Global Crisis Monitor Week 4 (April 8-15): A Survey Digest Showcasing 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 fourth week (April 8-15), the survey witnessed a 25% increase in the number of respondents bringing the total to 500 respondents versus the earlier count of 400 from last week

Impact of COVID19 on Treasury: What Has Changed In Week-3 (April 8-15):

Results from last week’s survey showcased that organizational liquidity was a top concern for 90% of the respondents and had a very negative outlook implying little or no recovery. This week’s survey results however, showcased that organizational liquidity only remains a concern for 78% of the respondents hinting that liquidity pressures have probably eased for few organizations. While this was the only positive insight, treasurers are still concerned about: 1. Accounts receivables: showed a -10X outlook, which could create challenges in working capital. 2. Supplier relationships: accounts payable is now being extended by 42% of the respondents.

Access to Debt & Liquidity: The Perspective in Week-4 (April 8-15):

Despite economic challenges caused by COVID-19, instruments that promise liquidity for an enterprise (except accounts receivables) have shown significant recovery in terms of their outlook, in comparison to the previous week (April 8-15). This implies easier access to bank lines of credit, commercial papers and money market funds. However, outlook on accounts receivable and the US government's fiscal activities saw further deterioration in comparison to last week, implying slower than expected recovery for these instruments, with the slowest being accounts receivable. 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 to -10X, in comparison to last week’s (April 1-8) outlook that stood at -5X, hinting at enduring challenges in working capital management, operations, investments and more 2. Bank lines of credit which earlier had a negative outlook of -1.2X last week, shifted to -0.6X this week, indicating the 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, considering the fact that it shifted from +2X (outlook last week) to +3X, indicating a progressive shift in the coming weeks 4. The outlook on commercial paper issuance has shifted positively to -1X from -1.6X over last week, indicating that organizations can currently issue commercial papers and secure short-term debt to manage their obligations 5. Covenant requirements & MACs had a negative outlook among the respondents last week as it stood -3.5X negative. This week, however, the outlook changed to -1.2X negative, hinting towards a positive outlook against the metric in the coming weeks 6. The outlook for the US fiscal policy shifted a little more towards the negative side to -2X from last week’s -1.7X despite several remediation initiatives being proposed by the US Senate

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

In last week’s survey, respondents cited that COVID-19 was expected to reach its inflection point within 1-2 months, while financial normalcy was expected to be restored within 7-9 months. However, this week's results pointed out that financial normalcy will take slightly longer to be restored, pushing the expected timeline to possibly beyond 9 months; further hinting that companies will not readily have access to lines of credit from banks, and may not be able to invest in newer initiatives until the second quarter of the next financial year unless revival policies are enforced by governments.

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 1 month, which is a positive sign considering the fact that it was 1-2 months last week
• The end of the COVID-19 pandemic can be expected to be seen in 4-6 months as cited by respondents this week. The outlook against this metric has also shifted positively by a few weeks, indicating an end to the pandemic sooner
• Financial normalcy is expected to be seen in 9 months from now, indicating a shift from the earlier expectations of 7-9 months

Conclusion: Accounts Receivable & Supplier Relationships are Top Concerns for Treasurers in Week-4 (April 8-15)

• Accounts receivables topped the list of concerns for treasury departments this week since it had a -10X negative outlook among all the liquidity instruments available to treasurers. It is also projected to be a top concern for the treasury department in the coming weeks.


• Supplier relationships also found its way to be a concerning issue, since 42% of the respondents have cited delaying their accounts payables

We'll continue to monitor and report on how the changing dynamics of COVID-19 has been impacting Treasury and Finance professionals so far, and on the way, we will also empower readers with valuable insights that can help mitigate risks.

Insights: Key survey findings of Week-3 - April 1-8

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