Insights

Peer-Validated Insight Distilled by NeuGroup

Sign up to get NeuGroup Insights by email—and share what you learn.

Seeing Risk Through an Auditor’s Sharp Lens: Bill Brewer of BMS

Bristol Myers Squibb’s Bill Brewer on what treasury can learn about risk with an auditor’s mindset and perspective.

Effective financial risk management is a fundamental component of how treasury delivers value to a business. And treasury’s skills managing risk have been put to the test repeatedly and profoundly in the last few years amid the pandemic, spiking interest rates, bank failures, wars and more.

At Bristol Myers Squibb, treasury has risen to the challenge thanks in part to the expertise of a financial risk management (FRM) team. It’s a small group that focuses on foreign exchange and interest rate hedging, commodities exposure, counterparty risk and the company’s short-term cash portfolio.

  • In the newest episode of the Strategic Finance Lab podcast live now on Apple and Spotify, BMS’ Bill Brewer, a member of the FRM team, shares insights with NeuGroup’s Justin Jones on the risk mindset he developed in previous roles within audit, and how that informs his current approach.

Bristol Myers Squibb’s Bill Brewer on what treasury can learn about risk with an auditor’s mindset and perspective.

Effective financial risk management is a fundamental component of how treasury delivers value to a business. And treasury’s skills managing risk have been put to the test repeatedly and profoundly in the last few years amid the pandemic, spiking interest rates, bank failures, wars and more.

At Bristol Myers Squibb, treasury has risen to the challenge thanks in part to the expertise of a financial risk management (FRM) team. It’s a small group that focuses on foreign exchange and interest rate hedging, commodities exposure, counterparty risk and the company’s short-term cash portfolio.

  • In the newest episode of the Strategic Finance Lab podcast live now on Apple and Spotify, BMS’ Bill Brewer, a member of the FRM team, shares insights with NeuGroup’s Justin Jones on the risk mindset he developed in previous roles within audit, and how that informs his current approach.
  • Earlier in his career, Mr. Brewer was a certified public accountant who spent time at Deloitte, and joined BMS initially in internal audit. In the podcast, he says his experience in IA gave him a unique view of the company’s different functional areas, helping him to bridge the gap of working with business units outside of treasury.

Bill Brewer
Financial Risk Management
Bristol Myers Squibb

Intuitive edge. In the podcast, Mr. Brewer emphasizes the need for treasury teams to always innovate, as well as ensuring risk controls don’t create operational risks. He also shares about the risk-mitigating effect of what he calls “intuitive processes.”

  • “When you’re able to seamlessly hand off a process to somebody else who doesn’t do it often, that’s a hallmark of something that’s standardized and intuitive,” he says.
  • In addition to building resilience, an intuitive process also facilitates smoother automation initiatives, he adds. “Anything that kind of frees up the team’s time to focus on more strategic opportunities is a welcome idea.”
Read More Read Less
Contact Us

NeuGroup Members on 3 Fed Rate Cuts in 2024: Fuhgeddaboudit!

In a late March poll, Capital Markets members expected one, two or no cuts—a view increasingly held by the market.

On the same day in late March that the Federal Reserve signaled it still expected to cut interest rates three times this year, almost none of the members of NeuGroup for Capital Markets polled at their spring meeting sponsored by HSBC believed that would happen. Call them prescient, perhaps: the poll came weeks before March jobs data and Wednesday’s hot inflation report pushed more investors and economists to revise expectations for the number and timing of cuts.

One cut or two? Or none? 
As the graphic below shows, 96% of members on March 20 said they do not expect the Fed to reduce interest rates by more than 50 basis points this year. Assuming each cut is 25 basis points, one-third said they expect one cut, 44% expect two and just 4% expect three cuts.

In a late March poll, Capital Markets members expected one, two or no cuts—a view increasingly held by the market.

On the same day in late March that the Federal Reserve signaled it still expected to cut interest rates three times this year, almost none of the members of NeuGroup for Capital Markets polled at their spring meeting sponsored by HSBC believed that would happen. Call them prescient, perhaps: the poll came weeks before March jobs data and Wednesday’s hot inflation report pushed more investors and economists to revise expectations for the number and timing of cuts.

One cut or two? Or none? 
As the graphic below shows, 96% of members on March 20 said they do not expect the Fed to reduce interest rates by more than 50 basis points this year. Assuming each cut is 25 basis points, one-third said they expect one cut, 44% expect two and just 4% expect three cuts.

  • The federal funds rate today is in a range of 5.25% to 5.5%, so three cuts would bring it down to 4.5% to 4.75%.
  • Perhaps most striking is that 19% of those polled that day said they expected no cuts at all in 2024. That possibility generated headlines last week when Minneapolis Federal Reserve Bank President Neel Kashkari said if inflation data continues to move “sideways,” the Fed may not need to cut rates.

Why it matters. When and how much the Fed cuts matters to corporates for a variety of reasons, including decisions on debt issuance, liability management, cash investment and how much of their debt is fixed- or floating-rate. Indeed, during the meeting’s projects and priorities session, many members listed debt composition as a key focal point.

  • One company is reducing what was a 35% exposure to floating-rate debt that inflicted financial pain through rising interest expense when rates jumped. Many more members want to reduce exposures to fixed rates at or near 100%, including one that now has board approval to swap to floating.

Cuts and inflation. In terms of timing, more than two-thirds (70%) of members polled said they don’t expect the Fed to start cutting rates until the consumer-price index falls between 2.5% and 3% year-over-year. About a quarter of members (26%) said the Fed won’t move until CPI is below 2.5%.

  • We learned this week that CPI rose 3.5% in March from a year earlier, more than expected. The Fed’s target for inflation is 2% as measured by the personal-consumption expenditures price index.

Bond yields. Wednesday’s inflation data sent the yield on the 10-year Treasury to its highest level since November, topping 4.5%. As the graphic above shows, 88% of members polled in March said the 10-year yield will be between 3.75% and 5% by the end of 2024. That includes more than 50% of members who said they expect rates to be at 4.25% or higher.

Perspective: don’t play the market. A treasurer at the meeting made the important point that treasury teams should not let their views on the direction of rates delay decisions or actions necessary for the company’s financial health. The jump in interest rates starting in 2022 showed that “you don’t want to get caught betting against the market knowing you have risk you need to fund,” he said.

  • “Take risk off the table as soon as you have it; don’t play the market. Keep the company safe and secure.”
Read More Read Less
Contact Us

Optimizing FX Hedging: Leveraging Technology for Cost Reduction

Feeling pressure to cut costs, FX leaders are leveraging tools to determine which currency pairs to hedge and when.

Reducing the cost of FX hedging requires a multifaceted approach that integrates technology, data analytics and collaboration across various business functions. With the right strategy and tools, companies can mitigate risks effectively while reducing expenses in an increasingly volatile global marketplace.

  • At last month’s summit meeting of NeuGroup for Foreign Exchange sponsored by Chatham Financial, FX managers emphasized the need for hedge optimization tools like ChathamDirect and AtlasFX to streamline hedging processes and improve decision-making.
  • “Tech helps you get smarter and make better decisions, whether it’s reducing VaR (value at risk) or netting exposures,” Chatham Financial’s Greg Deveney said in the meeting. “Using models and having a really good grasp on data is super important.”

Feeling pressure to cut costs, FX leaders are leveraging tools to determine which currency pairs to hedge and when.

Reducing the cost of FX hedging requires a multifaceted approach that integrates technology, data analytics and collaboration across various business functions. With the right strategy and tools, companies can mitigate risks effectively while reducing expenses in an increasingly volatile global marketplace.

  • At last month’s summit meeting of NeuGroup for Foreign Exchange sponsored by Chatham Financial, FX managers emphasized the need for hedge optimization tools like ChathamDirect and AtlasFX to streamline hedging processes and improve decision-making.
  • “Tech helps you get smarter and make better decisions, whether it’s reducing VaR (value at risk) or netting exposures,” Chatham Financial’s Greg Deveney said in the meeting. “Using models and having a really good grasp on data is super important.”

A new way to look at trades. One member presented how his team tackled a complicated balance sheet hedging program of nearly 80 currency pairs using the advanced analytics and dashboards available in ChathamDirect.

  • Managing risk for legal entities with large amounts of activity and complicated tax structures presented significant challenges and costs. On a regular basis, the program required up to 800 separate cross-currency trades per hedging cycle.
  • To streamline the approach, the member created a dollar-based view within ChathamDirect by “breaking apart” the cross-currency exposures into two sides, each one tied to the US dollar, then trading the net positions in back-to-back trades. This significantly reduced the number of street-facing trades necessary to hedge the same amount of risk; and it took more obscure (and expensive) trades like Russian ruble/Danish krone or Turkish lira/Hungarian forint out of the equation.
  • After trades are completed, the system “folds” them back into their respective cross-currency pairs and pushes the internal back-to-back trade details down to the business unit for settlement and accounting. This has evolved into an automatic process that pushes hundreds of trades efficiently to the appropriate entities.
  • Implementation of this streamlined strategy has led to a 40% reduction in trade volume for the corporate, cutting approximately $400 million in notional trading amounts each month and yielding significant savings in time, resources and execution costs.

Finding the point of diminishing returns. In the same session, one member whose company has 200 legal entities and hedges 30 currencies shared insight into his FX strategy, aided by internally built dashboards that connect to AtlasFX and Goldman Sachs’ Capital Markets Atlas tool.

  • These dashboards allow the team to experiment with different hypothetical hedging instruments or ratios for multiple currencies, and plot those on an efficient frontier that compares the cost of carry to VaR.
    • Cost of carry reflects a hedging cost for the corporate, and is derived from the difference of the forward and spot rates, represented as a percentage of the spot rate. The cost of carry can be either positive or negative and is a function of two factors: interest rate differential between the currencies, and cross-currency basis (the difference in the cost of borrowing one currency versus another).
  • For example, in the chart below, the two dots represent different strategies for hedging the company’s currency exposures: the strategy represented by the orange dot features higher hedging ratios, including a hedge of a small percentage of the company’s Argentine peso exposure. The green dot represents a strategy with slightly lower hedging ratios, but hedges none of the company’s ARS exposure.

While there is less unhedged VaR with the orange strategy, it is also noticeably higher on the cost side as well. This scenario analysis allows the FX team in treasury to choose the most cost-effective manner of hedging various exposures, and decide which currencies—like ARS—the company prefers to leave unhedged.

