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The Cloud: A Better Expense Model

CFO Magazine - 11 August 2017
Cloud computing is one of the biggest tech trends in a generation. It’s changing IT strategy for just about every business on just about every level, and it’s driving a huge shift in spending. The global cloud market is expected to grow to $390 billion by 2020, according to research by Bain, and one of its biggest areas of impact is how it presents a new landscape for chief financial officers to work within.
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The U.S. Jobs Market: Full Steam Ahead

CFO Magazine - 10 August 2017
June’s Job Openings and Labor Turnover Survey affirmed what many employers are already experiencing: a growing jobs market that shows no sign of slowing down. According to Tuesday’s Labor Department report, job openings increased by 461,000 to a seasonally adjusted 6.2 million in June. Openings are at their highest level since the data series was started in December 2000, and the monthly increase in job openings was the largest since July 2015. Those figures put the job openings rate at 4%, a level it last hit in July 2016.
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Private Companies See Bright Prospects, Wage Growth

CFO Magazine - 10 August 2017
CEOs and CFOs of privately held companies are growing more confident in the U.S. economy, feeding expectations of brighter prospects for their own businesses. As a result, hiring plans are up and importantly, so are expectations for future wage growth, according to a PricewaterhouseCoopers survey.

Sustainability Is a Key to Future Competitiveness

CFO Magazine - 9 August 2017
Traditional measurements of company value like total shareholder return (TSR) and market capitalization may help identify what companies are presently the healthiest. But, according to a new study by Accenture, they don’t have much to say about prospects for future competitiveness. The reason, Accenture says, is that companies historically have pursued value creation by focusing only on growth or profitability, or both. What they should be deploying today, in order to best position themselves for competitiveness later, is an “interdependent” strategy focused equally on growth, profitability, and a third dimension: sustainability and trust.
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Metric of the Month: Days Payable Outstanding

CFO Magazine - 8 August 2017
Not that long ago, negotiating extended payment terms was equivalent to tossing out a red flag to signal that the company was in trouble. But today, with fresh and painful memories of the past recession, many larger businesses in good financial shape are still pushing for extra time to pay their bills. In this month’s metric, based on current APQC Open Standards Benchmarking® data, it’s clear that “net 30” is no longer the standard at many companies. In terms of extending days payable outstanding (DPO), the “top performers” take 46 days or longer to pay their bills. The “bottom performers” pay their vendors in 27 days or less.
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When Projects Have a Zero or Negative NPV

CFO Magazine - 8 August 2017
The net present value (NPV) rule is essentially the golden rule of corporate finance that every business school student is exposed to in most every introductory finance class. The NPV rule dictates that investments should be accepted when the present value of all the projected positive and negative free cash flows sum to a positive number.
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Chill About China

CFO Magazine - 7 August 2017
Recently, U.S. and Chinese officials concluded a marathon 100-day round of trade talks without reaching agreement on a single significant economic issue. The dialogue reportedly ended in a stalemate after China balked at the U.S. side’s demand that it curtail its alleged overproduction of steel. The Trump administration has made limiting Chinese steel imports a central tenet of its trade policy — though Chinese steel accounts for just 3% of U.S. steel imports — while giving short shrift to the likely jump in domestic steel prices and job losses in the construction industry that would accompany an imposition of tariffs and quotas on Chinese steel.
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U.S. Employers Add 209,000 Jobs in July

CFO Magazine - 7 August 2017
The U.S. economy posted higher-than-expected strong job growth in July, continuing a summer surge, though wage increases remained sluggish. The Labor Department said employers added 209,000 jobs last month while the unemployment rate fell to 4.3% from 4.4% in June, matching May’s 16-year low.
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Microsoft Scales Accounting Mountain

CFO Magazine - 4 August 2017
In a move only a company as massive as Microsoft would consider making, the company is planning to offer a set of restated financial statements on Oct. 1 that reflect its early adoption of both of the Financial Accounting Standards Board’s two major new standards, the rules covering revenue recognition and lease accounting. To date, only a handful of public companies have chosen to adopt the revenue recognition or lease accounting standards early. To attempt to do both would test the resources of even the most well-staffed finance and accounting departments.
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Much Ado About Blockchain

