AFP Blogs

Busy corporate treasury and finance professionals may find it hard to get out of the office for a conference these days, but one event that is definitely worth the trip is the AFP Treasury Management Forum, April 21-23, in Washington, DC.

Take a look at the companies speaking at the Forum:

•  AOL
• Bank of America Merrill Lynch
• BNY Mellon
• Citi
• Coca Cola Enterprises
• Costco
• Custom House, a Western Union Company
• Ford Motors
• General Mills
• Industrial and Commercial Bank of China
• J.P. Morgan
• McCormick
• REI
• SWIFT
• Towers Watson
• U.S. Bank
• USPS
• Zappos.com

Senior executives from these companies will cover your most important treasury concerns:

• Working Capital
• Risk Management
• Technology
• Globalization

Plus, two Members of the House Financial Services Committee have confirmed to speak as well:

• Rep. Jim Himes, D-Conn. Worked at Goldman Sachs for 12 years, rising to Vice President. Worked extensively in Latin America and headed its telecommunications technology group.
• Rep. Gary Peters, D-Mich. Vice President of investments for Paine Webber from 1989-2003. Before that, he was with Merrill Lynch.

The AFP Treasury Management Forum also is approved for CTP recertification credits and CEP credits. Register now!

For companies with a centralized treasury structure or a shared service center (SSC), identifying and benchmarking key performance indicators is critical. Corporate treasury professionals confronting this challenge can get valuable advice from their peers at the AFP Treasury Management Forum, April 21-23, in Washington, DC.

Robert Polansky, Director, Treasury Operations for General Mills, will lead a roundtable discussion—“ How Centralized Companies Are Managing Working Capital”—at the forum. Besides learning from their peers, attendees will discuss issues associated with SSCs and ERPs as well as goals to measure performance.

“Treasury and finance professionals should attend the forum in order to gain up-to-date knowledge on working capital management, risk management, globalization and technology,” says Polansky. “It will also offer a great opportunity to network with industry leaders.”

Register for the event here.

The general counsel of the U.S. Commodity Futures Trading Commission, corporate treasury and finance executives from Verizon and Tiffany & Co., and legislators are slated to speak at an OTC derivatives reform update hosted by AFP.

CFTC General Counsel Dan Berkovitz, Verizon Director of Investment Strategy and Risk Management Neil O’Sullivan, CTP, and Tiffany & Co. VP Treasurer Michael Connolly will offer their perspectives on proposed OTC derivatives reform currently before Congress, December 7, in New York City. Registration is free, but seating is limited. The three-hour event starts at 8 a.m. at the Roosevelt Hotel in midtown Manhattan. This event is approved for three CTP/CCM credits.

AFP staff also will host an update and open forum on OTC derivatives reform in Chicago on December 4. Registration is free, but seating is limited. The three-hour event starts at 8 a.m. CT and is at the Hyatt Regency O’Hare.

“The situation around OTC derivatives reform is extremely fluid so these events are very timely,” says Brian Kalish, AFP Director, Finance Practice Lead. “It’s important for corporate treasury and finance executives to understand where we’re headed, and it’s an opportunity for legislators and regulators to hear from corporate end users.”

For more information about both OTC derivatives events contact Julianne Franck.

In the December issue of Exchange, Ron Maiorano and Keno Chan of KPMG raise an important point: Although restructuring debt is a viable — even critical — option, companies who do may face unexpected tax consequences.

For example, if a debtor and creditor negotiate a change in the terms of a $100 loan agreement, such as an increase to the interest rate, because the debtor has defaulted on the existing obligation the interest rate increase is treated as a significant modification to the debt obligation resulting in an issue price of $95 for the modified debt instrument. The debtor will realize $5 of COD income for tax purposes because the debtor is deemed to have repaid the old $100 loan with proceeds of $95.

Read more in Exchange.

This article drives home a stark reality: Big firms have gobs of cash, they can easily issue bonds, and they enjoy access to credit. And the little guys? No, no and no.

But should borrowing be the first step for firms? Not necessarily. “If you have long-term usages, you should use long-term money,” says Bruce Lynn of the Financial Executives Consulting Group. A capital expenditure that amortizes over 20 years is better served by going out to the 20-year bond market, rather than getting LIBOR plus 200 in a three-year line of credit. Says Lynn, “LIBOR plus 200 today is cheaper than the bond market, but what happens three years from now? Interest rates won’t be this low in three years.”

