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Volume 9, Issue 4      In This Issue:   Winning in a Downturn: Rapid cash generation   Bailout man turns the screws   How to think about the great consumer debt plunge   Industry shocked and angered by Facebook CFO's dismissal   Has the role of your A/P changed recently?   Can this tool really calculate telecom benefits?   Your supply chain doesn't have to be perfect - here's why   Are you abusing these 10 most irritating office phrases?   What's your data worth on the black market?   Why didn't FASB just say so?   Regulators eye "going concern" concerns   401(k)risis   Study predicts 50% cut in free cash flow   Staples CFO: Going green means saving green   Tracking an ancient Belgian beer Winning in a Downturn: Rapid cash generation As the global downturn deepens, many companies have seen a sharp decline in revenues and a growing cash crunch. They must find new ways to cut costs and generate much-needed cash, without hurting future viability. The good news is that many businesses can quickly cut overall costs by 15 percent or more without undermining their core business strength. The key is to take action on a number of fronts in a top-down effort driven by senior management... Read the article.  Back to top Bailout man turns the screws Consumer Credit Drops by $7.5 Billion Late on New Year's Eve, James Lambright, a Treasury Department official, sat waiting impatiently for documents to arrive from Citigroup Inc. He'd just been told by the bank's chief financial officer that Citigroup couldn't reach some executives who needed to sign the paperwork, including one woman whose husband was in the hospital with a heart attack. "Well then, you know where to find her," Mr. Lambright replied to the finance chief, Gary Crittenden, according to three accounts of the call. "Put someone in one of your fancy black cars and get her to sign the document." As the government continues to pour cash into the economy, Mr. Lambright, 38 years old, has become one of the most powerful men in American finance. Unknown to most outside the Treasury building, he's an embodiment of how power in the economy has shifted -- for good or ill -- to Washington. The chief investment officer of the Troubled Asset Relief Program has engineered $350 billion in deals for the U.S. government since October, more than many investment banks would do in a good year. His team interviews candidates for... Read the article.  Back to top How to think about the great consumer debt plunge Over the next few days you'll likely hear lots of theories trying to explain today's news that consumer credit card debt plunged at an annualized rate of 9.7%--the biggest drop ever recorded. Beyond the blather though, there's a simple truth: Consumer debt declines are very normal during a recession and this fall is steeper because during our last recession, the Fed and structural market changes prevented this normal slide from occuring. Declines in household debt usually lead a recession by... Read the article.  Back to top Industry shocked and angered by Facebook CFO's dismissal The industry reaction to the way Facebook handled CFO Gideon Yu's departure is surprise and anger. The anger stems from the way the company announced his departure, saying it needs a CFO with public company experience. Sources find this line ludicrous, given Gideon's talents and track record at Facebook, YouTube and Yahoo. "Looks like a smear job to me," said one prominent Valley investor... Read the article.  Back to top Has the role of your A/P changed recently? Today’s market constriction has forced A/P to step up and play a more pivotal part of overall company operations... Read the article.  Back to top Can this tool really calculate telecom benefits? Finally, a tool that spells out the benefits of telecommuting — in a language finance chiefs can easily understand... Read the article.  Back to top Your supply chain doesn't have to be perfect - here's why Supply-chain management Does your supply chain operation really need to be perfect to run at top efficiency? Good news: Perfection isn’t necessarily a requirement for top-level competency and success. First of all, “perfect” is a virtually impossible standard. Even one mistake — regardless of how many orders or units are handled — immediately puts perfection beyond reach. How much help does that provide for you as an effective benchmark of performance? One reason the goal of perfection persists is because research from several years ago that said boosting perfect order fulfillment by 3% paid off with a 1% hike in profit margins. But in subsequent years, a more well-rounded definition of what constitutes perfection has evolved among supply chain operators. One metric that’s picked up some steam is the... Read the article.  Back to top Are you abusing these 10 most irritating office phrases? Everyone’s got their verbal pet peeves, but odds are good you and your co-workers have more in common than you think when it comes to phrases that should never be spoken in the office. After performing extensive research, scholars at Oxford University and author Jeremy Butterfield have devised a list of the ten most irritating phrases uttered by humans. This top ten list appears in Butterfield’s latest book, “Damp Squid,” which was comprised from books, papers, magazines, journals, broadcast media and other sources:... Read the article.  Back to top What's your data worth on the black market? Stealing from the (ex) boss Does this sound too far fetched: Data from your finance department turns up in Iran, downloaded by a cybercriminal, who can now sell it to your competitor. Sound implausible? Well, if it could happen to highly classified plans for the U.S. president’s helicopter, chances are pretty good your next quarter sales forecasts could suffer the same fate. At the very the least, you can minimize the risk. How did top-secret design schematics wind up in the hands of thieves half a world away? Peer-to-peer (P2P) file sharing inadvertently allowed... Read the article.  