The Treasurer’s Response Plan to COVID-19

An injection of system and consulting to thrive during a crisis
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Ron Jaradat author pictureAuthor: Ron Jaradat

The COVID-19 crisis has reeled in a new wave of uncertainty among just about everyone. We, as treasurers, CFOs, and other finance specialists, are especially concerned because of the large-scale financial implications that the crisis is having on the economy, corporations, and the general well-being of all people around the world.

Everyone is referencing the 2008 financial crisis and the implications it had on the economy. While the 2008 financial crisis was bad, strangely, this crisis feels different. In 2008, companies, government agencies and families were huddled together to figure out ways to proceed. This crisis is strangely different because of the way it has pushed us away from each other. The global lockdowns have created a fractured and decentralized state within companies and homes alike.

“We will get through this together… but stay away from me!”

A driving challenge in this crisis for a lot of companies is to proceed with business as usual in a time where business is very unusual.

For treasurers, the way to do that is to ensure that data and information, especially pertaining to existing and future cash flows, is readily available and accurate. A combination of technology and process collaboration might just be the answer.

Current concerns for finance professionals

Starting from the top, treasurers and CFOs have a bounty of concerns they need to start addressing to be able to keep their companies financially stable.

Treasurers need to be able to answer questions like:

  • How much cash is available and where?
  • How fast am I able to access the cash and transfer it to where it is needed?
  • What is the forecast for every single location on the cash requirements over the next week and the following weeks?
  • What credit facilities do I have in place and how reliable are they, taking covenants and other factors into consideration?
  • What is the cash value of my assets turned into cash at short notice?
  • How high are the cash outflows in connection with repaying short and medium-term borrowings?

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With the use of a centralized treasury system and the right approach to collaboration and process, these questions can all be answered.

Mitigating risk with system support

Crisis risk mitigation involves an element of much-needed control and visibility. With a treasury system, the central treasury has the control to act quickly. Whether that means moving funds from point A to point B or liquidating assets to help float a subsidiary, control is much needed during these times.

With that control, you achieve the consequent transparency of all cash. In addition, you get a more detailed view of all the related risks like FX, interest, liquidity, etc., allowing you to act on that.

While it may seem like low-hanging fruit, a centralized treasury system can be the first line of defense in a time of crisis because of the group-wide control it provides.

Fortifying global cash visibility

All along, global cash visibility has been a driving factor and somewhat of a challenge for treasurers. Some were able to continue to operate normally even with some inefficiencies in maintaining that visibility.  

However, in today’s global crisis with COVID-19, thossame inefficiencies that might have been negligible before are a bit more unforgiving for corporates. Corporates need now, more than ever, group-wide cash flow visibility because of the need for fast allocation of funds and to be able to detect which subsidiary may need quick funding and to fulfill general receivables obligations. 

Ways to improve global cash visibility:

  • Making sure automated reporting is enabled and synced company-wide
  • Receive short-term estimates from local subsidiaries periodically through the system
  • Establish clear cash positioning workflows that all subsidiaries follow

 “With cash flow visibility comes great responsibility – for a treasurer”

To utilize the visibility you gain, put more of a focus on ensuring payments are made on time, establish clear credit and funding parameters, and find a way to streamline or optimize your payment processing funnel (make it easier on your suppliers to fulfill their obligations). The result of which should lead to better cash visibility and maybe even some surplus that you can spread to markets in need.

Centralizing data means unlimited collaboration

Working from home and global lockdowns shouldn’t be speed bumps in the way of ensuring data is accurate and timely.

But how can we collect the information in the most efficient way?

The only efficient way forward to accomplish this task is to create an environment, a platform, which is used by every finance department in the group to support their local needs while participating in a collaborative workflow.

The goal is for every subsidiary finance department to be sitting at the same virtual table, with access to view and publish all relevant data.

This, however, requires a workflow that all subsidiaries oversee their own data uploading.

If successful, the central treasury has control and access to all accounts to actively transmit the funds from any account to where it may be needed.

BELLIN tm5: Your versatile treasury sidekick

BELLIN tm5, our flagship treasury management system provides the technological center for all entities to establish that virtual table to collaborate on.

Our system eliminates laborious data gathering, tedious reporting and the time-consuming process of consolidating data, and provides you with the visibility required for more accurate positioning and forecasting on a local and global level.

With a system that is cloud-based like tm5, there is no need to be physically present for a majority of data collaboration.

All users have access to the same centralized dashboard from either their desktop or mobile phone – all shrouded in the BELLIN security promise that ensures constant oversight and the highest technological security infrastructure.

If you think about treasury like a financial recipe to crisis mitigation, think about it in two ways: system and process. Our treasury system is the sidekick and virtual assistant to executing tasks. The process restructuring is where the rubber meets the road.

If process and consulting is the avenue you are looking for, we are the only system provider that also offers in-house consulting – fully remote to accommodate you during this crisis.

Conclusion

Our treasury response plan to COVID-19 includes a two-pronged approach to gaining more control with consulting and the use of a treasury system, fortifying your cash flow positions and visibility, and transitioning your company from data gathering to data collaboration.

Using a centralized platform that also thrives with decentralized collaboration is the key to mitigating the risks of such a fractured and decentralized society that COVID-19 has created.

To help companies get ahead of their finances and to pull through this crisis, we are offering three TMS modules that are most crucial to mastering your current challenges – free of charge and with no strings attached.

Would you like to learn more about tm5 and the various other treasury solutions we offer? Just reach out to us and demo tm5, our intuitive treasury management system.

Have questions? Give us a shout.

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