  • “What’s really proving to be the cutting edge is knowing how much risk reduction is actually added for adding a currency pair,” Mr. Deveney said in response to the member’s presentation. “How can you reduce that risk, and how can you minimize cost in light of your risk profile? You have to have the tech that makes decision-making seamless.”

Following the session, NeuGroup peer group leader Julie Zawacki-Lucci said both members are blazing trails for FX best practices. “If you have large exposures to emerging markets and high cost of carry currencies, it’s well worth the cost in tools to help determine hedge execution optimization,” she said. “You can’t reduce the cost of hedging without the proper analytical tools.”

Read More Read Less
Contact Us

A Treasurer Devoted to Balancing Service and Financial Strength

Sheila Quintus is a believer in service and treasury’s critical role in enabling Medtronic to fulfill its medical mission.

Medtronic treasurer Sheila Quintus has a deeply-held belief in service that makes working at a medical device and technology company whose primary mission is to contribute meaningfully to human welfare a natural fit. She sees treasury’s purpose as connecting the fulfillment of Medtronic’s central mission with the need to deliver strong financial performance that will support growth.

  • In a new NeuGroup video you can watch by hitting the play button below, Ms. Quintus says that recent emphasis by executive leadership on prioritizing both mission and performance when making decisions and taking action plays directly to treasury’s strength. “That’s been a really great and subtle shift that really supports the treasury function,” she says.
  • “What I do and the rest of my team does is intersect with the business, allowing us to kind of repeat that mantra and make the connection,” she adds. “It’s the most important thing that treasury does.”

Ms. Quintus has nearly 25 years of experience at healthcare companies, having spent more than a decade at Merck before moving to Medtronic as assistant treasurer in 2010. In 2018, she took a leave of absence to devote time to her family and received the full support of the treasurer and the company. Medtronic named her treasurer in June 2023.

  • Ms. Quintus ties the support and opportunities she’s received at Medtronic to six tenets enshrined in its mission. These include the recognition of all employees’ personal worth (No. 5) and maintaining good citizenship as a company (No. 6). “That has really deepened my connection to the company,” she says in the video.
  • Born and raised in Minnesota, Ms. Quintus traces her personal belief in the value of service to her parents (her mother was an elementary school teacher, her father a physical therapist) and her Christian faith. Service and philanthropy, she says, “underlie my thinking and my actions.”

Sheila Quintus is a believer in service and treasury’s critical role in enabling Medtronic to fulfill its medical mission.

Medtronic treasurer Sheila Quintus has a deeply-held belief in service that makes working at a medical device and technology company whose primary mission is to contribute meaningfully to human welfare a natural fit. She sees treasury’s purpose as connecting the fulfillment of Medtronic’s central mission with the need to deliver strong financial performance that will support growth.

  • In a new NeuGroup video you can watch by hitting the play button below, Ms. Quintus says that recent emphasis by executive leadership on prioritizing both mission and performance when making decisions and taking action plays directly to treasury’s strength. “That’s been a really great and subtle shift that really supports the treasury function,” she says.
  • “What I do and the rest of my team does is intersect with the business, allowing us to kind of repeat that mantra and make the connection,” she adds. “It’s the most important thing that treasury does.”

Ms. Quintus has nearly 25 years of experience at healthcare companies, having spent more than a decade at Merck before moving to Medtronic as assistant treasurer in 2010. In 2018, she took a leave of absence to devote time to her family and received the full support of the treasurer and the company. Medtronic named her treasurer in June 2023.

  • Ms. Quintus ties the support and opportunities she’s received at Medtronic to six tenets enshrined in its mission. These include the recognition of all employees’ personal worth (No. 5) and maintaining good citizenship as a company (No. 6). “That has really deepened my connection to the company,” she says in the video.
  • Born and raised in Minnesota, Ms. Quintus traces her personal belief in the value of service to her parents (her mother was an elementary school teacher, her father a physical therapist) and her Christian faith. Service and philanthropy, she says, “underlie my thinking and my actions.”
Read More Read Less
Contact Us

Strategic Thinking: How Paths to CFO and CFO Roles Are Evolving

Promoting people in finance who want strategic roles can be challenging if they find some CFO duties unappealing.

By Joseph Neu

During the first peer group meetings of NeuGroup’s spring season, I have been listening intently for signals indicating how finance functions are changing course. One trend may be the strengthening of strategic finance roles under the CFO. This development arises in part because not everyone who is drawn to strategic, value-enhancing roles wants responsibility for everything in a CFO’s job description—transactional controls and compliance, for example.

Promoting people in finance who want strategic roles can be challenging if they find some CFO duties unappealing.

By Joseph Neu

During the first peer group meetings of NeuGroup’s spring season, I have been listening intently for signals indicating how finance functions are changing course. One trend may be the strengthening of strategic finance roles under the CFO. This development arises in part because not everyone who is drawn to strategic, value-enhancing roles wants responsibility for everything in a CFO’s job description—transactional controls and compliance, for example.

  • Of course, a growing emphasis on value creation has boosted the allure of the C-Suite for some members. They include FP&A leaders who, like treasurers, enjoy the more strategic path their roles have taken. At one recent meeting, we encouraged FP&A leaders to think about skills and mindsets needed to step up to the CFO role.
  • One session examined the evolution of the CFO’s position, moving from a transactional focus favoring executives with heavy controllership experience to one well suited to value creators with insight and analytical superpowers, favoring those who’ve come up through the FP&A ranks.

Is there another way to advance? But given that not everyone wants the full spectrum of CFO responsibilities, what else could heads of FP&A do next in their careers? As they search for answers, CFOs seeking help on value creation may benefit from considering a career path that elevates team members who excel in this area and want to focus on it.

  • One potential solution is to continue to elevate their titles from VP to SVP to EVP and even create a C-suite role of chief planning and analysis officer or chief strategy officer.
  • A similar career path should be considered for those in treasury who want to be less transactionally and operationally focused. The same executive-level solution could apply. Indeed, CFOs have asked us for titles of treasurers so they can benchmark how many are VPs vs. SVPs or EVPs.
  • Also, could another C-suite role be designed, akin to a chief risk officer or chief of capital?

Reviewing rotations. One recent treasury meeting highlighted a change in one member’s rotational program to encourage assistant treasurers to become business CFOs, and business CFOs to become ATs. This pushes down the strategic finance rotations increasingly seen at the treasurer level. (The path of AT to business CFO was pioneered years ago by the treasurer’s office at General Motors.)

  • The mutual advantage is pushing treasury value creation drivers into the business so business leaders learn to value them; and it brings business finance leaders into treasury to learn and use value-added skills when they return to CFO jobs.
  • Eventually, these business-level CFOs with treasury experience and ATs with business CFO experience will need to learn to love both being transactional focused and value creators, or they too will experience challenges to advance.

Regional centers. The other area where treasury-CFO role combinations can make sense is in regional centers, especially co-located with a regional headquarters, or in countries where regulations or other restrictions prevent them from being effectively managed centrally.

  • Regional treasurers in Europe or APAC (or North America for non-US MNCs) can be given CFO responsibilities and serve as deputy regional CFOs.
  • Local treasurers in regulated or restricted currency countries like Argentina may also have broader finance director/country CFO responsibilities to help justify the extra local finance head count.
  • Arguably, this does an even better job of pushing treasury value creation drivers into the business since regional centers or in-country entities are often closer to the periphery business initiatives than corporate. It also exposes treasury professionals to CFO skill sets, including FP&A and, of course, transactional reporting, controls and compliance responsibilities.
  • Treasurers who lead tax are also prone to give these regional or local team members tax responsibilities in addition (or instead).

Decentralized org models. Pushing value creation out to the business front lines is behind the thinking of some companies to undo the centralization of SG&A, including finance. Pushing decisions out to the periphery makes firms more agile, the thinking goes, making it worth sacrificing the efficiencies and controls of centralization.

  • Companies that decentralize in this way must also undo some specialization and deploy new CFO types who also can be effective at treasury and FP&A, while also being transactional reporting and compliance specialists.

The impact of AI. One constraining factor on rotational programs through specialty finance areas like treasury or tax is that so much specialized knowledge is needed to be highly effective. A treasurer or tax director who has a very knowledgeable team or even a single senior direct report can get away with not having deep knowledge for a rotational assignment lasting several years. Rotating too many team members at once could disrupt this.

  • Specialty knowledge, however, could be documented and learned by AI assistants, who could in turn support strategic finance types as they rotate along. This could allow more team members to rotate or may reduce the need for future finance leaders to spend as much time in as many finance roles.
  • AI might also excel at being a strategic generalist, as much or more than being a specialist; so specialists may be needed as a control on AI decision-making, with fewer CFO-types needed.
  • AI could impact CFO career paths as well by handling the transactional pieces that people who like strategic, value-enhancing paths prefer to do without. Hence, the controller bias in the path to CFO could evolve away since AI (with some human specialist control points) may handle all of that for CFOs in the near future.

It is probably too early to say how this will all play out.

Read More Read Less
Contact Us

Treasury 4’s Mission: Unlock the Power of Data for Finance Teams

Fintech founders Ed Barrie, Steve Helmbrecht and Nathan Brown explain what compelled them to reunite.

The most sophisticated finance and treasury teams are ahead of the curve in turning heaps of data into actionable insights, often with the aid of visualization tools that tell a story better than just facts and figures. A fintech called Treasury4 wants to make data-driven decision-making more accessible than ever for corporates of any size.

In the newest episode of NeuGroup’s Strategic Finance Lab podcast—available now on Apple and Spotify, and sponsored by Treasury4—NeuGroup founder and CEO Joseph Neu speaks with the fintech’s three founders about how the company’s software solutions can help treasurers and other finance professionals make better use of data.

Fintech founders Ed Barrie, Steve Helmbrecht and Nathan Brown explain what compelled them to reunite.

The most sophisticated finance and treasury teams are ahead of the curve in turning heaps of data into actionable insights, often with the aid of visualization tools that tell a story better than just facts and figures. A fintech called Treasury4 wants to make data-driven decision-making more accessible than ever for corporates of any size.

