Best of NeuGroup Insights, H1 2023

Telling topics. The banking crisis, the debt ceiling drama and uncertainty about interest rates have created significant challenges for treasury, FP&A and other finance teams in the first six months of 2023. So it's no surprise they show up prominently in these top-10 NeuGroup Insights posts from the first half.

The articles, a video and a Strategic Finance Lab podcast also show how NeuGroup members across our network of peer and working groups are embracing technology and transformation. For some, that means figuring out how artificial intelligence tools like ChatGPT (listen to the podcast) may further disrupt finance as it provides opportunities to elevate the function and make it a more powerful strategic partner within organizations.
In addition, these most-viewed offerings showcase NeuGroup’s commitment to extend the power of our process beyond treasury, to teams including FP&A—featured in the first story below, by Nilly Essaides, NeuGroup’s director of research and insight, who launched NeuGroup for Heads of FP&A.
You’ll also find a story that speaks to NeuGroup’s global perspective by founder and CEO Joseph Neu about the evolving, post-pandemic role within multinationals of Asian regional treasury centers, based on insights from a meeting of NeuGroup for Asia Treasury in Singapore.

Here, then, in descending order, are the 10 posts that got the most page views on our website—where you can find many more compelling insights, videos and podcasts.

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After completing finance transformation initiatives at two companies, one NeuGroup member shares keys to success.

Accelerating the finance function’s digital transformation is one of the leading priorities for NeuGroup members heading into 2023, as many corporates seek to overhaul outdated, tactical finance organizations and embrace a more strategic, forward-thinking mindset. But where do you start? For Aaron Bloomer, vice president of global FP&A at Baxter International, the answer was simple: FP&A.

"I’m a huge advocate of outside-in thinking," Mr. Bloomer said in an interview with NeuGroup Insights after presenting at a session of NeuGroup for Heads of FP&A. "Corporates can be insular. To be transformative, you need to see where you’re coming from and where you’re going," which he said starts with FP&A taking the lay of the land.
After previously implementing a finance transformation initiative at 3M, he was tasked with leading a large-scale transformation to modernize FP&A at Baxter in 12 months.

Please click here to read the complete story, including Mr. Bloomer's five keys to a successful finance transformation.

As June 1 draws close, treasury teams need to consider how a default might affect liquidity and what to do now.

Treasury Secretary Janet Yellen repeated on Monday that if the debt limit isn’t increased or paused, the US will probably be unable to pay all its bills as early as June 1. And while the worst case scenario of a default seems unlikely, few observers see a quick fix to the problem, despite Tuesday’s meeting between President Biden and House Speaker Kevin McCarthy.

What, then, should treasury and finance teams be doing to prepare for the extreme volatility and market dislocation that would almost certainly be sparked by a default following a failure to raise the debt ceiling?

Although answers to that question can be debated, it is incumbent upon treasury leaders—some still coping with liquidity concerns raised by the banking crisis—to consider, discuss and address the issue now if they haven’t already. That means digging into the potential implications for corporate funding sources such as commercial paper (CP), as well as cash investments like money market funds (MMFs).
One member at a recent meeting of NeuGroup for Tech Treasurers sponsored by Standard Chartered Bank has been preparing for volatility and default risks. "We are having conversations about how to diversify our liquidity," the treasurer said. His team is also discussing holding higher cash balances as a liquidity hedge and keeping more cash in foreign currencies vs. converting it into USD.

Please click here to read the complete story, including why prime funds are proving polarizing.

Members express frustration with Bloomberg’s data licensing fees and some explore alternatives.

The cost of paying Bloomberg’s data fees on top of what the company charges for a Terminal subscription sparked complaints and conversation at a recent meeting of NeuGroup for Foreign Exchange 2. The prices present a dilemma for treasury teams that don’t use the high-end tool on a daily basis but haven’t found alternatives they really like.

One member said her treasury team only logs on to Bloomberg Anywhere three times a month, using the Data License to publish the company’s 65 spot exchange rates for monthly internal reporting.
In 2021, this member’s total annual charges topped $140,000. That included $1,000 a month for the Data License and $75,000 to access to Bloomberg’s Multi-Asset Risk System (MARS), which treasury uses to extract much larger datasets every few years.
"I understand if you’re charging a big bank this kind of money because they’re using it every day, but we don’t," the member said. "To even put us on the same pricing tier as a big bank seems a little outrageous. Other members and I are in agreement that we just don’t use the Terminal enough to justify these types of costs."

Please click here to read the complete story, including why alternatives to Bloomberg have underwhelmed members.

Using Tableau to collect and aggregate data, a Salesforce treasury manager sidesteps IT to build a cash dashboard.

Having a dashboard showing where all a corporate’s cash is invested, how much yield it’s generating and the company’s exposure to numerous counterparties—on a daily basis—is not just a dream for one member of NeuGroup for Cash Investments. Cam Bowen, senior treasury manager at Salesforce, impressed peers at the group’s first-half meeting sponsored by DWS last week by presenting a dashboard he built himself that does all that and more.

His accomplishment validates the idea that technology developed by front office finance professionals who take matters into their own hands rather than wait for internal IT departments to come to their aid can help finance teams report valuable analytics to senior executives and the C-Suite faster and more efficiently.
Carlos Fernandez, a DWS coverage support specialist for Corporates & Insurance, praised the company: "By adopting cloud infrastructure and DaaS (data-as-a-service), Salesforce is moving forward with diminishing lines between technology and the front office to quickly create views and dashboards without dependency or need for time-consuming and costly IT projects."
One of the members wowed by the presentation added, "The project highlighted that treasury orgs don’t need a large, dedicated team of data scientists to unlock insights from their own data."
Mr. Bowen said, "We built this all, front office. If we had waited for the IT team to build some of this, we’d still be waiting."

