COVID-19 has impacted all corners of our business and working lives, and one of the most significant losses has been our ability to congregate to share knowledge and expertise face to face.
Technology has been mission-critical not just to treasury operations, but to sustaining contact with colleagues. Since lockdowns began coming into force earlier this year, managers and businesses have leant heavily on videoconferencing.
Collectively, teams and whole workforces have found ingenuous ways to plug the social gap that remote working brings about.
Meanwhile, educators, consultancies and others have filled our inboxes with invites to webinars and online conferences.
As a learning provider and membership organisation, The Association of Corporate Treasurers (ACT) wasn’t slow to address the challenge of staging an online event that would bring its usual mix of timely, thought-provoking and helpful material direct to its audience.
In its first ever fully online conference, the ACT’s events team brought together an impressive 71 speakers from 13 different countries. They shared their experiences of operating mid-lockdown, plus their expertise on subjects ranging from business continuity planning, the future for ESG in a post-pandemic world, liquidity issues and leadership.
With more than 18 hours of content spread over four days, the event attracted an impressive 3,456 registrations from more than 2,000 companies. Registrants from 80 countries took advantage of the conference programme, which then remained accessible via the event portal for a month following the event.
Discussions were nuanced and detailed, and panel discussions as well as content recorded ahead of the event can be accessed via the ACT’s YouTube channel. Here, meanwhile, we offer a number of highlights.
International Treasury Week (ITW) opened with a fascinating panel discussion on how treasurers responded to the onset of lockdowns, and how relationships with wider teams and external stakeholders have fared over time.
Panellists shared the measures they took in the earliest days of the crisis, such as ensuring that: team members were well placed to work from home; technology was in place to connect everybody; cash forecasting came to the fore; and liquidity and the terms of funding facilities were fully reviewed and understood.
Facilitating the session, speakers’ chair Peter Matza polled the audience on how their treasury teams had responded to the crisis. Forty-three per cent said their teams had been an integral part of their organisations’ strategic response, clearly demonstrating the value of treasury in times of crisis.
Sharon Wang, director group treasury at Alibaba Group, echoed that sentiment; treasury had been integral to Alibaba’s pandemic response and central to its aspiration to aid SMEs through their economic hardships by providing financial support in different forms.
Treasury was also involved in the group’s desire to provide medical supplies where needed around the globe. “That required the cooperation and involvement of treasury. The treasury team could not stay away from these challenges,” she said.
The treasury team could not stay away from these challenges
When it came to the human impact of working under pandemic conditions, Joseph Braunhofer, head of treasury at Smith & Nephew, said the outcomes had been positive. Staying in touch with team members – informally as well as formally – was paramount to avoid any sense of isolation setting in, along with understanding colleagues’ situation at home.
“Flexibility and understanding, and making sure you take those things into consideration for everyone’s situation are important.”
Panellists said that they had been working more closely than before with external contacts and counterparties, too. “Everyone is experiencing the same challenges and difficulties,” said Matthew Hurn, chairman of the ACT Middle East.
“It has actually become acceptable across all stakeholders to say ‘we don’t have the answers at our fingertips, but we have the ability to assess the impact and source a solution if you give us time’.
The more you can communicate openly and honestly, and with a sense of humility, the better. Show some empathy, show some understanding. We find that actually, coming together, we are uniting in a much better way.”
The global financial crisis of 2007/8 prompted a decade of financial regulation. As part of a panel discussion on regulatory developments, facilitated by the ACT’s James Winterton, panellists shared a wish list of regulatory inputs that might put a framework around a sustainable recovery in the wake of the pandemic.
The business and wider world would benefit from greater stewardship around ESG, digital issues and cybersecurity, along with a continued focus on anti-money laundering measures, the panellists argued.
It’s worth remembering that ESG isn’t just about the environment and climate
Caroline Dawson, partner at Clifford Chance, put the case for renewed focus on ESG. While some commentators have suggested that the ESG agenda will likely be put on hold in the interests of economic recovery, others are positioning ESG front and centre. European Commission president Ursula von der Leyen, for example, has said that the European green deal needs to be at the heart of Europe’s recovery, positioning the current crisis as an opportunity to rebuild European economies with greater resilience.
“It’s probably also worth remembering that ESG isn’t just about the environment and climate. COVID-19-related disruptions also raise a number of social issues, such as an increased focus on healthcare and the value of key workers,” said Dawson.
Governance is also attracting attention, Dawson pointed out. “Certainly, in the financial sector, there’s much more of a focus on conduct-related issues and you see a number of regulators talking about banks’ obligations to borrowers and starting to dig into some of the behaviours around relationship management.”
In a session on strategic leadership, panellists discussed the importance of keeping the bigger picture in mind and shared advice on responding to the crisis in a way that served treasury colleagues and their organisations well for the future.
Wilson Koh, group treasurer at Grab, for instance, suggested treasurers should keep an open mind and try to adopt the mindset of the CEOs of their organisations. The pandemic, he said, has rightly prompted treasury professionals to concentrate on sound business principles, and is also encouraging businesses to discard those practices or operations that no longer contribute to their overall financial health.
