Global Crisis Monitor Week-6 (April 22-28): Summary of The Survey On the Impact of COVID19 on Corporate Treasury

About the Survey:

The Global Crisis Monitor is an ongoing survey, conducted by HighRadius in partnership with Strategic Treasurer. The intention behind the survey is to understand the sentiments of the treasury community at large, and also the current challenges Treasury departments and their organizations are facing.

In its sixth week (April 22-28), the survey witnessed an 8% increase in the number of respondents bringing the total to 650 versus the earlier count of 600 from last week.

Impact of COVID19 on Treasury: What Has Changed in Week-6 (April 22-28):

Of the 650 respondents who participated in the survey, 30.1% cited having a positive outlook about organizational liquidity, 15.7% cited having a negative outlook and 54.2% remained neutral.

Thus, shifting the overall outlook on organizational liquidity towards a net positive, and also implying that organizational liquidity may not remain a concern in the forthcoming weeks.

While this was a positive insight, respondents from the survey showed lessening concerns surrounding:

1. Accounts receivables, since it showed 17% of the respondents having a positive outlook against this metric, which is a positive shift in comparison to last week where only 12.5% of the total respondents had a positive outlook.

2. Access to short-term debts: More than 80% of the total respondents seemed less concerned about the organizational access to short-term debts, indicating an easier availability of short-term debts & lines of credit in the coming weeks.

Access to Debt & Liquidity: The Perspective in Week-6 (April 22-28):

This week’s outlook on most of the survey metrics, such as access to short-term loans, money market funds and commercial paper issuances, have remained positive, and have also shown a positive forward shift, in comparison to last week (April 15-21), implying better business conditions in the coming weeks.

The outlook on accounts receivable and the US government’s fiscal activities (though the outlook on these metrics is still negative) also saw a significant improvement in the outlook, in comparison to last week, implying quicker than expected recovery for these instruments.

Here is a representation of the outlook that treasury departments currently have on various liquidity instruments available to them.

1. Outlook on accounts receivable shifted positively towards -5X, in comparison to last week’s (April 15-21) outlook that stood at -7X, hinting at reduced challenges in working capital management

2. Bank lines of credit which earlier had a negative outlook of +1.8X last week, shifted to +3.5X this week, indicating better availability of short-term loans provided by banks, that can be leveraged by organizations

3. Money market funds, which were set up by the central banks to induce liquidity into the system had a positive outlook this week too and has shifted from +4.0X (outlook last week) to +4.5X, indicating a progressive shift of this metric in the coming weeks

4. The outlook on commercial paper issuance this week saw a positive shift from +2.0X (which was the outlook last week) to +3.2X, indicating that organizations might issue commercial papers more comfortably to secure short-term debts

5. Covenant requirements & MACs had a slightly positive outlook last week among the respondents since it stood at -1.2X vs -1.6X (in comparison to week 3 – April 8-15). This week, however, the outlook shifted to neutral, hinting towards a positive outlook against the metric in the coming weeks

6. The outlook for the US fiscal policy shifted slightly towards the positive side to -0.3X from last week’s -1.4X, indicating a positive sentiment about the remediation initiatives being proposed by the US Senate

The Lasting Effect of COVID19: When Treasury Can Expect a Change

In last week’s survey, respondents cited that COVID19 was expected to reach its inflection point in less than 1 month, while financial normalcy was expected to be restored within 7-9 months.

However, this week’s results pointed out that financial normalcy can be expected to be seen within 10-11 months from now; hinting at deteriorating economic conditions rather than improvements.

A Projected Timeline of Health & Financial Inflection

• The expected point where the impact of the virus begins to diminish can be seen in the next 20-25 days.
• The end of the COVID19 pandemic was expected to be seen within 5 months as cited by a majority of the respondents last week. The outlook against this metric has shifted negatively, pushing the expectation to 10-12 month indicating a long-lasting effect of the pandemic
• Financial normalcy was expected to be seen in 7-9 months last week. This week, however, the outlook shifted to 10-12 indicating a declining economy in the days to come

Conclusion: Accounts Receivables remains the Top Concern for Treasurers in Week-6 (April 22-28)

• Accounts receivables remained a top concern for treasury departments this week since it only had a small cohort (17%) of the respondents with a positive outlook against the metric.

We’ll continue to monitor and report on how the changing dynamics of COVID19 has been impacting Treasury and Finance professionals, and on the way, we will empower readers with valuable insights that can help mitigate risks

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