In the newest episode of NeuGroup’s Strategic Finance Lab podcast—available now on Apple and Spotify, and sponsored by Treasury4—NeuGroup founder and CEO Joseph Neu speaks with the fintech’s three founders about how the company’s software solutions can help treasurers and other finance professionals make better use of data.

Ed Barrie, Chief Product Officer

One of the founders and Treasury4’s chief product officer is a longtime friend of NeuGroup and a former member of several of our peer groups: Ed Barrie. As Mr. Neu says, Mr. Barrie has treasury—and deep knowledge of treasury technology—in his DNA. In the podcast, you’ll hear Mr. Barrie say while companies may not use identical systems, they’re dealing with lots of similar data and systems.

  • “So Instead of having these separate siloed systems where you have to go struggle to get that data out of, are there better ways to be able to integrate it to drive better understanding, better visibility and transparency for the organization?” he asks. (Yes is the answer!)
  • Mr. Barrie has shared his extensive expertise on how treasury teams can leverage technology and data with peers throughout his career. That includes stints in treasury at Microsoft, Tableau Software and Itron, which provides technology solutions to utilities.
Steve Helmbrecht
President & CEO
Nathan Brown
Chief Analytics Officer

Itron is where Mr. Barrie met his two co-founders. Steve Helmbrecht, former EVP and CFO at Itron, is president and CEO of Treasury4. Another Itron veteran who has extensive finance and treasury experience, Nathan Brown, is the fintech’s chief analytics officer—and a former NeuGroup member.

Modules. 
Treasury4 currently has two modules available: Entity4, a legal entity management tool which covers all aspects of a company’s entity data for treasury, tax, legal and other functions; and Cash4, which automates daily balance and transaction reporting to enable improved decision-making.

  • Two other modules are in development: Forecast4, which consolidates data from external systems to drive more precise cash flow forecasting; and Payments4, a secure payments hub that facilitates treasury wire payments via APIs.

Please listen to the podcast now to hear the three founders discuss these tools, as well as Treasury4’s journey from inception—with a vision tracing back to Mr. Barrie’s experience as treasurer at Tableau, where he embarked on a mission to unravel the intricacies of treasury data.

Read More Read Less
Contact Us

A Shared Vision for Diverse-Owned Firms: Verizon and Amazon

Treasury leaders at the two companies urge peers to aim high in providing meaningful opportunities to diversity firms.

In the last several years, treasury team leaders at NeuGroup member companies Verizon and Amazon have stood out for their determination to provide meaningful opportunities and fee income in capital markets transactions to banks and brokerage firms with women, Black, Latino and veteran owners. These members have also been outspoken about how their actions in this sphere of influence align with wider corporate goals.

  • A recent session at the first half peer group meeting of NeuGroup for Mega-Cap Treasurers made clear that these leaders remain committed to promoting diversity as they encourage other companies to follow their example in giving smaller, diverse-owned firms significant roles in transactions—along with rising shares of the fee “wallets” managed by treasury.
  • Amazon treasurer Tony Masone said treasury’s support of diverse-owned firms “is an extension of what our values are at Amazon today,” adding, “my mission is to help create finance opportunities for someone that might not be able to get those opportunities.”

Treasury leaders at the two companies urge peers to aim high in providing meaningful opportunities to diversity firms.

In the last several years, treasury team leaders at NeuGroup member companies Verizon and Amazon have stood out for their determination to provide meaningful opportunities and fee income in capital markets transactions to banks and brokerage firms with women, Black, Latino and veteran owners. These members have also been outspoken about how their actions in this sphere of influence align with wider corporate goals.

  • A recent session at the first half peer group meeting of NeuGroup for Mega-Cap Treasurers made clear that these leaders remain committed to promoting diversity as they encourage other companies to follow their example in giving smaller, diverse-owned firms significant roles in transactions—along with rising shares of the fee “wallets” managed by treasury.
  • Amazon treasurer Tony Masone said treasury’s support of diverse-owned firms “is an extension of what our values are at Amazon today,” adding, “my mission is to help create finance opportunities for someone that might not be able to get those opportunities.”

Fees and beyond. At the group’s meeting in New York, Mr. Masone and Verizon assistant treasurer Ron Simon discussed their views as well as data that included the top 20 debt issuers ranked by the percentage of fees paid to diverse-owned firms in 2023 (see table below). The shaded fields show banks.

  • The fee table is an update of one, also provided by Ramirez & Co., shown to peers by Verizon treasurer Scott Krohn two years ago and featured in NeuGroup Insights. As Mr. Krohn emphasized in 2022, Verizon’s goal of helping diverse-owned firms grow goes well beyond cutting checks and includes allocating them bonds in deals that will help build their distribution franchises.
    • “There’s a call to action, with a role to play in providing a meaningful opportunity for D&I firms whether you’re an issuer, large bank or fixed income investor,” he said.

Progressive assignments. Mr. Simon explained that Verizon initially included diverse-owned firms in bond deals as co-managers that receive fees and in some cases are allocated bonds. That gives a corporate a chance to evaluate the firm and its distribution capability. Flash-forward several years and Verizon today is using some firms as joint book runners that earn fees equal to big Wall Street firms in some deals, including two recent green bond issuances by Verizon.

  • “Those that have a chance to be joint leads in a deal get a chance to expand their network and show that they’re able to more than competently handle these deals,” he said. And the firms help the corporate broaden its investor base by bringing in small or medium-sized fund managers. “Helping the DEI firms expand becomes the gift that keeps on giving.”

Beyond bonds. Amazon today uses 12-diverse-owned firms for a variety of transactions, including bond underwriting, commercial paper issuance, share buybacks and investment management. (The company did not issue debt in 2023; in 2022, it ranked No. 8 on the debt issuance fee list, with 15.4% of total fees paid to diverse-owned firms.)

  • Other ways corporates use diverse-owned firms include liability management, asset-backed securitization programs and investments for pension plans.
  • One member whose company doesn’t often issue debt also mentioned supply chain finance programs that provide funding allowing corporates to make early payments to suppliers, including businesses owned by minorities. “There are other avenues,” he said.

Read More Read Less
Contact Us

Navigating a Data Maze: Performance Metrics for FX Hedges

NeuGroup members debate the best methods to measure performance of foreign exchange hedges.

Amid the surge of finance teams embracing data and analytics to enhance decision-making, FX managers are harnessing data to measure their hedging program’s ability to mitigate risk for scores of currencies, identify strategies to manage exposures, and effectively communicate pre- and post-trade results to internal and external stakeholders.

  • At a recent summit meeting for members of NeuGroup for Foreign Exchange sponsored by Chatham Financial, a majority of members identified finding the best metrics and KPIs for their hedging programs as a top priority—vital for demonstrating the program’s value to the company.
  • One member said that metrics which effectively tell the story of an FX hedging program provide our “testament to bringing value and reducing earnings volatility.”

NeuGroup members debate the best methods to measure performance of foreign exchange hedges.

Amid the surge of finance teams embracing data and analytics to enhance decision-making, FX managers are harnessing data to measure their hedging programs’ abilities to mitigate risk for scores of currencies, identify strategies to manage exposures, and effectively communicate pre- and post-trade results to internal and external stakeholders.

  • At a recent summit meeting for members of NeuGroup for Foreign Exchange sponsored by Chatham Financial, a majority of members identified finding the best metrics and KPIs for their hedging programs as a top priority—vital for demonstrating the program’s value to the company.
  • One member said that metrics which effectively tell the story of an FX hedging program provide our “testament to bringing value and reducing earnings volatility.”
    • “Everything we are doing is a value-add, and there’s an appreciation when management can [actually] see the value-add,” another member responded.

Floors and forwards. One member said his company adopts a multi-pronged approach to assessing the performance of hedges involving meticulous measurement against expected outcomes set by an FX floor strategy, which sets predefined levels or thresholds below which FX rates are not expected to fall.

  • The strategy requires detailed calculations to compare hypothetical hedges the company could have made. Measuring performance against a FX floor strategy assesses whether their risk mitigation efforts effectively prevented losses when FX rates approached or dropped below these predetermined levels.
  • Because this company uses a combination of forward and option trades in their program, “we also measure against a hypothetical purely FX forward strategy,” he said. “And then, on a monthly basis, we meticulously analyze our FX P&L. If we’re effective, it shouldn’t exhibit significant fluctuations.”

Mid-hedge evaluation. Another member’s team analyzes hedge performance monthly, using metrics like the average hedged rate compared to spot rates over time, and considers whether to restructure hedges for larger and more significant exposures. “Though we probably only have a half dozen materially exposed currency pairs at most at any point.”

  • He starts by measuring the percentage of the currency that remains exposed to market fluctuations after a hedge. The team then analyzes where this protection lies in relation to the current spot rate and assesses potential losses.
  • He said this helps to evaluate whether the team has adequately protected against adverse outcomes, balanced against what level of risk exposure remains, before it’s too late.

On target. One member whose FP&A team helps set targets for the FX program, said goals for KPIs are critical, because a clear objective is necessary to gauge performance successfully. “But I’m glad to not be included in that process; we’re not in the business of giving targets,” he said. For multiple other members, benchmarks are set by leadership, or for one member, a quarterly capital risk committee comprising the CFO, chief risk officer, compliance team members and more.

  • A member, who only hedges external cash flows, has a KPI mandate set directly by the CFO: to offset any gain or loss by at least two-thirds. Gains and losses related to hedging activities are calculated by comparing effective hedge rates to budgeted FX rates that were set at the start of the fiscal year. Each month, the team examines where their gains and losses fall within the two-thirds threshold and make decisions as to how to hedge their remaining exposures accordingly.
  • Another member at a tech company responded that he uses option collars to manage risks, with an aim to offset approximately 40-50% of downside risk while still allowing some natural upside potential.

The balance of effective and efficient. For one member, the directive from senior management is to remain conservative on hedge ratios—or the percentage of potential currency volatility the company actually hedges—but aim for net-zero impact of currency fluctuations. “That obviously doesn’t happen,” he said, leaving the team responsible for communicating why any currency fluctuations remain.

  • “Where we look at it, from a KPI reporting perspective, is to try and attribute back the causes, which can be multifaceted,” he said. “From carry levels being very different, to hedges becoming very expensive to put on, to a view of exposures that is out of date, to a forecast being incorrect. So we need to pull and track all of these ahead of time.”
  • He added that, on the cash flow side, his team is responsible for investigating reasons for asymmetry between actuals and forecasts, considering factors like layering hedges and movements in forward rates. He said that potential obstacles include changes in market values, forward points or long-dated exposures.
  • The member also said that having data on hand before hedging can be equally useful. “Sometimes you can show management that a portion of exposure is de minimis, he said. “And it doesn’t make sense to hedge currency that’s not a significant portion of the balance sheet.”

