies that can drop sharply and unpredictably. “With the uncertainties of how those valuations change, it can really impact your balance sheet globally in the functional currency,” he noted.

New imperatives, local avenues.
 A strategy that will better contain geopolitical and macroeconomic risk is offered by an approach to derisking that Mr. Chaki describes as “local for local,” a phrase that gained use during the pandemic as companies tried to boost supply chain resiliency by producing goods in the same countries where they are sold.

“In the treasury construct, what local for local means is that companies are trying to explore more local avenues to fund their businesses,” he explained. “Treasury is starting to evaluate, ‘How do I better manage my local bank balance sheet with less dependency on the global balance sheet, on global capital markets, on global fund flow.’”

Those avenues are leading some corporates to direct subsidiaries in Asia and elsewhere to explore onshore funding options in local currencies from global or local banks—instead of using intercompany loans or equity injections from the parent. “Geopolitical risk has caused us to pull back from our global funding programs and implement local funding and risk management programs in select geographies,” said the corporate treasurer at one mega-cap multinational. “It’s like a pendulum: the world was globalizing; now it’s deglobalizing and we’re moving along that spectrum.”

This member and others interviewed for this article agreed that navigating both geopolitical and macroeconomic risks requires a support network that includes trusted bankers at institutions with teams around the world who are familiar with varying regulatory and legal requirements in dozens of countries in Asia and beyond, some exposed to geopolitical risk and others where capital controls and restricted currencies are the key challenge, including India.

“This is where a bank like ours with a Global Hausbank strategy, with our global footprint, advisory strength and deep onshore capabilities, is well-placed to support large multinational companies in their journey toward a more optimal strategy and structure in many of these restricted markets around the world,” Mr. Chaki said.

Beyond the geopolitical. 
Discussions of geopolitical risk at NeuGroup meetings among treasurers at dollar-functional companies often lead to talk about countries with restricted currencies where repatriating earnings is highly problematic. The pain is made worse in places including Argentina where local currencies devalue rapidly amid soaring inflation, meaning the corporate is losing money in dollar terms. Then there are countries with relatively stable, restricted currencies and thriving economies but significant regulatory obstacles to repatriating capital.

“I’m less worried about geopolitical crises with India, Indonesia and Vietnam and those places; it’s more the macroeconomic impacts,” said the treasurer of one mega-cap multinational exposed to risks all over the globe.

“For treasury, planning for geopolitical versus macroeconomic risks, and managing those risks, philosophically isn’t any different,” he added. “You’re trying to manage your exposure in those markets through various strategies, including minimizing the amount of capital you’re putting into them. And as you’re generating earnings and converting those to cash, trying to protect the value of that cash, including repatriating as quickly as you can to deal with sovereign risk.”

Mr. Chaki agreed and reiterated that corporates in need of capital should try to include onshore funding options in their financing mix. “Multinationals that better balance offshore and onshore funding, leverage digitization and automation of cross-border intercompany payments and repatriate dividends more frequently can optimize onshore cash in restricted markets. They also reduce macroeconomic risks—and operational trapped cash—in more volatile markets.”

What this means in practical terms may initially deter some corporates but should pay off in the long-term, he said. “In the onshore entities, maybe you leverage up yourself a bit more. Maybe you start paying a little bit more interest cost than you did in the past. Your profitability might even go down in the country, but that will lead to less capital retention. And that’s part of creating a capital structure and legal entity structure in such a way that your setup has less capital ‘stuck’ starting on day one.”

The economic value journey.
 An assistant treasurer at one NeuGroup member mega-cap corporation argued that focusing only on the cost of local funding and nominally higher borrowing rates ignores the losses in economic value a company suffers when a currency depreciates significantly. He cited the example of one country where it made sense for his company to pay double-digit interest costs for local borrowing.

