Global Recovery Monitor 9th edition (May 13 – 27): Summary of The Survey On the Impact of COVID19 on Corporate Treasury

What you’ll learn

  • The outlook against accounts receivable for the duration of May 13 – May 27 shifted positively with 33% (vs 29% from the week of May 6 – 13 ) respondents favoring a positive outlook in the coming weeks against the metric
  • Financial normalcy can be expected to be seen in 11 months from now, which is a negative shift from the earlier expectation of 8 months
  • More than 60% of respondents from the current survey period had a positive outlook organizational liquidity, implying an alleviating financial condition in the forthcoming weeks

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 9th edition (Survey Period: May 13 – May 27), the survey witnessed a consistent number of respondents with 1000+ respondents being part of the survey.

Impact of COVID19 on Treasury: What Has Changed in Weeks of May 13 – May 27

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.

Access to Debt & Liquidity: The Perspective from May 13 – May 27

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

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

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

  • The expected point where the impact of the virus begins to diminish can be seen in the next one month, which is a positive shift from the earlier expectation of 2-3 months from the week of May 6-13
  • The end of the COVID19 pandemic was expected to be seen within 10-12 months as cited by a majority of the respondents from the previous survey findings. The outlook against this metric, however, has remained stagnant in the current survey period implying a slower than expected recovery from the pandemic
  • Financial normalcy was expected to be seen in 8 months earlier. This week, however, the outlook shifted to 10 months indicating a slower than usual recovery of current economic pressures and financial conditions.

Conclusion: Accounts Receivables and Material Adverse Conditions remain the Top Concerns for Treasurers during (May 13-27)

  • Accounts receivables remained a top concern for treasury departments this week since the metric showed marginal improvement in the outlook from -3.5X to -3.4X. However, considering the trends from the earlier survey the outlook against this metric is on the road to recovery and will eventually become positive in the forthcoming weeks.
  • Covenant Requirements made its way into being a top concern for treasurers in the current survey period since this metric had a negative outlook after having a positively steady streak from the earlier weeks.

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.

Insights: Key survey findings of Week-8 May 6 – 13

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