Please click here to read the complete story, including how Mr. Bowen used Tableau to build the global cash dashboard.

SVB insights from NeuGroup founder Joseph Neu and senior executive advisors Paul Dalle Molle and Jerry Olivo.

Financial crises like the failure of Silicon Valley Bank reveal the grit, dedication and skill of first-rate treasury and finance teams—and their ability to manage risk when battling forces they can’t control. Upheaval, volatility and uncertainty also test the mettle of NeuGroup, whose mission is to help members, sponsors and partners withstand the blows.

Hours after regulators shut down SVB last Friday, the NeuGroup team ran an hour-long session where more than three dozen members shared what they knew and what they’d done so far. They answered each other’s questions and provided a path for their peers through the fog.
The Silicon Valley Bank Crisis Community session and two others have been hosted by senior executive advisor Paul Dalle Molle, a former head of technology banking in North America at Societe Generale.
In a video clip you can watch by hitting the play button below, Paul offers his observations on a bank failure that he says did not have to take place, as well as takeaways from hearing how members have navigated the crisis and lessons the collapse of SVB holds for corporates and their finance teams.

Treasury and finance teams can better prepare for potential disruption and crises by codifying past lessons.

Over the last few years, treasuries have faced significant market and geopolitical shocks, including the onset of Covid, the war in Ukraine and extreme global financial market volatility. This year promises to be equally if not more challenging.

Respondents to NeuGroup’s 2023 Treasurers’ Agenda Survey listed an economic downturn as their No. 1 risk this year. Financial market volatility was tied with political uncertainty for second place.
On treasurers’ risk radar screens this year are an escalation in tensions between Taiwan and China, and political strife and currency devaluation in Nigeria, Peru, Chile, Brazil, India, South Africa, Venezuela and Turkey.

Please click here to read the complete story, including the key considerations of an early warning system.

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: insights@neugroup.com.

Context: The failures of Silicon Valley Bank, Signature Bank and Credit Suisse dramatically drove home the critical need of corporations to keep close tabs on the credit worthiness of their banking partners. In response to the crisis of confidence, some companies moved money out of smaller, regional institutions into large, global systemically important banks. The tumult also sparked questions for treasury from audit committees and the C-Suite about counterparty risk and investment policies.

Question: "I’m looking to see if anyone has a framework in their investment policy around counterparty risk on cash? The news about SVB, Signature and CS prompted an audit committee inquiry about our investment policy. I would appreciate it if anyone is willing to share their investment policy."

Please click here to read the complete story, including excerpts from two investment policies shared by members.

Baxter International FP&A head Aaron Bloomer shares insights on how FP&A can lead finance into the digital future.

The buzz surrounding the OpenAI tool ChatGPT has highlighted the power of artificial intelligence and the potential for AI to bring the future of finance forward—in ways that will further disrupt and transform finance organizations.

That’s the jumping-off point for a lively Strategic Finance Lab podcast conversation between NeuGroup’s Justin Jones and Baxter International vice president of FP&A Aaron Bloomer about AI, advanced analytics and the leading role finance should play as corporations turn insights derived from data into strategic action.
Watch a video clip from the podcast by clicking here, and listen to the full interview by heading to Apple or Spotify.

Post-pandemic thinking on the role of Asian regional treasury centers, often based in Singapore.

By Joseph Neu

I was excited to return to Singapore in February for the first time since 2019 to address NeuGroup for Asia Treasury, a group launched in 2011 to connect member companies to this vital region. While much has changed in a dozen years, Asia in 2023 remains crucial for MNC growth plans, so the group’s bridging mission remains more important than ever.

When I met with members before the pandemic, I wanted to help them navigate a more strategic role for MNC regional treasury. Since then, NeuGroup has pivoted further to embrace strategic finance professionals who move beyond SG&A support roles to become valued business partners.
It is my mission now to see regional treasury centers (RTCs)—especially those in Asia—join this pivot. The roles and responsibilities of RTCs must elevate to deliver more value. Treasury operations and low-value transactional work belong elsewhere—ideally in the hands of machines.
The good news is that discussions with members suggest that RTC roles will be more customer- and supplier-facing—aligning them with the strategic finance focus.

Please click here to read the complete story, including the how regional treasury centers can become more strategic and agile.

Multiple members have executed pre-issuance hedges in recent weeks, with many more strongly considering them.

Extreme volatility in interest rates is fueling strong interest in pre-issuance hedging among NeuGroup members who want to mitigate risk—especially those who plan to issue fixed-rate debt in 2023.

At the first-half meeting of NeuGroup for Capital Markets sponsored by Chatham Financial and Loop Capital Markets, members and representatives from Chatham agreed that this is an opportune time for companies to consider pre-issuance hedging, particularly using forward-starting swaps.
Pre-issuance hedging mitigates interest rate risk for a company’s future bond issuance by offsetting changes in the Treasury component of the bond coupon that occur between the date of the hedge and the date of bond issuance, according to Chatham.
"This strategy is particularly useful in volatile interest rate environments," Chatham’s presentation said.

Please click here to read the complete story, including which instruments members are using to lock in rates.

June 27, 2:00 PM - 3:00 PM ET
High Potentials: Political Risk and Tools for MNCs
As geopolitical tensions rise, our group for strategic finance analysts and managers deemed to have high potential will take a look at the sources members use for outside political analysis and expertise, and how lines of communication are maintained in high-risk jurisdictions. One regional treasurer will present on how he stays agile with clear lines of communication and reporting for better decision-making.