CFO Magazine - 4 August 2017
Companies invested about $1.4 billion in blockchain initiatives last year, officially making distributed ledger technology the sexiest piece of back-office plumbing since the modem first arrived on the scene. Simultaneously touted as a game-changer with the power to disrupt every industry and a goldmine for the innovators who develop the right commercial applications of the technology, blockchain initiatives are popping up left and right, causing many financial executives to ask the question: Do I need to care about this right now?
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Planned Job Cuts Fall 18% in July to 28,307

CFO Magazine - 3 August 2017
Layoffs announced by U.S.-based employers fell in July to the lowest monthly total since November 2016 but a downturn could be on the horizon, according to a new report. Outplacement firm Challenger, Gray & Christmas said employers announced 28,307 job cuts last month, 18% fewer than in June and 37.6% fewer than in July 2016. It was the lowest monthly total since November 2016, when 26,936 cuts were announced.
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Regulators Find 'High Level' of Risk in Syndicated Loans

CFO Magazine - 2 August 2017
The riskiness of large syndicated bank commitments declined slightly as of the first quarter but remained elevated, according to U.S. banking regulators. The high level of credit risk is mostly due to leveraged lending practices and loans to distressed borrowers in the oil & gas sector. Regulators are concerned that loan losses could rise considerably if U.S. economic conditions deteriorate. The review of “shared national credits” (SNCs) — loans of at least $20 million that are jointly made by three or more U.S.-regulated banks — is conducted regularly by the Federal Reserve in conjunction with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
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Plan-Design Changes Have Less Impact on Health Costs

CFO Magazine - 2 August 2017
Companies may finally be running out of ways to hold their health costs in check by tinkering with plan design, new research suggests. Plan-design changes generally reduce participant benefits, increase participants’ share of total costs, or both.
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Six Ways to Curb the Costs of a Data Breach

CFO Magazine - 2 August 2017
For those paying attention, 2017 has provided a steady and impressive litany of data breach victims, from video games to hotels to burrito shops to nearly every American voter. This is a direct continuation of the trend from 2016, in which roughly 40% of breached companies had under $100 million in revenue, and only 11% had revenue greater than $1 billion. No matter what size you are, you’re a target.
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Would a Territorial Tax System Help Investors?

CFO Magazine - 1 August 2017
As corporate tax reform emerges as a national legislative priority, a key proposal by the Trump administration and others is to scrap the United States’ current worldwide system of taxation. In that system, income earned abroad by subsidiaries of U.S. multinationals is subject to federal taxes when brought home.
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Indices to Bar New Issuers That Offer Multiple Share Classes

CFO Magazine - 1 August 2017
Just as the initial public offering market revs up again, the providers of stock market indices are taking a stand against new issuers that trample on shareholder voting rights. According to announcements in the past week, both S&P Dow Jones Indices and FTSE Russell will bar companies from some of their indices that either issue multiple classes of shares or have a very small percentage of voting rights in the hands of non-restricted shareholders.
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Cancer-Fighting Investments Went to Fund Restaurants

CFO Magazine - 31 July 2017
The Securities and Exchange Commission today filed charges to stop an alleged ongoing fraud by a Massachusetts businessman misusing investments intended for the development of cancer diagnostic tests. According to the SEC’s complaint, Patrick Muraca established two pharmaceutical development companies and raised nearly $1.2 million by representing to investors that their money would be used to develop products to detect cancer and other diseases. Instead, the money went to fund Muraca’s fiancée’s restaurant businesses.
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For a CFO, How Important Is Industry Knowledge?