“Baggage or overheads that we used to accept and carry during the growth periods now have to be scrutinised and shed fast. There is also a strong leadership push to accelerate automation and simplification of key business activities,” he pointed out. “Operate on a lean basis. It’s time to conserve cash and watch liquidity,” he said.
Operate on a lean basis. It’s time to conserve cash and watch liquidity
Looking ahead, he urged treasurers not to lose the learnings that weathering the pandemic can offer. “This crisis is a good time to reflect, reset yourself, others and your teams. And believe that we will emerge from this stronger, wiser and more connected,” he said.
Adam Boukadida, CFO at Etihad Airways and a former treasurer, said he was encouraging staff to look ahead and focus on key stakeholders – within and outside the business.
Treasurers, CFOs and finance professionals as a whole have a role to play in adopting that forward-looking approach, rather than relying on what’s happened already this year.
“Ask: what can we do differently for the rest of this year and beyond? That could be around targeting an operating model in order to become more cost-effective, efficient and using technology better,” he said.
“Appropriately challenge your team to continue to deliver, but learn more.”
In a session on rebuilding business resilience, an audience poll found nearly 60% of respondents expected to require both their professional and technology skills to make the most of a post-pandemic recovery period.
Surviving recessions and rebuilding companies are resource-intensive periods, the panellists said, with business divisions likely competing for budget. Making an investment case for treasury technology, cash management systems and greater connectivity will be difficult when organisations are managing costs at a business level, they said.
Challenge your team to continue to deliver
Treasurers will need to bring their leadership and negotiation skills to the fore if they are to articulate to build successful cases for investment. “I think treasury always has a bit of an uphill battle on that front, because most of the time we are a cost centre for the company,” said Agnes Favillier, treasury director at technology company Sage. “Justifying investment is always a bit of a challenge.”
Katherine Horrell, who joined the Automobile Association after lockdowns were in place, said experience throughout her career has taught her the importance of making the case for technology investment – even in difficult times.
However, today’s focus on cash and liquidity should strengthen treasurers’ case. “It can be quite daunting to think about making that investment case. Hopefully, with the focus that treasury is getting from senior management in businesses that haven’t perhaps had to think about [the treasury function] so carefully before, perhaps now is the opportunity to get ahead in that queue,” she said.
Justifying investment is always a bit of a challenge
Treasury and cash management specialist Bill Wrest argued that some of the issues treasuries would need to solve around cash management and liquidity were achievable without a large technology spend. “We’re going through unprecedented economic times.
It begs the question as to whether the existing structure you have will be robust enough to be able to give you a proactive rather than a reactive treasury.
However, I don’t think that – with the way technology has continued to develop – it involves or needs a huge budget to achieve best practice these days. Looking at the addressable gaps in liquidity or connectivity could well mitigate the cost of any solution,” he said.
Today’s pandemic conditions are operationally tough for treasurers, but they also represent an opportunity to look at the bigger picture and make the case for steering a socially responsible course, as Matthew Hurn argued at ITW…
As a profession – fortunately, or unfortunately – we have been front and centre for more black swan-type events over the past five to 10 years than probably anybody else. Any treasurer who has not yet become very familiar with their CFO, CEO or chairman has probably missed an opportunity to demonstrate the true value that a treasurer and a treasury team can bring to an organisation during such uncertain times.
Treasurers are used to horizon-scanning and looking for the bigger picture. Collectively, we’re looking at various macro themes and the economic impact, testing multiple scenarios and the impact they may have on key shareholder value metrics.
The risk with that, however, is ‘analysis paralysis’. Everyone’s running various sets of assumptions on what may or may not happen, some of which are stand-alone and some of which are consequential, but in truth, nobody really knows.
And therefore you need to start questioning the basis of assumptions being used and the value any output may provide in order to make a broad-based case for action. Is the data and analysis actually going to help make a better-informed decision?
We also need to be mindful of the longer-term consequences of today’s actions. For instance, we’re seeing many organisations drawing down on committed loan facilities and actively going into the debt markets because interest rates are so low and liquidity remains strong, but what is the consequence of that going to be?
For a lot of investor relations and treasury teams consulting with a wide range of external stakeholders, both debt and equity, including the rating agencies, there are going to be some interesting discussions soon around: ‘have you been socially responsible by taking that amount of liquidity out of the system if you didn’t need it? Are you going to be able to generate a reasonable return on it? Is that liquidity going to be available for those companies that probably would want it, but perhaps now can’t access it?’
At Mubadala, we have spent a lot of time assessing the cash impact of Covid-19 on our portfolio companies, trying to determine how much cash is going to be required to support a business, for sure, but also making sure we contribute responsibly in other ways.
We have looked at how we can support our customers and communities at this important time in all the countries where we have a significant presence, perhaps to support people who have been so adversely impacted during this time. If this crisis taught us anything, perhaps more so than previous ones, it’s the importance of compassion, tolerance and humility.
Matthew Hurn is CFO alternative investments & infrastructure at Mubadala in Abu Dhabi, and chairman of the ACT Middle East
The ACT Annual Conference
The ACT Annual Conference will be held online this year for the first time, 5-8 October 2020. Find more details here.
Liz Loxton is editor of The Treasurer
This article was taken from the August/September 2020 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership