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 9th edition (Survey Period: May 13 – May 27), the survey witnessed a consistent number of respondents with 1000+ respondents being part of the survey.
Of the 1000 respondents who participated in the survey, ~66% cited having a positive outlook about organizational liquidity and ~33% cited having a negative outlook
Thus, shifting the overall outlook on organizational liquidity towards a net positive in the survey period, with implications of diminishing challenges surrounding organizational liquidity in the forthcoming weeks.
While this was a positive insight, respondents from the survey showed lessening concerns surrounding:
1. Accounts receivables, since the outlook in the current survey period, saw 33% of the total respondents having a positive outlook against this metric; hinting at reduced working capital pressures in the near future
2. Commercial Paper Issuance, since a significant number of respondents, have cited having a positive outlook against this metric, further implying the ease of securing short-term loans that can fund business-critical operations.
The outlook on survey metrics, such as access to short-term loans, money market funds and commercial paper issuances, remained positive, and have also shown a positive forward shift, in comparison to the week of (May 6-13); implying easier access to short-term debts despite the Coronavirus Recession
The outlook on US government’s fiscal activities also saw a significant improvement in the outlook, in comparison to the week of (May 6-13), indicating a positive outlook on the remediation steps being taken by the US government.
The outlook on accounts receivable, however, has remained negative. But the respite for this metric is that 33% of the total respondents cited having a positive outlook against it, implying a sluggish recovery of the metric in the coming weeks.
Here is a representation of the outlook that treasury departments currently have on various liquidity instruments available to them.
1. Outlook on accounts receivable changed from -3.5X (May 6 – 8) to -3.4X, indicating a positive shift and a recovery of this metric.
2. Bank lines of credit which earlier had a positive outlook of +0.4X last week, shifted to +1.0X in the current survey period, showing a positive shift and indicating easier accessibility to 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 in the current survey period, with the metric shifting to +3.6X from +2.2X (from the week of May 6 – 8), indicating a progressive shift of this metric in the coming weeks
4. The outlook on commercial paper issuance in the current survey period saw a positive shift to +1.8X from -1.5X (from the week of May 6-8), indicating an ease of access to short term debts by issuing commercial papers.
5. Covenant requirements & MACs had a positive outlook in the week of May 6-8 among the respondents since it stood at +1.0X vs 0X (in comparison to week 7 – April 28 – May 5). In the current survey period, however, the outlook shifted to -1.7X, hinting towards a negative outlook against the metric in the coming weeks.
6. The outlook for the US fiscal policy shifted slightly towards the positive side by standing at -1.3X (in the current survey period) in comparison to -2.0X from last week, indicating a slightly positive sentiment about the remediation initiatives being proposed by the US Senate
In the week 8 survey (May 6-13), 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 8 months.
However, this week’s results pointed out that financial normalcy can be expected to be seen within 11 months from now; hinting at a slower than expected recovery from current economic pressures and financial conditions.
A Projected Timeline of Health & Financial Inflection
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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