Several conversations this week around the world showed how severe the COVID-19 pandemic has been on suppliers, banks and corporates. We are starting to see the consequences…..

Reactions

There have been many different company reactions including:

• Customer-focused companies have:
  • Not lost any contracts with customers who either:
    • Delaying the finish date
    • Ask for an earlier date
  • New customers have come on board demanding an installation ASAP
• Companies are varying how they handle the pandemic:
  • Supplier treatment:
    • Some are reducing payment times to help the supplier
    • Others are extending payment terms (many think this could put them at risk in the long term with their suppliers)
  • Customer treatment:
    • Some have offered to extend payment terms
    • Others offered financing programmes
  • Set up joint committees to offer a range of support for both customers and suppliers because “we are all in this together”.
• The Association of Corporate Treasurers in the UK has found that their well-being courses and webinars on coping with “the new normal” have been really popular and very well attended. Caroline Stockmann, the ACT’s focussed and energetic CEO, believes that today the most important words in business today are “trust’ and “resilience” which are increasingly needed to survive.

All change in corporate treasury and banking

All sizes and types of corporate treasury suppliers, including banks, have been hugely affected by the pandemic:

• Most players have had a very bad 1Q (although a few specialist companies have done really well, with signings massively increasing in the first quarter) but most have had a ‘lousy/terrible/horrific first quarter;
• Many key people are scared, really scared, but will only admit it in private. They include senior bankers, fintech developers, insurance executive, etc., etc. No-one is immune.
• The most senior consultants are worried, e.g. What will it mean for our work? Our sales pipeline? Will I give all my advice remotely? How will I get to know people? Develop relationships? My life has changed completely said one, “Now a holiday would be getting away from each other.”

Corporate treasury and banking are no longer what it was:

• Corporate treasury is now the second most important function in the MNC after the CEO and CFO office (according to The ACT)
• How do you do corporate treasury in a business that no longer makes sense? For example:
  • How to do you do corporate treasury in an airline when ‘all of a sudden’ at least 70%, and probably more, of your customers have disappeared?
  • Most restaurants and hotels cannot afford the cut in income combined with the extra and necessary changes to the buildings, etc.
  • How do you lend to/invest in such businesses?

The NEW NORMAL needs something else

At the ACT’s International Treasury Week there was much talk of “building a better new normal”. Everyone agreed that this was right and would happen, but how?

There was much talk of digitising everything, but already people are rowing back on this because it would exclude too many people, e.g. the blind, the very poor, the technology illiterate people, etc.

However, what is happening is much more profound than just digitising everything, people’s basic values are changing, e.g.:

• A senior executive in a US corporate treasury system supplier now offers European length holidays and insists on people taking then
• Now that it is no longer possible to fly from New York to London for a meeting, this has introduced the thought that most international travel is not necessary and wasteful. So what is the most effective minimum?
• Printing out documents is now starting to be banned in some offices and people are not complaining
• Senior executives are starting to think, to realise – believe it or not – that the low paid workers, e.g. cleaners etc. are much more important than they thought.

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CTMfile take: The New Normal needs new business model(s) and corporate treasurers have a responsibility to help the drive to develop and build them.