Head of Banking & Treasury Management Sales and Advisory - Americas
March 30, 2021Posted InTreasury management
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As the pandemic retreats, finance and treasury departments can emerge stronger with more agility and resiliency, while anticipating potential disruptions to their conventional business processes in the future.
The impact of COVID-19 exposed vulnerabilities and illuminated inefficient and oftentimes, manual, processes. However, the pandemic also naturally accelerated digitization and technology enhancements as staff were driven to remote working environments. It forced companies to look inward at all manual treasury management, risk mitigation, and business continuity planning (BCP) processes.
Recent survey data lends credence to what we see and hear. The Boston Consulting Group’s (BCG) recent COVID-19 CFO Pulse Survey found that nearly all Chief Financial Officers (CFOs) surveyed in October 2020 had temporarily paused exploring proactive ways to protect their business. However, 85% of those surveyed expressed optimism that they would be able to take advantage of new opportunities in risk mitigation, BCP, and treasury management over the coming months as business environments and the macroclimate improve.
It is our hope too that finance and treasury departments can emerge stronger with more agility and resiliency by proactively reviewing lessons learned, while anticipating potential disruptions to their ‘business-as-usual’ processes in the future. Preparing for this rapidly approaching post-COVID business environment will be crucial as the pandemic retreats, and investment and economic activity pick-up.
Preparing for a post-COVID world
The question on the minds of all CFOs and Finance Managers is: What steps can my staff and I take to ensure we are prepared for the days, weeks, and months ahead?
Implications for cash and liquidity management
Treasury organizations will also need visibility into cash, contracts and facilities across the organization. Sufficient transparency is key to identifying all cashflows, interfaces, risks, and contingencies as it will allow the team and broader committee to take actions that deliver quick wins that immediately improve the liquidity position of the organization. Launching revenue generating campaigns, improving core working capital management processes, and delaying capital expenditures and other investments may prove highly effective at achieving these goals. It is vital for the organization to develop upside and downside liquidity scenarios that match top-down probabilities over the coming months with bottom-up liquidity planning.
It goes without saying that many supply chains have been adversely impacted by the pandemic and treasury organizations may need to manage additional risk associated with suppliers, FX and commodities. Organizations will need to take into consideration how suppliers are being directly affected. Those that are struggling to fulfill orders may benefit from supply chain finance. At the same time, treasury teams may also need to monitor the management of currency and risk associated with the volatility.
Best practices for a successful treasury organization
In summary, with the right planning and reasoned actions, treasury organizations have an opportunity to help the business thrive. Below are a few key best practices that treasury professionals should keep in mind:
To further discuss your treasury management needs and the themes highlighted in this article, please do not hesitate to contact us.Contact us BCG’s COVID-19 CFO Pulse Survey #3, October 2020 https://www.bcg.com/en-gb/publications/2020/covid-cfo-pulse-check-3