People management: engaging stakeholders. One member discussed the role of comprehensive dashboards in facilitating engagement with management. “You need to be able to stand behind what you are doing, and show that you are adding value,” he said. “It’s helpful to get ahead of them and have dashboards with the metrics they care about—once they can see it and slice and dice, management gets more involved.”

  • Another challenge highlighted by a member is the need to communicate effectively with investors, who often focus solely on the bottom-line impact of currency fluctuations.
  • “The reality is, investors see a number, an impact related to currency, and they don’t understand nuances of accounting and legal entity structure—currency can be a driver of stock price perception,” he said. “Educating investors on the intricacies of FX risk management has to be an ongoing process.”
  • Similarly, effective education across finance doesn’t stop with quarter-end or year-end results. “Even when you think you are over-communicating, you should probably communicate more,” a member said.
Read More Read Less
Contact Us

Talking Shop: Benchmarking Helps Move Insurance Off IA’s Plate

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: Buying insurance coverage is an important and challenging task for most corporations, a form of risk management known as risk transference. Companies purchase policies to cover losses including those from property damage, cyberattacks, claims against directors and officers, and product liability.

Insurance off IA’s plate. The member of the internal audit (IA) group who posed the questions below is now chief audit executive at a company where IA had shared responsibility for insurance—uncommon among NeuGroup members.

  • The benchmarking the member did with Mr. Howard’s assistance helped him move all insurance oversight to an individual on the chief accounting officer’s team. That’s also relatively rare, but at this company the CAO “owns” treasury, the member said.
  • Regardless, it’s a welcome development for him: “I’m out of the insurance business!”

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: Buying insurance coverage is an important and challenging task for most corporations, a form of risk management known as risk transference. Companies purchase policies to cover losses including those from property damage, cyberattacks, claims against directors and officers, and product liability.

Insurance off IA’s plate. The member of the internal audit (IA) group who posed the questions below is now chief audit executive at a company where IA had shared responsibility for insurance—uncommon among NeuGroup members.

  • The benchmarking the member did with Mr. Howard’s assistance helped him move all insurance oversight to an individual on the chief accounting officer’s team. That’s also relatively rare, but at this company the CAO “owns” treasury, the member said.
  • Regardless, it’s a welcome development for him: “I’m out of the insurance business!”

Member questions:

  1. “Which function (e.g., treasury, legal, finance, audit) in your company oversees insurance?
  2. “Is there a dedicated individual or team responsible for defining insurance strategy, or is it outsourced to a broker or outside specialist?
  3. “Do you have any formal self-insurance programs or a captive insurance company?
  4. “Our brokers are telling us the median coverage limit for cyber insurance is $20 million to $30 million. Are others in this kind of range or is anyone radically different?”

Mr. Howard helped solicit answers to the member’s four questions and then compiled and analyzed 25 responses. Here are takeaways from his analysis of the results.

  1. Treasury dominates. The treasury function is most commonly responsible for overseeing insurance across companies, emphasizing its integration within finance-related operations. The concentration in treasury underpins a company’s strategic financial oversight and aligns with broader corporate risk management.
  2. Internal teams with broker support. Companies often have dedicated internal teams or individuals (ranging from a single manager to more complex teams) responsible for insurance strategy. These teams work closely with external brokers (e.g., Gallagher, WTW, Simkiss & Block) who assist in negotiating terms and advocating claims, thereby blending internal expertise with external insights.
    • Strategic outsourcing. Some companies outsource strategic elements to brokers while retaining internal oversight, particularly for specialized areas like cyber insurance; this approach leverages external expertise without ceding control.
  3. Mixed approaches to risk management. Responses indicate a variety of approaches to managing risk, including self-insurance through retentions and the establishment of captives. The choice between these approaches often depends on company size, risk exposure, and financial strategies.
    • Selective use of captives. While not all companies utilize captives, those that do often cite their utility in providing a “rainy day fund” for losses, indicating a long-term strategic approach to risk management.
  4. Cyber coverage based on risk and size. There is significant variation in cyber insurance coverage limits, reflecting differing company sizes, risk exposures and industry-specific threats. While some companies align with the median range of $20 million to $30 million, others have limits well above this range, and in some cases, into the hundreds of millions.
    • Strategic decision-making. Decisions on cyber insurance coverage are strategic, considering factors like company size, industry, risk tolerance, and cyber security programs. Companies use bespoke modeling, peer benchmarking, and industry trends to inform their coverage levels. Some companies have opted out of cyber insurance due to high costs relative to perceived benefits, highlighting the importance of cost-benefit analysis in these decisions.

More on cyber. Here are some of the comments from respondents about cyber insurance:

  • “We don’t procure it anymore because it got expensive such that it wasn’t worth it. That’s in addition to too many exclusions in place related to our specific risks.”
  • “It was prohibitively expensive for the coverage we were offered, so not worth the premium.”
  • “Our broker provides peer benchmarking data and computer-simulated cyber loss analyses that help our thinking on cyber insurance limits.”
Read More Read Less
Contact Us

Planting Seeds: IT Auditors Aim to Harvest AI Insights From Data

The race for leveraging generative AI as a strategic advantage is on, but the ground must be tilled before the field yields results.

Large language models (LLMs) like ChatGPT and Microsoft Copilot have swept through the corporate landscape as many companies have licensed or built their own internal instance of the technology. Early adopters in organizations are getting their hands dirty with this new tool, but those in the know realize that their house—the underlying data on which AI models are built—must be in order before they can make the AI revolution a reality.

  • Ed Barrie, a finance technology expert and the co-founder of Treasury4, recently told NeuGroup Insights, “AI and machine learning are only as good as the underlying datasets they’re being applied against. I’m skeptical about some of the use cases that do get talked about in the industry—unless you have a really rich dataset and much more granularity to then drive those insights.”
  • At a recent session, many members of NeuGroup for IT Auditors shared that this point rings true: for now, the use cases for generative AI are limited. Corporates must have a plan to obtain large quantities of high-quality data before they can fully realize the efficiency gains promised by AI and machine learning.
  • One member named two places where “the rubber should hit the road” for companies: “In the automation of task work, especially in the building out of sampling and testing methodologies; and in building the LLM using audit data to provide summaries, analysis and trending risk assessment data.”

The race for leveraging generative AI as a strategic advantage is on, but the ground must be tilled before the field yields results.

Large language models (LLMs) like ChatGPT and Microsoft Copilot have swept through the corporate landscape as many companies have licensed or built their own internal instance of the technology. Early adopters in organizations are getting their hands dirty with this new tool, but those in the know realize that their house—the underlying data on which AI models are built—must be in order before they can make the AI revolution a reality.

  • Ed Barrie, a finance technology expert and the co-founder of Treasury4, recently told NeuGroup Insights, “AI and machine learning are only as good as the underlying datasets they’re being applied against. I’m skeptical about some of the use cases that do get talked about in the industry—unless you have a really rich dataset and much more granularity to then drive those insights.”
  • At a recent session, many members of NeuGroup for IT Auditors shared that this point rings true: for now, the use cases for generative AI are limited. Corporates must have a plan to obtain large quantities of high-quality data before they can fully realize the efficiency gains promised by AI and machine learning.
  • One member named two places where “the rubber should hit the road” for companies: “In the automation of task work, especially in the building out of sampling and testing methodologies; and in building the LLM using audit data to provide summaries, analysis and trending risk assessment data.”

Current use cases. Members are finding ways to gain small victories from the technology—for some, these victories are won by significantly cutting down research time for audits.

  • “Right now, I see AI as a knowledge tool similar to Google search that can be used to increase efficiency and effectiveness,” one member said. AI can help to cut down the time researching and writing reports by 10% to 50%, he added.
    • The same member that after challenging audit leaders to use the company’s internal LLM, multiple team members could grasp the unique details of specific risk frameworks in less time and with a better understanding than from a Google search.
  • “What I’m going to try to do in our model in the near future is basically try to string together several documents,” another member said. “Right now I can get an extract of tickets from our project management software, put it in our platform and basically ask it, ‘Get me these several fields from these tickets and put it in a table format in this order.’ And it’ll kick out a table you can copy and paste into your work paper.”
  • One member’s team has found use cases like data entry that can make a 60-minute task take 30 or 45 minutes. But for anything beyond that, the conclusion is, “I don’t have the datasets. I have talked to others who have put five years of their audit work in, and it still wasn’t enough to train the models.”

Training the models. Some IT auditors shared that they are focusing on automating manual work, which one member called “dumb” work, using tools like Power Automate or UiPath; then capturing that work in datasets to train their models.

  • “We’re going to devote full resources to look at every process, automate, and then put AI over that automation, particularly when it comes to controls,” one member said. There are a lot of areas where there are manual controls—we’re trying to automate there. We want to fix the processes before we just jump into putting AI in something that is broken.”
  • In identifying what should be automated, one member suggested that “as you conduct your normal course of work, identify the pieces of evidence your auditor is asking for. Take inventory of those things because later on, when you want to get to automation and translate that automation into actual action for the business, you’re going to need to understand where the datasets sit.”

Future use cases. The goal, many IT auditors in the session shared, is to get internal LLMs to the point that they can provide better, company-specific outputs—applying this tool to more value-added, strategic work.

  • A member described his team’s process for auditing IT help desk tickets, using random number generators and dozens of tabs in spreadsheets. “That’s time-consuming work, it takes hours,” he said.
  • Once a process like this is automated, he will be able to test and validate a much broader swath of data that can train an AI model to do value-adding work like identifying key trends and themes, providing risk assessment data and issuing summaries.
  • The same member’s “pie in the sky” goal is to use an LLM to comprehensively generate a risk assessment, which he said will make the audit planning process more effective and efficient. “You want to be able to ask a library, ‘where do I have governance issues?’ or ‘how long did it take to close out this management action plan that was high risk?’”
Read More Read Less
Contact Us

Trapped Cash Unlocked: Bopreal Pipeline Pays Off for Corporates

Some NeuGroup members are using Argentina’s Bopreal bonds to free nearly all of their trapped cash amid peso devaluation.

