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CTMpulse: How to survive the COVID-19 crisis

In today’s COVID-19 crisis, where economists are predicting a 15% fall in trade and a global recession, new attitudes and new ways of working are required. Below we describe 1) what corporate treasury departments are doing and 2) a couple of good ideas lists.

Corporate treasury departments

Corporate treasury departments:

  • Are focusing on:
    1. Managing liquidity and funding:
      • More disaster scenario planning
      •  Stress testing to determine the need for new or extended facilities
      • “Although have sufficient liquidity globally– nevertheless, we have just issued a multi-billion Delayed Draw Term Loan.”
    2. Cash flow forecasting:
      • Much more emphasis on the accuracy, particularly in the short term
      • Moving to more frequent – a weekly forecast for most businesses, rather than monthly
      • “Using cash flow forecasting to closely monitor our working capital needs”
    3. Credit risk on receivables and the linked supply chain finance
      • Increased visibility and focus on receivables position by industry and type of customer
      • More emphasis on Letters of Credit
    4. Managing FX volatility: corporate treasury departments are asking:
      • How long can our hedging programme work?
      • What are the right hedge levers
  • Have found that having the corporate treasury team working from home:
    1. Is mostly not a problem as many were already doing that already, just the % changed
    2. Signing documents is a problem
    3. Doing team projects remotely and interacting is a problem
    4. Needs cross-training of team members to ensure continuity in case of mass sickness
    5. Challenges are more emotional. Need to keep close to each team member.

Great ideas for handling the COVID-19 crisis

There are many lists of ideas on how to tackle the COVID-19 crisis. Two we like are:

Finch Capital

Finch Capital – the fintech investor, has produced this Checklist on how to navigate through the crisis phase of COVID-19 and reposition for the new normal:

  1. Managing losses with speed and adequacy: staff costs (be open and emphatic), use force measure clauses, renegotiate contracts
  2. Be realistic about fundraising landscape: short-term little appetite for new deals as the focus is with protecting portfolio (this will change in about six months)
  3. Use equity to reward and incentivise staff: your remaining staff needs to be 100% aboard with the mission of the company and needs to overperformed to survive
  4. Communicate openly with staff: will help to gain the support of staff whilst making tough decisions
  5. Put as much effort as you can into product development: now is the time to make sure your product stands out amongst a crowd
  6. Marketing spend: focus only on high ROI channels
  7. Government support: make use of local rescue packages where you can and explore opportunities early (Find overview here)

Deutsche Bank’s:

  • COVID-19 dossier
  • The COVID-19 corporate checklist (available to Deutsche Bank customers only).

CTMfile take: Stay safe and be kind.

 

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This item appears in the following sections:
Cash Flow Forecasting
Financing Short-Medium Term Deficits
Global Cash & Liquidity Management
Tips
Treasury insights

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