“That was a significantly better economic alternative for the company because when inflation is 20% to 30%, when the currency devalued 30% every year, every dollar that would have been infused is losing value for the parent company. Local financing protects the economic value for the company, even if it is painful in the short-term, from a cost of funding perspective.”

Group treasurers, he said, have a responsibility to encourage regional finance teams to overcome their resistance and work with bankers onshore. “Treasurers have the onus of educating local finance management, showing that the decisions are holistic, keeping in mind the economic value and not just the P&L.”

To do that, he believes that multinationals first need to define minimum liquidity standards for every country—one size does not fit all. This minimum typically consists of working capital plus a small contingency to cover volatility in collections or inventory build, the NeuGroup member said.

Also critical: understanding repatriation costs and local regulations, and preparing financial statements in accordance with local GAAP requirements. At his company, he expects it could take five years “to get the standard level of cash that we need; however, in the end, it’s going to be a meaningful reduction. This is a journey, and we haven’t figured it all out.”

Bring cash home more often.
 Several treasurers interviewed for this article have increased the frequency of dividend payments in response to macroeconomic and geopolitical risk. For example, one now arranges dividends from risky markets by paying them more than once a year to mitigate the risk of devaluation or a change in a country’s dividend policy. Another NeuGroup member’s vision of the future includes four quarterly dividends from restricted countries.

That comes at a cost, part of which is taxes paid on dividends. Also, one treasurer said, “It costs money because you have to go through a closing of your books, do an interim set of financial statements. You have to go to the government and get their approval. It’s a lot of work, but you’re getting your money out faster than you otherwise would.”

But make no mistake, getting money out is time-consuming. One NeuGroup member said it takes his company, on average, nine to 12 months after earnings are generated to dividend cash out of a restricted country because of local regulations, company policies on closings and legal entity structures. “There are still markets in the world where the legal entity structure makes it extremely difficult, if not impossible, to get the money out of the country,” he said.

The importance of banks. 
This member hopes banking partners can help corporations make progress as they strive to move more money out of offshore subsidiaries and manage local financing independently. “I think the number one piece is simplifying the regulatory approvals in the process. Deutsche Bank, for example, has helped us in one country where the regulatory approval is extremely complex. They’ve stepped up to the plate,” he said.

The treasurer of another mega-cap corporate values his relationship with bankers who know their stuff. “What those banks do when they are well connected on the ground there and when they have good operations there is help you solve problems. The other thing is, I want to be the first call when they think something’s coming. So if they think the government is about to do something, I’m hoping they’re going to let me know before it even happens.”

Yet another treasurer put it this way: “We’re always relying upon the banks to understand what the art of the possible is. It may not always fit our risk profile, but what’s the art of the possible?”

One area of interest: cash pools. One member would like banks to work with countries like India and Brazil to allow cash pooling, something available in China and most of the other developed and emerging countries. Some companies weaning themselves from intercompany loans are turning to pools when a subsidiary faces a cash deficit. More broadly, this member would like a “menu of products that are available to repatriate money when dividends are not an option.”

Looking ahead. 
Of course, not every multinational will want or need to jump on the local-for-local bandwagon. “We generate sufficient cash in our local countries to fund operations, so we do not borrow locally,” one mega-cap treasurer said. “We then focus on quickly and efficiently getting cash out or gaining access to that cash and typically have mechanisms to do that.”

Other companies may be hesitant to give up the benefits of scale and lower costs of funding that have developed along with global supply chains and centralized funding structures. “These benefits of scale are what have created some of these risk issues,” another treasurer said. “The way you resolve that undoes the scale, but this can create a cost issue. This is going to be the challenge companies are going to face for the next five to seven years, trying to figure this out. That’s clearly a dilemma.”

Mr. Chaki said that companies with a need for working capital to fund growth in emerging economies that want to reduce their vulnerability to losing access to funds held overseas may need to compromise a bit on scale and cost and borrow some of the money they need locally. “In the past, people were not willing because only tax and cost considerations drove liquidity structures.”