During continued devaluation of the Argentine peso that may only get worse, multiple NeuGroup members are prioritizing the use of the Bopreal series of bonds launched last December to help importers pay off cross-border debt to get trapped cash out of the country as soon as possible.

  • Members discussed their use of these bonds in a recent session of NeuGroup for Latin America Treasury featuring experts from Banco Comafi. One member said their view is that devaluation will continue to worsen, and said their company would be “exposed like sitting ducks” if they weren’t able to get the cash out of the country as soon as possible.
  • Comafi’s Mateo Gall said futures markets are pricing in devaluation rates around 10% by this July amid economic, political and social challenges in Argentina. However, recent positive outcomes like increased dollar deposits in the country have led to a reduced likelihood of an official devaluation like the one that occurred last December.
  • Bopreals have been released in weekly auctions by the Argentine central bank (BCRA), with three series of bonds, each with unique maturities and restrictions. The first series, which reached its maximum $5 billion allocation in January, matures in 2027 and does not include the country’s 30% tax on outgoing cash. The second and third series mature in 2025 and 2026.

Some NeuGroup members are using Argentina’s Bopreal bonds to free nearly all of their trapped cash amid peso devaluation.

During continued devaluation of the Argentine peso that may only get worse, multiple NeuGroup members are prioritizing the use of the Bopreal series of bonds launched last December to help importers pay off cross-border debt to get trapped cash out of the country as soon as possible.

  • Members discussed their use of these bonds in a recent session of NeuGroup for Latin America Treasury featuring experts from Banco Comafi. One member said their view is that devaluation will continue to worsen, and said their company would be “exposed like sitting ducks” if they weren’t able to get the cash out of the country as soon as possible.
  • Comafi’s Mateo Gall said futures markets are pricing in devaluation rates around 10% by this July amid economic, political and social challenges in Argentina. However, recent positive outcomes like increased dollar deposits in the country have led to a reduced likelihood of an official devaluation like the one that occurred last December.
  • Bopreals have been released in weekly auctions by the Argentine central bank (BCRA), with three series of bonds, each with unique maturities and restrictions. The first series, which reached its maximum $5 billion allocation in January, matures in 2027 and does not include the country’s 30% tax on outgoing cash. The second and third series mature in 2025 and 2026.

Turnaround for series 1. After a slow start for the first series of Bopreals last December, the government sweetened the terms, sparking demand. In addition, one member said that “everybody and their mother suddenly wanted in on” the bonds when it became clear they were an effective, reliable way to free trapped cash.

  • For one member with outstanding debt to vendors in the US, it took multiple attempts to purchase series 1 bonds, with the BCRA only granting half of their bid on the first attempt. But after subsequent requests in the following weeks, the member was able to free up all of the company’s trapped cash in the country using series 1 Bopreals that they sold on the secondary market for about two-thirds of the bonds’ USD value.
  • The company will be able to access Argentina’s blue-chip swap market (an unofficial FX market that carries an unfavorable rate) on April 1 to pay their vendors the remaining value while exempt from a 90-day required waiting period that typically applies to this market—a bonus exclusively for the first series.

Scoring with series 2 and 3. One member, whose company had several million “old and cold” dollars trapped in the country, attempted to access this first series of bonds, but due to such high demand their bank could not get the bid ready in time. The company has subsequently freed more than three-quarters of intercompany debt trapped in the country with purchases from series 2 and 3.

  • The member said that, whether or not a corporate works with their bank, there is a bounty of paperwork required to register these debts with the BCRA. “There’s lots of manual work, including uploading many documents, to present yourself with payment,” they said.
  • The member was allocated series 2 bond equal to about one-third of the company’s trapped cash. They received an additional amount through a series 3 auction. 
  • In last week’s auction of series 3 bonds, the BCRA awarded the entirety of 205 requested bids. In a sign the bonds may be satiating demand, nearly $2 billion of series 3 remains and is open to all importers with debts, regardless of registered balances, in this week’s auction.

Hold or sell? Because the bonds do expose a company to sovereign risk, this member is evaluating the secondary market to determine whether—and when—to sell the bonds.

  • “And if we take it onto the secondary market, we’d have to figure out how to account for that,” the member said. “I just don’t know if we want to pull that trigger yet, we may just wait to see how it all shakes out.”
Read More Read Less
Contact Us

Former HP Treasurer Zac Nesper’s Joyful Passing of the Baton

Mr. Nesper’s total trust in Andrea Noseda’s abilities provided the confidence to leave a job and company he loved.

After years of thinking about leaving a company and a job he loved to spend more time with his family, former HP Inc. treasurer Zac Nesper found the right internal person to succeed him: Andrea Noseda, a treasury novice back when he hired her for a capital markets role four years earlier (today she’s an expert).

  • In a new NeuGroup video you can watch by hitting the play button below, Mr. Nesper shares how Ms. Noseda progressed to the point where, after she interviewed for the position, HP named her treasurer in June 2023. It was an outcome he called one of the greatest joys of his career.
  • Mr. Nesper provided support during a transition period, while also serving as CFO of the company’s Strategy and Incubation business unit. He left HP at the end of 2023 to begin what his LinkedIn page describes as a career break and personal goal pursuit.
  • “I hit a point where I just was like, my kids are only going to be in the house for three more years, and I have this crazy hunger to just spend time with them,” he says in the video. “I’ve got this personal desire to step out, but beyond that, I don’t want to stand in somebody else’s way.”

Mr. Nesper’s total trust in Andrea Noseda’s abilities provided the confidence to leave a job and company he loved.

After years of thinking about leaving a company and a job he loved to spend more time with his family, former HP Inc. treasurer Zac Nesper found the right internal person to succeed him: Andrea Noseda, a treasury novice back when he hired her for a capital markets role four years earlier (today she’s an expert).

  • In a new NeuGroup video you can watch by hitting the play button below, Mr. Nesper shares how Ms. Noseda progressed to the point where, after she interviewed for the position, HP named her treasurer in June 2023. It was an outcome he called one of the greatest joys of his career.
  • Mr. Nesper provided support during a transition period, while also serving as CFO of the company’s Strategy and Incubation business unit. He left HP at the end of 2023 to begin what his LinkedIn page describes as a career break and personal goal pursuit.
  • “I hit a point where I just was like, my kids are only going to be in the house for three more years, and I have this crazy hunger to just spend time with them,” he says in the video. “I’ve got this personal desire to step out, but beyond that, I don’t want to stand in somebody else’s way.”

A treasurer’s journey. Mr. Nesper’s decision to step down came after 20 years of experience in corporate finance at HP, with stints in FP&A and multiple treasury roles before he became treasurer in 2018. His time as treasurer was an eventful one, facing the emergence of the Covid-19 pandemic and its fallout, as well as a hostile takeover attempt by Carl Icahn.

  • He now takes great comfort knowing that treasury is in good hands—and that there are other employees from his team that could also be corporate treasurers. “So that’s fun to have, that legacy,” he says in the video.

Stay tuned to NeuGroup Insights to hear the full conversation between Mr. Nesper and NeuGroup founder and CEO Joseph Neu in an upcoming episode of the Strategic Finance Lab podcast. In addition to a deeper dive into the former treasurer’s decision to step down, the pair discuss the evolving role of AI, the benefits of embracing a personal brand and the lessons he learned from his path through finance.

Read More Read Less
Contact Us

Banding Together: Uniting Risk Management, Finance and Safety

NeuGroup members are creating risk teams within finance that rethink risk from a top-down perspective.

In response to rising commercial insurance premiums and other factors, NeuGroup members are taking proactive steps to fortify risk management strategies. One option that came to light at a recent session of NeuGroup for Risk Finance and Insurance: creating a risk management team that sits within finance and is empowered to work with safety, claims and insurance teams to foster a company-wide culture of risk awareness.

  • Members at the session shared insights on the road to better risk management—including one who implemented a new RMIS (risk management information system) that allows the risk team to track on-the-ground activities at multiple customer-facing locations.

NeuGroup members are creating risk teams within finance that rethink risk from a top-down perspective.

In response to rising commercial insurance premiums and other factors, NeuGroup members are taking proactive steps to fortify risk management strategies. One option that came to light at a recent session of NeuGroup for Risk Finance and Insurance: creating a risk management team that sits within finance and is empowered to work with safety, claims and insurance teams to foster a company-wide culture of risk awareness.

  • Members at the session shared insights on the road to better risk management—including one who implemented a new RMIS (risk management information system) that allows the risk team to track on-the-ground activities at multiple customer-facing locations.

Strategic location. Some members said their companies’ safety teams work well within operations, with insurance and claims units residing elsewhere. Others emphasized the value of a centralized team that sits within finance.

  • One member commented that sitting within finance gives the risk team wide-ranging visibility into activities like upcoming mergers and acquisitions.
  • This structure also allows the team to partner closely with treasury, which provides insight into liquidity—a key component when determining the corporate’s risk tolerance, dependent on its ability to absorb unexpected losses or expenses. 

The language of risk. Because these risk teams’ collaborative ethos extends beyond operations within finance, they also lead to strong partnerships with ERM, legal, compliance and internal audit teams.

  • A key step that made it easier for one member to work closely with these teams was to create a standardized language around risk, coming to a shared understanding of the meaning of phrases like “high risk” and “critical risk,” including monetary value and likelihood of occurrence.
  • The member said these teams have quarterly meetings with their closest business partners, emphasizing the value of proactive discussions on risk reduction. This regular interaction allows for strategic conversations focused on preparing for potential future risks, rather than only collaborating when there is a problem to solve.

Empowered business partners. One critical strategy employed by some members is a two-pronged approach to promote safety at each of a company’s buildings: centralized teams that work to reduce risk through efficiently designed processes, complemented by onsite safety professionals that partner with the business by leveraging their on-the-ground perspective into trends and hazards.

