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Global Crisis Monitor Week 2: A Survey Digest Highlighting the Impact of COVID-19 on Treasury

What you’ll learn

  • Liquidity being available to organizations from central banks is considered to be three times more positive than negative
  • Most organizations believe Accounts Receivables would see a major setback in the coming days, being viewed as six times negative than positive
  • The fiscal policy shows some level of concern as governments are struggling to keep up with the impacts of COVID-19

About the Survey:

The weekly survey by Strategic Treasurer named Global Crisis Monitor is done in association with HighRadius Corporation. With the ongoing COVID-19 pandemic, the world economy is taking a major hit. Markets are slumping even though central banks are pushing more liquidity into the system to decelerate the economic slowdown as much as possible. Keeping these things in mind, this survey aims to track:
  • Attitudes, sentiments, and responses of organizations and governments
  • Multiple dimensions of treasury including liquidity, employee care, customer status
  • Opinions and insights from across the globe to benefit from a larger pool of experience
  • Future expectations from the pandemic and ways to mitigate the risks
Keep reading to explore the point-of-view of various organizations around the globe, how the pandemic has impacted their industry and key takeaways from what changed in perspective from the past week.

The Impact of COVID-19 on Treasury:

More than 300 organizations (an increase of 50% from last week) from across the globe participated in this week’s survey. Here’s what they feel has had the biggest impact on the Treasury:

  • Liquidity being available to organizations from central banks is considered to be three times more positive than negative
  • Most organizations believe Accounts Receivables would see a major setback in the coming days, being viewed as six times negative than positive
  • Businesses are focusing more on cross-training their employees to mitigate the impacts of COVID-19
  • Organizations are securing extra liquidity by drawing on credit lines, padding balances and securing loans. Emphasis on forecasting and monitoring of liquidity is absorbing a lot of time
  • The time to reach the point where health impact is minimal and we reach financial normalcy both added about one month since last week’s survey. Financial normalcy is 7+ months out
  • The outlook change in fiscal policy actions was added to the Monitor this week and it begins with a negative outlook

Impact on Perspectives - What Changed in Sentiment this Week:

Here, the measurements are done on a scale of 1-9, with 1 being a major deterioration, a 9 suggesting a strong improvement, and 5 being neutral, meaning almost no change.

Impact of Covid-19 on companies over the past week

  • The scale of impact of COVID-19 on companies over the past week has shown an improvement suggesting companies have started implementing resolutions to alleviate the impacts of the global pandemic
  • The organizational and country response to the situation is still positive, meaning more countries and companies have started taking active steps and measures to ease off any repercussions
  • The level of concern of impact on community & family of employees largely remains the same

Access to Liquidity and Debts - A/R Remains the Top Concern:

The graph represents the level of concern with regard to the availability of liquidity of an organization. The scale shows the ratio of more concerned versus less concerned, meaning a 2 on the negative side represents 2:1 ratio for more concerned versus less concerned, while a 4 on the positive side means for every organization that is more concerned, 4 organizations are less concerned.

Respondent's attitude towards various aspects of Treasury

  • The most concerning aspect is still the accounts receivable where the number of organizations that are more concerned is six times higher than the number of organizations that are less concerned
  • The central banks providing liquidity remains the least concerning of the lot since more organizations are happier at the changes in provisions for central banks
  • The fiscal policy shows some level of concern as governments are struggling to keep up with the impacts of COVID-19
  • The Bank Line of Credit sees a switch from being a slightly concerning aspect to less concerning one
  • Commercial paper issuance and covenant requirements show far lesser levels of concerns than last week, possibly due to the release of a cash crunch caused by lesser liquidity in the previous week

The Lasting Effect of COVID-19: When can Treasury Expect a Change:

This graph illustrates the time organizations expect normalcy to arrive.

 A projected timeline for Health & Financial Inflection

A breakdown of the graph represents the following:

  • The expected point when the impact of the virus begins to diminish is mostly seen within a duration of one month. This figure has reduced by a week from last week’s results, meaning the time period remains almost the same
  • The end of health issues is expected somewhere around a couple of weeks into five months from now. The number has increased by about 2 weeks owing to the wider spread of COVID-19 in the past week
  • The financial normalcy indicator shows most organizations believe it to be in the bracket of 4-9 months period from now. This timeline has also increased by a few weeks from the past results may be because companies predict the impact to last longer than previously expected

Expected Economic Inflection Points :

This graph counts the level of optimism for an economic recovery to occur. Here, different color bands show the outlook to be either positive, negative, or neutral, each reflecting the percentage of these responses.

Anticipated Economic Recovery over 3 months & 12 months

  • Almost 80% of organizations do not see an economic recovery within a period of 3 months, while the figure changes to around 35% for a period of 12 months.
  • Only 13.5% expect a recovery to show up in 3 months, while almost half believe the same to happen within a year.

Conclusion: Top Levels of Concern for Treasurers and Financial Organizations

  • The Staff Safety Protocols topped the list of concerns for the 2nd week in a row. This means the health and welfare of employees remains the top concern for organizations
  • Access to Adequate Liquidity moved up a position over last week and now sits at number 2. This shows increasing levels of concern as more liquidity is needed by organizations since forecasted impacts on Accounts Receivable is likely the key factor
  • Direct Financial Impact on the Business now sits at the third-highest concern as attention is shifting away from BCP completeness given most companies have had a significant number of staff working remotely for at least two weeks at this point

We’ll continue to monitor and report on how the changing dynamics of COVID-19 impacts Treasury and Finance professionals, including the way we work to mitigate the risks.

Insights: Key survey findings of Week 1- March 18-24

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