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Deep global uncertainty: time for a new business model?

It is clearer by the day: the world is becoming more uncertain socially, economically and politically. Business hates uncertainty, so what does corporate treasury do about it? How does the corporate treasurer help their company manage the increased uncertainty?

Trump and North America

Deloitte CFO Signals™ Survey: cracks in optimism surface as fewer CFOs express confidence in trajectory of North American economy:

  • Net optimism index declines 15 points, the largest decline in more than two years; confidence in the trajectory of the North American economy declines 13 percent compared with the second quarter of 2017
  • More than 75 percent of surveyed CFOs indicate a CEO or expanded CFO role are among the opportunities most likely to make them consider a change in role or company
  • More than half of CFOs say they have not yet moved beyond the pilot stage in applying emerging technologies to the finance function; those implementing emerging technologies cite efforts with robotic process automation, cloud-based services and analytics as particularly successful.

Brexit shadow

The impact of Brexit is becoming clearer as businesses and research agencies understand what is happening:

  • Moody's cut the rating by a further notch to Aa2 last Friday, underscoring the economic risks that leaving the EU bloc poses for the world's fifth-biggest economy
  • The FT reports that, “British companies are increasingly concerned that Brexit will hit sales and raise costs, according to a comprehensive new survey. Tracking the views of chief executives and chief financial officers across 2,500 non-financial companies every month, the survey by Nottingham and Stanford universities showed that, “the shadow of Brexit is still hanging over UK businesses”. The dangers of a cliff edge change are preying on companies’ minds.


The FT reports today that, “FX traders’ sense of political risk expected to linger as Merkel forms a shakier coalition” which points to even more uncertainty.

So what can the corporate treasury department do?

How can a strategic corporate treasurer help their company survive and prosper in the current environment? 

There are the natural, sensible actions:

  • Safety first in FX and liquidity management?
  • Batten down the hatches: minimal investment?
  • Double check all corporate treasury cybersecurity systems and processes?
  • Double efforts to release trapped cash?
  • Increase efforts to release working capital and improve WCM efficiency?
  • Etc.

But how and where can you help change the business model to open up new opportunities:

  • Move to recurring, regular payments rather than one off large payments for all sorts of business?
  • Change to mobile based solutions in major parts of your business
  • Take FX risk out of all your subsidiaries business model?
  • Tokenize your business?

CTMfile take: The increasing uncertainties show the need for new business models……. What would be yours?

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