The good news: “In China and elsewhere, access to local currency and options for availing local financing has significantly improved and deepened from a decade ago.” He cited the development of capital markets in countries with restricted currencies like India where the commercial paper market is mature and deep.

Another factor that will help corporates committed to tapping into growth markets in Asia and elsewhere are efforts by countries to make doing business less onerous. “Most of these countries are very keen to ensure that operational cash is a lot more mobile and can move much faster through automation and digitization and simplification of processes. They want to make it easier for global companies to do business, make it easier to do their trade payments cross-border,” Mr. Chaki said. One example: South Korea has improved its cross-border structure through a scheme called consolidated management of funds.

Having trusted global banks supporting them can only help corporates make the most of the evolving landscape amid geopolitical and macroeconomic risks, he said. “Deutsche Bank’s strong presence in many of these markets, our cross-border payments and FX capabilities, and significant investments in digitization will help our clients take complete, full advantage of these regulatory developments.”

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A Treasury Dashboard Drives Better Working Capital Management

A member leads a cross-functional, strategic digital transformation project to improve working capital management.

Treasury at one multinational corporation is leading a digital transformation project to improve working capital management. At the center of the initiative is a new dashboard, still in its early stages, described in detail at a recent meeting of NeuGroup for EMEA Regional Treasury. Here is a brief overview of the dashboard prepared by the presenter for NeuGroup Insights.

Starting point: aged AR. 
Treasury began the project by targeting accounts receivable (AR) management and reducing so-called aged AR—unpaid, overdue invoices. Before the dashboard, finance teams had to manually extract and analyze internal data in Excel, which was inefficient.

  • To address this, the team first focused on visualizing aged AR in real time, using a technology transformation team to integrate relevant data into a dashboard-supported data lake.
  • The dashboard automates the previously manual process, allowing teams to quickly determine which clients to follow up with on invoices, eliminating the need to export data to Excel.

A member leads a cross-functional, strategic digital transformation project to improve working capital management.

Treasury at one multinational corporation is leading a digital transformation project to improve working capital management. At the center of the initiative is a new dashboard, still in its early stages, described in detail at a recent meeting of NeuGroup for EMEA Regional Treasury. Here is a brief overview of the dashboard prepared by the presenter for NeuGroup Insights.

Starting point: aged AR. 
Treasury began the project by targeting accounts receivable (AR) management and reducing so-called aged AR—unpaid, overdue invoices. Before the dashboard, finance teams had to manually extract and analyze internal data in Excel, which was inefficient.

  • To address this, the team first focused on visualizing aged AR in real time, using a technology transformation team to integrate relevant data into a dashboard-supported data lake.
  • The dashboard automates the previously manual process, allowing teams to quickly determine which clients to follow up with on invoices, eliminating the need to export data to Excel.
  • Cross-functional workshops with stakeholders ensured the tool would track key metrics.
  • The dashboard is enhancing access to real-time data for quicker collections, improving working capital. The team has already reduced aged AR significantly.

Collaboration and development. Treasury leads the tool’s development with cross-functional teams, with regular feedback sessions to ensure continuous improvement. Treasury’s strategic leadership role ensures effective collaboration across departments.

  • Weekly calls with senior sales and finance leaders allow for real-time discussions on large transactions, helping identify strategies to accelerate cash flow. The dashboard has improved working capital and free cash flow management.
  • The team holds quarterly meetings to update regional CFOs, general managers and other key users, maintaining momentum and driving the tool’s evolution.

Future source of truth. Treasury’s vision is to create a single source of truth by expanding the dashboard into a comprehensive system covering all treasury areas, including cash flow forecasting and scenario planning. AI will be integrated to provide real-time insights, such as contract analysis.

  • The tech transformation leader estimates the company is only 10% of the way through its journey.
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To RMIS or not to RMIS: Risk Managers Weigh Tech Tools

Members weigh the pros and cons of implementing a risk management information system, which aggregates a company’s risk data.