CFO Magazine - 31 July 2017
In our Proformative question of the week, Wayne Spivak, president and CFO at SBAConsulting.com, writes: How important is industry knowledge to the CFO? My thesis is that all businesses are about 90% the same. They all have cash-flow issues, budgeting, products and/or services, ownership (of some type), taxes, and compliance issues.
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Twitter Shares Dive on Static Monthly Usage

CFO Magazine - 28 July 2017
Twitter’s share price fell more than 14% on Thursday as the news that it failed to add any monthly users in the last quarter disappointed investors following a growth surge earlier in the year. For the second quarter, the company reported 328 monthly active users, exactly where usage was three months ago. It the high-spending U.S., monthly usage dropped from 70 million to 68 million.
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UK Tech Giant Sage to Buy Intacct for $850M

CFO Magazine - 27 July 2017
In its largest acquisition ever, British tech giant Sage Group has agreed to buy Silicon Valley software developer Intacct for $850 million to expand its cloud-based financial management offerings. Intacct competes with the likes of FinancialForce and Oracle’s NetSuite in the enterprise resource planning software space. It posted revenue of $88 million for the fiscal year ended in June, more than 90% of which was subscription-based.
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Late Shift: The 2017 Working Capital Scorecard

CFO Magazine - 26 July 2017
Cash is the lifeblood of a company, so managing short-term assets and liabilities to a strong working capital position is one of the things a company has to be great at. After all, efficiently managing cash leads to higher liquidity and a reduction in the debt and equity needed to sustain operations. Therefore, it’s good news when a company’s cash conversion cycle (CCC) — the amount of time it has cash tied up in working capital — shrinks. That’s exactly what happened overall for America’s largest companies in 2016, according to this year’s CFO/Hackett Group Working Capital Scorecard.
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Growth, Interrupted

CFO Magazine - 26 July 2017
Uncertainty about U.S. regulatory and trade policies is prompting some companies to put business expansion plans on hold, according to the second-quarter Duke University/CFO Magazine Global Business Outlook survey. More than one-third of U.S. finance executives (36%) report that the level of uncertainty their companies face is currently higher than what they perceive as normal. Among the respondents who say their companies face increased uncertainty, nearly 6 in 10 (58%) say that the uncertainty will cause their firms to proceed at a slower pace with or even delay business expansion efforts.
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Crowe Horwath Censured Over China Audits

CFO Magazine - 26 July 2017
The Public Company Accounting Oversight Board has sanctioned Hong Kong-based audit firm Crowe Horwath CPA Limited for refusing to cooperate with the board’s investigation of the firm’s audits of a publicly-traded Chinese company. According to the PCAOB’s disciplinary order, the board’s Division of Enforcement and Investigations last year demanded that Crowe Horwath to produce audit work papers and other documents but the firm refused to comply, citing guidance from China’s Ministry of Finance.
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IMF Isn't Buying Trump's 3% Growth Target

CFO Magazine - 24 July 2017
The International Monetary Fund has cut its forecast for U.S. economic growth over the next two years, citing the Trump administration’s lack of progress in implementing tax cuts and infrastructure improvements. President Trump has targeted 3% growth, a rate that has not been seen since the Clinton administration. Average growth rates slowed to below 2% during the presidencies of George W. Bush and Barack Obama.
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What Makes an Ideal Private Equity CFO?

CFO Magazine - 24 July 2017
As private equity firms look to maximize the value of their holdings, they are increasingly bringing in new CFOs early in the lifespan of their investments. The ideal private equity CFO both strategic and operational, serving as a thought partner across various functional and divisional aspects of the business while implementing the systems and processes to help the company get to an exit.
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Landing the Megadeal: Seven Keys to Closing Big Sales That Make Money

CFO Magazine - 24 July 2017
It all started out so well. A long-time, valued customer of a networking company put out the word that it was planning a massive purchase of equipment. The supplier assembled a deal team, submitted a bid, and made the sale. But not at a profit. The customer loved the extra scope the supplier had built into its proposal but wasn’t willing to pay for it, leaving the supplier with a choice of walking away or taking a hit. It chose the latter. Of still more concern was a contract clause stipulating delivery milestones. The deal was signed three months later than expected, but no one thought to change the delivery dates accordingly. Within a matter of weeks, the supplier found itself liable for penalties.

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