Back to top Why didn't FASB just say so? Rule Change Lets Banks Reinvent the Past Why Didn't FASB Just Say So? In a "plain English" summary of its recent actions on fair value, the FASB proves that it can, in fact, speak plain English. Rarely in history has accounting received such public and media attention as it has in recent months, as debate swirls around the question of whether mark-to-market, or fair-value accounting has exacerbated the difficulties of the financial industry. Last week, the Financial Accounting Standards Board voted to allow companies to change how, or, perhaps more important, where, the impairment of securities are reflected on financial statements. That allows companies to avoid having to show... Read the article.  Back to top Regulators eye "going concern" concerns With the economic crisis deepening, auditors and their clients get testy with each other about companies' ability to survive. In the midst of an increase in the number of going-concern qualms stamped on company financials, standard-setters are working on changing how managers and auditors determine whether a business will stay viable in the foreseeable future. It's the one area of financial reporting where auditors are required to play forecaster. Here, they must go beyond their more comfortable role of reviewer where they retrospectively look over a company's past financial performance. What's more, the prediction portion of their jobs is getting harder... Read the article.  Back to top 401(k)risis The stock-market meltdown has dealt a crushing blow to retirement plans. Brace for repercussions. Soon after Section 401(k) of the Internal Revenue Code took effect in 1980, it morphed from an obscure investment option into the goose that laid the golden nest egg. Has that goose been cooked? The value of the equities held in defined-contribution plans has declined by $2.8 trillion since the market peaked in 2007. The Hewitt 401(k) Index finds employees moving substantial sums into fixed-income investments. And multiple surveys have found that a majority of employees, from the C-suite to the front lines, are now delaying or reconsidering their retirement plans as a result of the sharp decrease in their personal wealth. This has already had some short-term effects,... Read the article.  Back to top Study predicts 50% cut in free cash flow A new study that tracks free cash margins says the metric is set to drop to recession levels. The median free cash flow for nonfinancial companies could sink by 50% during the next year, especially if the recession continues to choke revenue streams, a new report says. Up until now, cash-flow margins — free cash flow measured as a percentage of revenue — have remained flat. But recessions have a way of eating away at that ratio, says Charles Mulford, director of the Georgia Tech Financial Analysis Lab and co-author of the study. Mulford and two co-authors, graduate research assistants Sohel Surani and Jason Blake, analyzed the cash-flow trends of 20 nonfinancial industries, comprising 61 subindustries, for a series of rolling 12-month periods from the first quarter of 2000 through the third quarter of 2008. They plan to track the same indicators each quarter going forward. The first report, which will be released next week, notes that... Read the article.  Back to top Staples CFO: Going green means saving green Switching from using three-amp to two-amp lightbulbs, for instance, adds $4.2 million to the company's bottom line. Companies that have not done much work on "green" initiatives will likely get going now because of their declining business fortunes. So said John Mahoney, finance chief of Staples, at the CFO Green Conference yesterday in New York. Do sustainability efforts save money? The question of whether that's the case or whether such practices cost more than they're worth has long been answered, conference speakers asserted. "We've seen over and over again that companies can find ways to benefit both the environment and their bottom lines," said Gwen Ruta, vice president of corporate partnerships for the Environmental Defense Fund. A vast assortment of green practices have had a clear impact on the financial performance at Staples, according to Mahoney. "While the economy is reeling today, we can afford to maintain our sustainability programs because of their measurable impact on our financial performance," [programs such as]... Read the article.  Back to top Tracking an ancient Belgian beer Worth Seeking Out: White Bordeaux Lambic, a rare, sour brew, uses techniques dating back to man's first beer. Reporter Charles Forelle visits one of the few remaining breweries. Beer is usually not a morning pursuit. But it was still dark one day last month when I lumbered out of bed and over to the tiny Cantillon brewery, located in a scruffy neighborhood not far from the main train station here. Industrial brewers can be as secretive as defense contractors -- good luck getting inside the mashing room of Diageo PLC's Guinness brewery in Dublin -- but a couple of times a year Cantillon opens its doors to the public. I had risen early because I wanted to see how to brew lambic, a Belgian specialty so retro its origins go back thousands of years. The early-morning start was necessary because there are no refrigerated tanks or cryogenic chillers at Cantillon; the boiled liquid that will become beer cools in... Read the article.  Back to top Forward to a Friend: Do you have a friend that would like to receive FinanceWatchsm? Perhaps you know a peer within your organization, or associate at a partner company that would benefit from applying to receive this publication. 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