Around the world, treasurers are playing a greater role as strategic advisers to their companies. Throughout Q4 of 2019, Greenwich Associates surveyed leading treasurers at major multinational corporations to understand the ways in which the role of corporate treasurers were changing. The report, Changing KPIs force treasurers to improve their risk technology, concluded that, to meet new demands, treasurers felt they needed additional resources to fully support company initiatives, especially in tracking risks.
Now, due to the current coronavirus crisis, those responsibilities have escalated dramatically in importance. How are corporate treasurers responding to the increasing pressure placed on them and how do they see the future of their profession post-pandemic? To find out, Bloomberg and Greenwich polled leading treasurers, CFOs and corporate finance professionals on their response to the crisis during a recent webinar.
Asked to describe the additional demands treasurers are facing as a result of the pandemic:
Given the level of disruption, corporate treasurers are looking more closely at the credit risks in their supply chain and client base. When asked to explain how they are dealing with increased risks, 44% of the respondents said they were scrutinising the creditworthiness of their customers and suppliers more closely.
This is essential now that uncertainty in supply chains has increased and many receivables need to be discounted and important decisions on extending credit to clients must be made. In addition, 38% of respondents indicated they were increasing the number of conversations they have with their lenders. This is unsurprising, but it is remarkable that this action took second place behind scrutiny of their business partners’ creditworthiness. Meanwhile, 15% of respondents said they were expanding their hedging programmes and only 1% indicated their risk management stance was unchanged.
What does the future hold for corporate treasurers?
Now that the initial shock has passed, many are turning to face the future. Unsurprisingly, treasurers said they believed they would be focusing more on risk management (35%.) A further 27% said they would increasingly focus on supply chain management. Additionally, 21% of respondents said treasurers will be required to hold greater reserves and 14% believe they will be required to draw up expanded disaster response and business continuity plans. Only 1% of respondents indicated that the crisis was such an outlier that it would not have any effect on corporate treasurers’ responsibilities.
The poll was taken during a Bloomberg webinar on 31 March that attracted 80 leading treasurers, CFOs, and other financial executives with multinational corporations. The webinar was held to review the findings of the aforementioned report, Changing KPIs force treasurers to improve their risk technology, produced collaboratively by Greenwich Associated and Bloomberg.
The report found that nearly 90% of treasury departments said their key performance indicators (KPIs) had changed and that to meet them treasurers would need additional resources. Another interesting finding of the report was the importance of data quality and the difficulty in obtaining it. When treasurers were asked how confident they were in the data they have to capture and use to calculate their risks, nearly one in five treasurers said they were not at all confident about the data they were using to hedge their foreign exchange risks. This uncertainty about data quality impacts which risk management strategies are chosen and also influences the choice of systems used to monitor them.
Both the study and the impact the crisis is having clearly underline the fact that the role of corporate treasurers is more important than ever before. Treasurers are finding themselves at the centre of many urgent situations. The demands of these higher-level initiatives mean treasurers and their teams have to save time by automating many of the routine tasks that once made up the bulk of their day-to-day work.
Treasury departments are increasingly looking to new technologies and third-party providers to help them address data and risk management and improve efficiency by automating their workflows. All this helps them pivot towards being more forward-looking and more strategic in their thinking and perhaps, most importantly, addressing the crisis at hand.