Companies with significant data needs and large teams are turning to risk management information systems (RMIS) to manage an ever-growing list of risks. These tools can offer solutions for corporate risk managers looking to improve processes, manage data and support better decision-making.

  • RMIS platforms provide centralized systems to track insurance claims, policies and risk exposures, which can be essential for coordinating across teams and global offices. But companies with a less complex risk profile say it might be more trouble (and cost) than it’s worth.
  • That was among the key takeaways at the inaugural meeting of NeuGroup for Insurance and Risk, where some risk managers said they found their RMIS invaluable, while others saw limited benefits, when considering the cost and integration challenges.

Members weigh the pros and cons of implementing a risk management information system, which aggregates a company’s risk data.

Companies with significant data needs and large teams are turning to risk management information systems (RMIS) to manage an ever-growing list of risks. These tools can offer solutions for corporate risk managers looking to improve processes, manage data and support better decision-making.

  • RMIS platforms provide centralized systems to track insurance claims, policies and risk exposures, which can be essential for coordinating across teams and global offices. But companies with a less complex risk profile say it might be more trouble (and cost) than it’s worth.
  • That was among the key takeaways at the inaugural meeting of NeuGroup for Insurance and Risk, where some risk managers said they found their RMIS invaluable, while others saw limited benefits, when considering the cost and integration challenges.

A centralized system. Systems like Riskonnect and Origami are frequently cited for their ability to consolidate extensive amounts of risk data in one place, making it accessible and manageable. One member, whose company moved to Riskonnect from a platform provided by their insurance broker, described this centralization as transformative:

  • They said, “We moved from a broker system because we didn’t want to be tied to a broker. Initially, we used it for data collection, then the efficiency of it grew. Now we also measure insurance counterparty risk in there and have integrated it with other functional teams around the company.”
  • “You need up-front effort. It takes time. But if you invest the time, I would say it’s definitely worth it,” the member added.

Automation opportunities. For many, RMIS platforms also improve operational efficiency, allowing members to automate tasks and focus on strategic work. For example, some companies integrate their RMIS with their ERP systems.

  • One risk manager uses Riskonnect to manage their captive insurance program, explaining that it can save considerable time by replacing spreadsheets and manual tracking.
  • Another member added, “In my past company, we were with Origami. It was very flexible and transferring data from it was good. It was our system of record for our captive, so that the captive could be audited.”
    • “You really need to define what you are going to do with this and why.”

Complexity calculation. However, for smaller teams with simpler needs, a RMIS may not justify the cost. For companies with a more contained footprint and a centralized corporate structure, existing tools like Excel and Smartsheets, combined with direct data access from carriers, may provide sufficient solutions without the high implementation costs.

  • One member, whose team had nixed its RMIS because they only use one broker, shared, “We couldn’t find a problem we were solving for. We’re a small team, and we communicate well.”
    • The member added, “If we go to a multiple broker model, then maybe a RMIS system makes more sense to manage the information.”
  • Integration challenges may also deter some companies from investing in a RMIS. One member said, “Most RMIS platforms don’t connect well with other systems, but some insurtech companies are trying to solve that.”

A middle ground. Alternatives to traditional RMIS may be a middle ground for smaller teams needing centralized data without the extensive setup that a traditional RMIS requires. One newer tool discussed by members, LineSlip, offers a searchable database for risk data and policy management. Like other competitors in the insurtech space, it offers users more control over data access. LineSlip and others in this market, including one called Big Ticket, are using AI in their tools.

  • One member with experience with one of these tools warned that “any nuances in insurance policy was a time-suck,” in part, because the AI had difficulty understanding the meaning of policy language.
  • That said, another member who had familiarity with the same tool added: “They have built their product out significantly. And it allows you to see your portfolio in one place from wherever you are.”

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