CIT Group, the nation’s largest U.S. Small Business Administration lender for nine straight years, is on the brink of collapse once again. A deal with bondholders to restructure its massive debt remains up in the air, according to reports. The deadline to complete the deal is October 1. The Fed already gave CIT $2.3 billion in TARP funds and refused to give more.

If CIT files for bankruptcy, the hardest hit sector would be the apparel industry, where CIT provides short-term financing to about 2,000 vendors who supply retailers with a combined 300,000 stores.

“Simply put, there is no other CIT,” says Sarsha Adrian, a senior research consultant with Graber Associates. “However, there are two new sites that could be helpful to small-and medium-sized businesses: Alivia Capital and The Receivables Exchange.”

There’s been a lot of talk on AFP’s discussion lists recently about yet another consequence of the credit crunch—firms getting hit for unused lines of credit.

What to do?

Try negotiating a tiered line of credit, says Jason Norma, controller at Belair Excavating. “In this case, the available amount would increase/decrease monthly, quarterly or at some point in the future. With a seasonal business, this is often a very good route to take. By closely matching the credit available to your cash needs by season, a company can minimize the unused portion, thus avoiding the heavy fees.”

Fees are partly a function of your company’s profitability and its capital funding [balance sheet] structure, adds Barrett Peterson, CPA, manager, accounting standards, procedures & analysis at TTX Company. “If profits are modest and variable, or your debt is too much of your capital, standby fees will be higher. Cash balances can be maintained at somewhat higher levels to compensate the lender, although the environment in early 2009 does not aid this option. A shorter term for the line may help, although renewal risk is increased. An early out clause for certain conditions might lowered the fee rate, although risk of loss of the credit line increases.”

More to come in the next issue of Payments.

Look for July AFP Payments soon. 
Current Payments Issue | Join Payments mailing list

Hello,

Introducing the AFP Payments Blog.

Whether you care about accounts payable or accounts receivable, cash management or increasing visibility into the payments channel, improving funds availability or strategically deploying treasury throughout the organization, We”ll do our best to help. And if we can’t answer your question, we’ll find someone who can.

You can contact us at payments@afponline.org or 301.961.8881.

We also edit Payments, AFP’s monthly newsletter for payments professionals. As you can see below:

Here’s a preview of the upcoming issue:

-Problem Solved. Our monthly column profiling treasury professionals who tackled a challenge. This month: Suguna Vepa, CCM, director of finance, for Fujitsu Computer Products of America, builds a better ERP system.

-Peer to Peer. Your colleagues discuss liability on a stop-payment check.

You can join the Payments distribution list by clicking here.

Hello,

Introducing the AFP Payments Blog.

Whether you care about accounts payable or accounts receivable, cash management or increasing visibility into the payments channel, improving funds availability or strategically deploying treasury throughout the organization, We”ll do our best to help. And if we can’t answer your question, we’ll find someone who can.

You can contact us at payments@afponline.org or 301.961.8881.

We also edit Payments, AFP’s monthly newsletter for payments professionals. As you can see below:

Here’s a preview of the upcoming issue:

-Problem Solved. Our monthly column profiling treasury professionals who tackled a challenge. This month: Suguna Vepa, CCM, director of finance, for Fujitsu Computer Products of America, builds a better ERP system.

-Peer to Peer. Your colleagues discuss liability on a stop-payment check.

You can join the Payments distribution list by clicking here.

Hello,

Introducing the AFP Payments Blog.

Whether you care about accounts payable or accounts receivable, cash management or increasing visibility into the payments channel, improving funds availability or strategically deploying treasury throughout the organization, We”ll do our best to help. And if we can’t answer your question, we’ll find someone who can.

You can contact us at payments@afponline.org or 301.961.8881.

We also edit Payments, AFP’s monthly newsletter for payments professionals. As you can see below:

Here’s a preview of the upcoming issue:

-Problem Solved. Our monthly column profiling treasury professionals who tackled a challenge. This month: Suguna Vepa, CCM, director of finance, for Fujitsu Computer Products of America, builds a better ERP system.

-Peer to Peer. Your colleagues discuss liability on a stop-payment check.

You can join the Payments distribution list by clicking here.