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Treasurers’ liquidity actions suggest dire economic consequences

Treasury departments are focusing on preserving cash and improving forecasting to ensure that their organisations weather the COVID-19 crisis, according to a survey conducted by the Association for Financial Professionals (AFP).

In early April 2020, AFP conducted the Impact of the COVID-19 Pandemic survey. The survey revealed that cash is organisations’ top priority in this crisis, and practitioners are taking somewhat drastic measures to preserve it. A majority of companies (69%) have delayed hiring new employees, and many of them (61%) are instituting a total hiring freeze.

Taking a long-term view, treasury departments are building liquidity buffers in case economic conditions worsen or recover slowly. Fully 70% of organisations have either delayed planned capital expenditures (41%) or are in the process of delaying them (29%).

The increased focus on potential future impacts of the pandemic on organizations’ liquidity has led to a high-profile role for treasury. Seventy-eight percent of respondents said their organisations are including representatives from treasury in meetings and discussions surrounding the pandemic. In addition to preserving cash, treasury has increased its emphasis on cash forecasting and expanded the time horizon for forecasts. A total of 88% of respondents are now making this a priority.

Protecting cash also means making sure companies do not lose money to unauthorised transactions. Seventy-four percent of organisations have either implemented or plan to implement strict compliance procedures to protect against fraud.

“Determining the amount of cash required to sustain the business is vital to weathering a crisis of this magnitude,” said Jim Kaitz, president and CEO of AFP. “Treasurers are guardians of corporate liquidity, and this pandemic is requiring them to go the extra mile to ensure the sustainability of their organisations.”

“These results mirror what we’re hearing from our clients, that cash forecasting, adoption of digital payments, and renewed fraud mitigation processes are critical for preparedness,” said Sharon Haward-Laird, head, North American Treasury & Payment Solutions at BMO. “Thankfully, a wide variety of industries and organisations are taking the necessary steps, working with their customers, suppliers and partners, including their banks, to navigate what’s ahead.”

Additional findings from the survey include:

  • Sixty-two percent of respondents had business continuity plans in place and a significant share of treasury professionals (95%) attest that these plans were effective when put into use.
  • Sixty-five percent of companies have moved from paper to electronic payments since the start of the crisis.


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