  • Using the company’s RMIS, onsite safety teams report and track any incidents at their locations. The data is then consolidated into dashboards, enabling stakeholders to have a predictable and understandable view of the company’s exposures.
  • By establishing a culture of shared responsibility, this approach motivates all members on the team to become true partners to the business, actively contributing to risk management discussions and decision-making processes.
  • For one member, a RMIS system was quickly tested after implementation when the company had to make changes to its operational plans nearly overnight. The central teams responded swiftly by establishing streamlined checklists for the onsite safety employees, which facilitated implementation of new processes for escalations and interventions.
  • This collaborative approach ensures that risks are identified and addressed in a timely manner, fostering a proactive risk management culture throughout the organization. As a result, the company is better equipped to anticipate and mitigate potential risks, safeguarding its operations and financial stability in an ever-changing business environment.
Read More Read Less
Contact Us

Talking Shop: Does IA Need Technical Accounting Black Belts?

Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected].


Context: In the world of accounting standards, a material weakness is “a deficiency, or a combination of deficiencies, in internal control over financial reporting (ICFR), such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.”

  • The Sarbanes-Oxley Act (SOX) required companies to start testing for material weaknesses and have outside auditors review their controls. Corporates are required to publicly disclose any material weaknesses in ICFR.
  • The phrase has appeared recently in articles about: New York Community Bancorp uncovering material weaknesses tied to internal controls related to a loan review; and chemical maker Chemours evaluating one or more potential material weaknesses in its financial reporting.

Member question: “Does your audit committee (AC) expect your internal audit team (not SOX) to have strong GAAP expertise to be able to identify non-compliance in technical areas? Do you have auditors who are basically black belts in technical accounting skills?”

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: In the world of accounting standards, a material weakness is “a deficiency, or a combination of deficiencies, in internal control over financial reporting (ICFR), such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.”

  • The Sarbanes-Oxley Act (SOX) required companies to start testing for material weaknesses and have outside auditors review their controls. Corporates are required to publicly disclose any material weaknesses in ICFR.
  • The phrase has appeared recently in articles about: New York Community Bancorp uncovering material weaknesses tied to internal controls related to a loan review; and chemical maker Chemours evaluating one or more potential material weaknesses in its financial reporting.

Member question: “Does your audit committee (AC) expect your internal audit team (not SOX) to have strong GAAP expertise to be able to identify non-compliance in technical areas? Do you have auditors who are basically black belts in technical accounting skills?

  • “We have a material weakness in revenue for GAAP non-compliance that was missed for several years by our external auditors, by management, by SOX, and by internal audit. There was a calculation of revenue recognition that was not in strict compliance with GAAP. It was not material enough to require restatements of prior years or quarters, thank goodness.
  • “So we are grappling with how responsible IA was in not catching this. We do operational audits (but basically never a pure financial audit for GAAP compliance) and our team members generally have Big Four (or public accounting) backgrounds, with an average of about 7 years of experience, many in low-cost locations).
  • “My AC chair asked what level of GAAP knowledge did my team have; I said I have no black belts or even auditors who are super technical in any particular accounting processes. Does your team have these skill sets? Open to your opinions as well.”

Peer answer 1: “Our team makeup is very similar to yours, but I also own SOX. My AC has never expressed expectations that we be experts on GAAP, nor do I think it is reasonable for them to do so given the breadth of our responsibilities.

  • “It seems to me that the question, rather than each group’s capabilities, is why existing key controls were insufficient or ineffective to catch it and why the external auditors, between their independent controls testing and substantive testing, also did not catch it.”

Peer answer 2: “I can almost exactly replicate the first response. I’ll add that my team has no black belts and two-thirds of them are offshore.”

Peer answer 3: 
“I have not had super-technical accountants in IA teams in my current or prior roles. I think it’s beyond the expectations in the IIA standards for IA to be equipped to substantively validate complex accounting positions. I would expect IA to have enough financial literacy to test management’s own controls over risky areas, i.e., whether they had the relevant expertise on their team and had done the necessary white papers/reviews on a complex topic.”

Peer answer 4:
 “My AC has not asked this question. However, I would expect the AC and our external auditors to assume that internal audit has the responsibility to assess the design of ICFR, unless there’s another third line function that has this responsibility within the org. In the context of the third line responsibility, I see two frameworks relevant to an expectation over the use of knowledgeable personnel:

  1. The IIA Global Internal Audit standards (2024), Principle 3, ‘Demonstrate Competency’ (specifically, standard 3.1 “Competency”)
  2. COSO Principle 16, specifically ‘Points of Focus, Uses Knowledgeable Personnel.’ Evaluators who perform ongoing and separate evaluations have sufficient knowledge to understand what is being evaluated.”

NeuGroup Insights reached out to the questioner, who provided these additional comments and insights:

  • “I have never viewed IA as being responsible for GAAP compliance in general, unless an audit objective/scope was specifically defined as such. From a third line of defense standpoint, I leave GAAP compliance governance with the SOX group.
  • “By design, internal auditors would not possess this specific set of skills as we need to cover very broad areas. For SOX, this is a different conversation, and should be designed to catch material weaknesses before they happen.
  • “The IA function does independent testing of management SOX controls (utilizing a third-party public accounting firm), and I feel some ownership for not catching it. However, management owns the control environment with the technical accounting positions, and the IA SOX testing function is more about confirming the execution and documentation (IPE) of the control.”
Read More Read Less
Contact Us

Balancing Act: A Former Auditor’s Perspective on Financial Risk

A Bristol Myers Squibb risk manager shares how a balanced approach to controls can optimize treasury efficiency.

The multifaceted job of financial risk management within corporate treasury includes the effective use of controls to mitigate all sorts of potential threats to a company’s financial stability. But don’t let controls get out of control—implementing too many of them to manage financial risks can inadvertently create operational risks.

  • That’s a key takeaway from a recent NeuGroup conversation with Bill Brewer, associate director of financial risk management at Bristol Myers Squibb. You can watch a video clip from the interview by hitting the play button below.
  • “If you have five different controls and you need to get a payment out in a certain amount of time, those controls may slow down the process,” Mr. Brewer said, illustrating the point. “While you might reduce the risk of sending out a payment to the wrong address, you might end up increasing the risk of not sending out payments on time.”

A Bristol Myers Squibb risk manager shares how a balanced approach to controls can optimize treasury efficiency.

The multifaceted job of financial risk management within corporate treasury includes the effective use of controls to mitigate all sorts of potential threats to a company’s financial stability. But don’t let controls get out of control—implementing too many of them to manage financial risks can inadvertently create operational risks.

  • That’s a key takeaway from a recent NeuGroup conversation with Bill Brewer, associate director of financial risk management at Bristol Myers Squibb. You can watch a video clip from the interview by hitting the play button below.
  • “If you have five different controls and you need to get a payment out in a certain amount of time, those controls may slow down the process,” Mr. Brewer said, illustrating the point. “While you might reduce the risk of sending out a payment to the wrong address, you might end up increasing the risk of not sending out payments on time.”

An audit perspective in treasury. Mr. Brewer’s skill at walking the fine line between operational efficiency and effective controls is rooted in his background in internal audit at BMS. The perspective he brings to treasury includes the view that risk mitigation controls are more effective when they are preventive rather than “detective,” or those that are used to detect an issue after it has occurred.

  • Mr. Brewer joined treasury at BMS 2020 and the team he’s on today oversees FX hedging, interest rate risk, commodities exposures, counterparty risk and risk in the BMS short-term cash portfolio.
  • In an upcoming episode of NeuGroup’s Strategic Finance Lab podcast, he will dive further into his view of risk management as well as treasury’s partnerships with other teams at BMS, his path through finance and his approach to designing automations.
Read More Read Less
Contact Us

C2FO’s CEO: Early Payment Proponent, Financial Friction Foe

The views of Sandy Kemper—entrepreneur, rancher and former bank CEO—on the Strategic Finance Lab podcast.

C2FO CEO Sandy Kemper, in a Strategic Finance Lab podcast interview you can listen to now on Apple and Spotify, describes how the fintech he founded in 2008 provides fast, flexible access to low-cost working capital to suppliers, some of whom struggle to get bank loans.

  • C2FO’s platform enables large corporations to pay their suppliers early in exchange for a discount set by the supplier. Mr. Kemper says early payments help eliminate “friction” in a banking system he calls antiquated and rife with pain points.
  • Those pain points can put small and midsize businesses—some owned by women and minorities—at a disadvantage because of how heavily-regulated banks view risk, he says.

The views of Sandy Kemper—entrepreneur, rancher and former bank CEO—on the Strategic Finance Lab podcast.

C2FO CEO Sandy Kemper, in a Strategic Finance Lab podcast interview you can listen to now on Apple and Spotify, describes how the fintech he founded in 2008 provides fast, flexible access to low-cost working capital to suppliers, some of whom struggle to get bank loans.

  • C2FO’s platform enables large corporations to pay their suppliers early in exchange for a discount set by the supplier. Mr. Kemper says early payments help eliminate “friction” in a banking system he calls antiquated and rife with pain points.
  • Those pain points can put small and midsize businesses—some owned by women and minorities—at a disadvantage because of how heavily-regulated banks view risk, he says.

Sandy Kemper, C2FO

A rancher with a banking background. As he tells NeuGroup founder and CEO Joseph Neu, Mr. Kemper’s opinions about the banking system are grounded in hands-on experience in an industry whose role in economic growth he greatly respects. Raised by a family of bankers, he rose through the ranks and served as chairman of the board and CEO of UMB Bank and CEO of UMB Financial.

  • Mr. Kemper, who left banking to start his first technology company, Perfect Commerce, lives with his family on a small ranch in Kansas City, Missouri. They raise and care for horses, sheep, chickens and bees. In the podcast, he discusses lessons he’s learned from nature and ecosystems.
  • He also talks about how early payments and better access to working capital for suppliers can help corporations trying to reduce carbon emissions in their supply chains. C2FO, he says, is hearing large companies say this about their suppliers: “Let’s reduce their cost to borrow and have them be able to get more margin and more profit and, because of that, help us make our supply chain carbon neutral.”
Read More Read Less
Contact Us

Talking Shop: Bank Criteria for Granting Deposit Rate Premiums

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: The Federal Reserve’s 11 increases in the fed funds rate since March 2022 have changed bank deposit dynamics. NeuGroup senior executive advisor Jerry Olivo, a former banker who leads NeuGroup for Regional Bank Treasurers, says the higher rate environment means institutions now have to compete for so-called sticky deposits as customers move money elsewhere.

