Treasury Today Country Profiles in association with Citi

Are you prepared for 2017?

2017 cardboard numbers at a new years party

It’s fair to say that 2016 was something of a rollercoaster ride for treasurers around the world. As such, when asked to predict what shape 2017 will take, the word that first springs to mind is ‘uncertainty’.

While the repercussions of recent and upcoming world events will loom large in the coming year, treasurers will continue to focus on the fundamental components of the job – and to ask how developments in technology can support them in increasing efficiency, reducing costs and making effective decisions.

Changing political landscape

The last year has been nothing if not surprising. On 23rd June, the world was shocked by the UK’s decision to exit the European Union. More was to follow with Donald Trump’s election victory in November, as well as the resignation of Italian prime minister Matteo Renzi in December, following the resounding defeat of his referendum on constitutional reforms. Following this wave of political upheaval, treasurers will be watching events closely in 2017 – particularly the upcoming elections in France, Germany and the Netherlands.

Recent political events have the potential to impact treasurers in a number of different ways. “In the US, with rising interest rates, treasurers will be looking at their cost of funds and when is the right time to tap the market for funding, from banks or through bonds,” notes Matt Tuck, Head of Global Transaction Banking at Barclays Corporate Banking. “The as yet unknown impact of Trump is also hampering clear decision making.”

In Europe, meanwhile, Tuck says that investment decisions are becoming harder to make in light of forthcoming elections in Germany, France and the Netherlands, alongside the impact of the UK’s approach to Brexit on the wider economy and trade flows. The changing political environment may also affect companies’ funding decisions.

For Mark O’Toole, Vice President of Commodities & Treasury Solutions at OpenLink “Group Treasurers will get a funny sense of déjà vu next year – as managing volatility will still be the name of the game”. He believes that further big swings in sterling, particularly once the UK triggers Article 50 in Q1, will create new accounting and forecasting challenges.

Automation, security and technology

Mark Smith, Global Head of Liquidity Management Services at Citi, says that investing in automation and security will be another priority for treasurers in 2017 – not only as a means of achieving efficiency gains, but also to increase the security of treasury operations. Last year’s high profile cyberattacks have not gone unnoticed by treasurers, and many will be putting measures in place to minimise the risk of similar attacks on their own businesses.

“Automating manual processes brings a number of different benefits,” says Smith. “These include reducing errors and achieving a consistency of approach, as well as greater security compared to manual intervention. Automation also frees up different members of the corporate treasury team to focus on other areas, such as risk management and regulatory change.”

OpenLink’s O’Toole concurs, predicting that technologies providing predictive analysis are likely to be all the rage in 2017. “But first and foremost, the daily grind of cutting costs and increasing margin will be front of mind. Corporates will be on the lookout for treasury-specific technologies that help them reduce bottom line costs and boost top line revenues,” he adds.

Other areas to watch

Aside from the changing political landscape and developments in technology, the following trends and topics are also likely to be significant in 2017:

  • Regulatory change.

    In keeping with the last few years, regulatory change continues to be a major area of focus – and this is set to continue in the coming 12 months.

  • Relationships.

    Daniel Jefferies, Group Treasurer of Equiniti Group says that in the current low rate environment, both banks and corporates are looking to get the most out of their relationships.

  • Role of the treasurer.

    According to Smith, treasurers are continuing to be more engaged in driving business decisions on topics such as how and where best to set up working capital frameworks and liquidity pools.

Conclusion

While the core priorities of treasurers continue to be on managing cash, liquidity and risk effectively, the events of 2016 means that treasurers are likely to be entering January with a greater sense of caution about the coming year. If treasurers took just one message from last year, it would be to expect the unexpected.

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