  • “Many banks will offer a premium rate for the deposit types they value if they have seen a runoff of those deposits as clients move into higher-rate money funds or Treasury bills,” Mr. Olivo explained. “They will not offer the premium for other types.”
  • Banks are more willing to pay higher rates for funds that are likely to remain on deposit during a time of liquidity stress. Those include retail accounts as well as commercial operating accounts and deposits of clients with good, longstanding relationships with the bank, according to Mr. Olivo.
  • Given that banks evaluate the “stress liquidity attributes of a deposit” and use that analysis to decide when to pay premiums, corporates can position a portion of their deposits for higher rates by better understanding the attributes that banks seek in a deposit, he added.

Member question: “I am curious if anyone is willing to share the types of criteria or qualification to grant deposit rate premiums? We look at each customer/account on a case-by-case basis, but want to start using a more formulaic approach with criteria for our salesforce to reference when making requests for rate premiums. Any information is appreciated.”

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: The Federal Reserve’s 11 increases in the fed funds rate since March 2022 have changed bank deposit dynamics. NeuGroup senior executive advisor Jerry Olivo, a former banker who leads NeuGroup for Regional Bank Treasurers, says the higher rate environment means institutions now have to compete for so-called sticky deposits as customers move money elsewhere.

  • “Many banks will offer a premium rate for the deposit types they value if they have seen a runoff of those deposits as clients move into higher-rate money funds or Treasury bills,” Mr. Olivo explained. “They will not offer the premium for other types.”
  • Banks are more willing to pay higher rates for funds that are likely to remain on deposit during a time of liquidity stress. Those include retail accounts as well as commercial operating accounts and deposits of clients with good, longstanding relationships with the bank, according to Mr. Olivo.
  • Given that banks evaluate the “stress liquidity attributes of a deposit” and use that analysis to decide when to pay premiums, corporates can position a portion of their deposits for higher rates by better understanding the attributes that banks seek in a deposit, he added.

Member question: “I am curious if anyone is willing to share the types of criteria or qualification to grant deposit rate premiums? We look at each customer/account on a case-by-case basis, but want to start using a more formulaic approach with criteria for our salesforce to reference when making requests for rate premiums. Any information is appreciated.”

Peer answer 1:
 “We don’t have a formulaic calculation or process for exception pricing. I would say we utilize ‘informed subjectivity.’ Our profitability team has created an easy access customer relationship link that captures the entire relationship, so we can determine the depth of the relationship. That, combined with daily cost of funds and internal approval levels, allows us to target reasonable pricing levels.”

Peer answer 2: 
“I would agree that ‘informed subjectivity’ would describe our process. We do establish no-call exception guidelines where the line of business can approve certain exceptions without escalation to senior managers. Over that level, exceptions need approval by me or the executive in charge of the line of business. Only the most sensitive requests usually make it to that level.”

Peer answer 3:
 “We have established exception-pricing authority relative to the level of the fed funds upper bound rate. Bankers and our deposit working group have specified levels of authority in basis points relative to that rate, and we adjust that authority as necessary.”

Final thoughts. 
Reviewing the answers, NeuGroup’s Mr. Olivo observed that a subjective, qualitative approach to determining deposit premium criteria is common. However, he said more regional banks are going down the path to create a more structured liquidity and pricing model.

  • “Deposit pricing committees within the banks are looking to define and implement these pricing criteria so that their client-facing teams can make quick decisions when in the field rather than have to come back for centralized approval—without overpaying for less valuable deposits,” he said. “For large corporate clients, there may be more one-off negotiation based upon the relationship, but with upper bounds established via qualitative and quantitative criteria.”
Read More Read Less
Contact Us

Shifting Tides: The Role of DEI Firms in Capital Markets

New NeuGroup Peer Research shows DEI firms enjoy support among corporates but face headwinds in the current ESG climate.

A new NeuGroup survey reveals that 66% of corporate treasuries include diverse-owned firms in their capital markets deals, including bond underwriting, commercial paper (CP) and open market repurchase (OMR) programs. The survey, conducted in collaboration with Sustainable Fitch and the National Association of Securities Professionals (NASP) in December 2023, explored the level of engagement between treasury and diverse-owned firms.

Shifting winds. 
NeuGroup members who responded to the survey cited two top reasons for awarding minority-owned firms a share of treasury’s capital markets business. Chief among them is supporting the company’s diversity objectives, listed as a benefit by 87% of respondents (see chart), followed by sending a positive message to employees, suppliers and customers (78%).

New NeuGroup Peer Research shows DEI firms enjoy support among corporates but face headwinds in the current ESG climate.

A new NeuGroup survey reveals that 66% of corporate treasuries include diverse-owned firms in their capital markets deals, including bond underwriting, commercial paper (CP) and open market repurchase (OMR) programs. The survey, conducted in collaboration with Sustainable Fitch and the National Association of Securities Professionals (NASP) in December 2023, explored the level of engagement between treasury and diverse-owned firms.

Shifting winds. 
NeuGroup members who responded to the survey cited two top reasons for awarding minority-owned firms a share of treasury’s capital markets business. Chief among them is supporting the company’s diversity objectives, listed as a benefit by 87% of respondents (see chart), followed by sending a positive message to employees, suppliers and customers (78%).

  • These benefits illustrate both a weakness and a strength in supporting continued or expanded corporate engagement with diverse-owned banks and broker-dealers. Because they are related to companies’ overall commitment to DEI, they leave these firms vulnerable to shifts in the social, political and economic environment.
  • “The environment in 2024 is not what it was in 2021-22,” noted one respondent in a follow-up conversation. Indeed, several companies have made headlines by backing away from earlier ESG commitments and reducing the size of their DEI teams—one aspect of the social component of ESG.
  • “We have used diverse firms for a number of years, purely because it’s an effective way to demonstrate these are organizations we believe in,” one respondent said. “The danger is that if the company’s commitment to the issue wanes, it is no longer a big motivator.”

Investors and capital. The third most common benefit (72%)—access to a diverse investor base—indicates that minority-owned firms have an important and continuing role to play in executing corporate capital markets transactions, one with economic value. One member also highlighted the firms’ analytical skills related to investors. “The diverse-owned firms conducted much better analysis ahead of a bond deal,” one respondent said. “They looked at our overall debt investor base and dug deeper to find out, for example, what percentage of bonds is held by different types of investors, like insurance firms.”

  • But corporates allocating fees (share of wallet) typically award the most lucrative roles to banks that commit capital to their revolvers; most diverse-owned financial institutions lack the capital needed to support those credit commitments. As a result, over three-quarters of respondents that work with diverse-owned firms on bond deals use them as co-managers as opposed to being active book runners that earn higher fees.
  • “Our current pricing approach requires a bank to take trading risk,” explained one respondent. “The problem is that they lack the capital to support the types of transactions we undertake.”
  • Another member said, “At a certain point, we will be cannibalizing the fee pool for banks that are providing us capital. Continuing to grow our business with all but the largest diverse-owned firms may be a challenge in this environment.”

A different type of capital. The key for maintaining and growing diverse-owned firms’ share of corporate capital markets deals is to not compete with big banks, but to offer more reasons for treasuries to award them higher fees. “The firms need to find the one thing or value they can deliver and do it consistently,” one member said. “They need to offer something that differentiates them from other firms.”

  • Minority-owned firms often play active roles in CP and OMR programs because those do not require capital commitment. In fact, some treasurers said they use diverse-owned firms exclusively in their CP and OMR programs.
    • “We get better execution than we do with bulge-bracket banks because the smaller institutions pay more attention to our business,” explained one respondent. “We found that they actually outperform the bulge-bracket banks.”
  • As noted above, another area where some diverse-owned firms already shine is offering a unique point of view on the market and providing deeper and more insightful analysis. “They have to compete on intellectual capital,” said a respondent. “We partner with DEI firms that offer something unique and value added.”
  • He added: “If I get 100 emails from banks with their market insight every day, the only one I read is from a diverse-owned firm. They bring a different geopolitical and economic perspective that I don’t get anywhere else.”
Read More Read Less
Contact Us

Seeking Solutions, Pushing Banks for Change on Signer Management

As NeuGroup members unite to lobby banks, digital signer portals from Citi and J.P. Morgan create buzz.

Frustration with the inefficiencies of tracking and updating signers on bank accounts has pushed some members of NeuGroup for Global Cash and Banking to form a subgroup to present a united front in asking banks for digital solutions and standards that will provide real-time visibility to signer data (Step 1) and, ideally, make it possible for that data to flow directly into treasury management systems (TMSs) and other corporate databases (Step 2).

  • “How can we collectively tell the banks we’re done waiting for this to get handled over the next 10 years, and to put the resources to it?” one member asked during a December session. “I’d rather have banks focus on that in the near future, rather than talk about AI.”

As NeuGroup members unite to lobby banks, digital signer portals from Citi and J.P. Morgan create buzz.

Frustration with the inefficiencies of tracking and updating signers on bank accounts has pushed some members of NeuGroup for Global Cash and Banking to form a subgroup to present a united front in asking banks for digital solutions and standards that will provide real-time visibility to signer data (Step 1) and, ideally, make it possible for that data to flow directly into treasury management systems (TMSs) and other corporate databases (Step 2).

  • “How can we collectively tell the banks we’re done waiting for this to get handled over the next 10 years, and to put the resources to it?” one member asked during a December session. “I’d rather have banks focus on that in the near future, rather than talk about AI.”
  • The good news is that some banks, including Citi and J.P. Morgan, are in different stages of offering digital signer portals and platforms to corporates. Members participating in rollouts of these solutions are sharing information on their capabilities and the experience of working with the banks to improve the offerings.
  • NeuGroup is committed to facilitating dialogue between banks and corporates to address this and other issues with electronic bank account management (eBAM). Existing NeuGroup members who are interested in participating or getting more information can reach out to peer group leader Julie Zawacki-Lucci via email.

Signer pain. A key frustration for treasury teams responsible for BAM is the time-consuming, manual nature of confirming with banks the names of signers on what can be thousands of accounts at dozens of banks spread across the globe—information needed for external audits, SOX compliance, fraud prevention and other reasons. Members also describe sending endless emails to obtain data and correct inaccuracies in bank records that have not been properly updated.

  • “It’s frustrating managing an Excel spreadsheet and trying to keep up,” one member said. Another agreed: “Even knowing who your signers are at any given point—the annual process is painful.” She added, “Today, if I needed to get reports on all those who have portal access across our banks, there are reports and visibility into users and accounts that I can run and see. My position is that the banks should have signatories set up in a similar manner.”
  • One factor that has inhibited progress, members said, is that many banks don’t have fast, digital access to signer information and documents. “Banks are telling us they also grew through acquisitions and are trying to consolidate systems on their end as well to gather that data,” one member said. “Even on their back end, it didn’t seem like there was an automated process they have for tracking signers,” another added.

Citi’s digital solution. One member at the December session told peers about what Citi calls its Digital Signer Management program that sits inside CitiDirect, the bank’s global, digital banking platform. “This new portal will allow us to see our signers that Citi has on file currently and, when we need to, we can use it to launch and initiate a signer update,” she said.

  • Citi confirmed to NeuGroup Insights that its portal gives clients the ability to maintain signer information and submit documentation online globally. The bank reviews changes and performs automated signer maintenance in a global, centralized signer database. Clients have access to real-time reporting to view signer details and create on-demand signer summary reports.
  • Citi’s work on the signer solution started three years ago and required combining local repositories of signer information and documents into one, global, digital repository to create “one source of truth,” said Magdalena Mielcarz, Global Head of Onboarding-Platforms & Data Services. This allows a treasury team to have visibility through the portal of all of their signers in multiple branches or countries, eliminating the need to ask the bank for signer summary reports.
  • The NeuGroup member whose company is now using Citi’s Digital Signer Management program is one of more than 300 corporates that Citi has invited to use the solution, which now covers bank accounts in 44 of the 95 countries where Citi has on-the-ground presence.
  • The companies invited so far have a majority of their accounts in those 44 countries. Citi, which went live with the offering in June 2023, will “start opening the gates a lot more this year” as it plans to add more countries, according to Ms. Mielcarz.
  • Julie Betts, a Citi director who has played a key role in the bank’s digital onboarding and Digital Signer Management program development, elaborated on the advantage the signer program provides, for example, when updating a person’s signing authority in multiple locations, formerly a decentralized, prolonged process.
  • “Now, this solution allows our clients to update one or more signers in multiple locations through a single, digitally initiated request; this allows Citi to make the requested changes at a personal level, instead of on an account-by-account basis,” she said.
    • “So if you’re updating Sally and she’s left the company and Jane is taking over, we allow the client to do that as one activity instead of having to go to 44 different countries. So that’s a huge, fundamental change from a client perspective in how they manage signer updates today.”

Working with J.P. Morgan. One member of the global cash and banking group told peers about her company’s use of Authorized Signer, a solution offered by J.P. Morgan through its Access platform that she said “has been great” in the US. Her team worked with the bank extensively to address differences between signers listed in the portal and the company’s own records. Discrepancies have been resolved successfully and the portal “can help with FBAR reporting as well,” she said.

  • A J.P. Morgan spokesperson described the solution, launched in 2022, as “a self-service tool for clients to have visibility and reporting of account and entity signers, simplifying the process for treasury teams,” adding that it allows new clients to view and export their signatories for reporting and other purposes.
  • Access Authorized Signer is available to “all new clients and current clients are being migrated to the tool,” the spokesperson said. It’s being used in “several countries across North America, EMEA, APAC and LatAm.”
  • For the member using it, the solution is a significant improvement over what had been a very decentralized process that “was all in spreadsheets,” she said. The portal offers the visibility and centralization the member wanted. It does not currently enable updating signer data within the portal; but requesting updates through email is not a problem for her.
  • “It’s going to be great when all banks are offering” similar digital signing portals, she said. However, “having to log into each portal and run a report is still going to be time consuming.” Another member said, “What I don’t like is that you have to go through a portal.” That leads directly to the other major issue for corporates joining forces: the desire to have signer data flow from banks to their TMSs.

Step 2: Standardization, APIs and TMSs. Yet another member, commenting on the solutions offered by Citi and J.P. Morgan, said she was “happy there was some small movement in the right direction. I think it’s a good Step 1. Step 2 would be getting that information into whatever work station you’re working with,” meaning a TMS.

  • Most everyone agreed with that assessment. But they also said that will require banks to agree on standard file formats and to work with TMS vendors. “I’d rather this be bank agnostic,” one member said. “We need it in our databases.”
  • That won’t happen overnight. “Banks are not ready is what I’m hearing,” one member said. She added that her TMS vendor is “not set up in a way to take all of that data and do something with it. You almost have to push in both directions or else it doesn’t move.”
  • Pushing is exactly what the subgroup of the global cash and banking group will be doing in the weeks and months ahead, supported by NeuGroup. A draft list of priorities written this week includes: “Future Consideration—automatic transfer of data (via API) to TMS or other system to help us consolidate signers across various banks.”

Bank agnostic? Looking into bank-agnostic fintech solutions to relieve signer management pain is also on the agenda of some NeuGroup members. One member who saw a fintech demo its solution said, “it seemed like a great product.” But his company is using an eBAM tool offered by its TMS vendor. Another member said his company tries to create solutions on its own. “We typically choose to build over buy,” he said.

  • Whatever road corporates go down, one thing is clear, according to Ms. Zawacki-Lucci, the NeuGroup peer group leader: “The bottom line is that banks must digitize the signer information they have been warehousing in antiquated ways,” she said. “Where the technology for bank portals exists, it is unacceptable that the information isn’t readily available to managers of those accounts.”
Read More Read Less
Contact Us

Sharpening Treasury’s Strategic Profile Means More Collaboration

Members share the rewards and obstacles of collaborations with FP&A, tech, tax and other functions.

Top treasurers are growing into more strategic roles and playing a greater part in decision-making at companies where finance is valued as true partner of the business. The function’s broader profile means treasury teams need to collaborate effectively and frequently with a variety of other functions within the enterprise. Doing that well ultimately pays off, but isn’t always easy.

  • In a recent session of NeuGroup for High Potentials, treasury managers and analysts shared experiences, triumphs and challenges of working with their most frequent collaborators. One consistent theme: It’s worth making an extra effort to foster strong relationships.

Members share the rewards and obstacles of collaborations with FP&A, tech, tax and other functions.

Top treasurers are growing into more strategic roles and playing a greater part in decision-making at companies where finance is valued as true partner of the business. The function’s broader profile means treasury teams need to collaborate effectively and frequently with a variety of other functions within the enterprise. Doing that well ultimately pays off, but isn’t always easy.

  • In a recent session of NeuGroup for High Potentials, treasury managers and analysts shared experiences, triumphs and challenges of working with their most frequent collaborators. One consistent theme: It’s worth making an extra effort to foster strong relationships.

Figure out FP&A. Treasury’s often uneasy collaboration with FP&A primarily revolves around forecasting—which the functions approach from different perspectives. So it’s no surprise members reported varying degrees of responsiveness when seeking help or information from FP&A teams. One member found the remedy for slow response times is putting treasury and FP&A under the same organizational umbrella.

  • “We started under the controllership and then moved under FP&A; we actually work much closer with FP&A now that we’re part of the same org, particularly on the cash forecast, aligning the direct and indirect approaches,” he said. “We’ve gotten much higher quality data, and obviously much better responsiveness now that we have the same goals.”
  • Another member sits on treasury’s capital markets team and said FP&A is a vital partner. “If we have board presentations coming up and slides we need help on, they can do that,” he said. The collaboration helps on capital allocation issues, “whether it’s the timing of repurchases, or when to issue bonds: When does the cash come in, and when does the cash go out?”

Technology ties. Most members have some support from corporate IT, but some feel they’re left to manage complex implementations themselves. Treasury at some tech companies, meanwhile, has greater access to IT budget and more latitude to experiment and collaborate. Regardless, regular meetings with tech teams can help overcome obstacles.

  • One member at a tech firm collaborates on a nearly daily basis with a dedicated fintech team that helps manage the TMS and adds value in other ways. “I feel like they sometimes have a different insight into what new business lines we’re going into and vice versa, so I pretty frequently touch base with that team,” she said.
  • Not everyone is in that position, of course. One member whose technology budget was recently slashed said she “doesn’t have anyone that supports us.” Treasury is in charge of the TMS and connections to banks, and only gets help from corporate IT on what she called “enterprise projects” like updating the company’s ERP.
  • While a lack of technology support can be a pain, strong relationship management can pay dividends, one member said. “Having gone through an ERP change and implementation, it really helps having a good relationship with our enterprise applications team who manage any internal software,” he said.
    • “What’s been really great is educating and teaching them treasury concepts—so they can then know what we need. Even not having a dedicated team, having close relationships and even just having recurring meetings with them has been really helpful for our team.”

Adjusting the payments machine. Multiple members are transitioning from a transactional focus on payments to a more strategic approach. Treasury teams that now prioritize smarter decisions on fund allocation and banking relationships need close collaboration with AP and AR.

  • “Treasury was very much a payment machine, we generated wires and all that kind of stuff,” one member said. “In my role now, we do move money around, but it’s usually more strategic: Where does the money need to be in the bank account?”
  • “There are a lot of guidelines and policies on payments that we have been a part of as they’ve been built up over time,” another member said. “As long as everybody is following those guidelines, we know what to expect from a cash perspective. Those kinds of things are part of the structure that’s put in place so we don’t have to have the day-to-day interaction with AR and AP.”

Sizing up tax and accounting. Nearly all members said the majority of accounting and tax operations are done separately from treasury, with interactions limited to reviewing, auditing or on a one-off basis—though some teams maintain more collaborative relationships.

  • One member has a dedicated accounting team within treasury that helps with day-to-day operations. “They come to us for verification, so we’re doing the accounting on the back end and then when it posts in our system,” he said. “We verify with controllership that it’s posting exactly what we thought. So that one is a shared function.”
  • Members from larger corporates said they typically have smooth collaboration with tax teams on day-to-day operations. “It’s tax and treasury work hand-in-hand every day,” one member said. “Operations fly!”
  • That’s not always the case for smaller teams. One member from a less mature company said, “For us, working with tax has been challenging. Sometimes it’s been working for different purposes—we are in separate departments and they roll up through controllership, and we roll up through corporate finance. They don’t have the same priorities at an organizational level.”

The spirit of collaboration. One member, describing treasury’s mostly non-existent relationship with procurement, neatly captured the spirit of the ideal state of his team’s interaction with all other functions: “Our day-to-day jobs don’t align, but we collaborate when our strategic objectives do.”

Read More Read Less
Contact Us