Treasury Today Country Profiles in association with Citi

In the grip of change: treasurers facing up to the future

Egg in a clamp vice cracking under pressure

Every profession faces a certain amount of pressure but what really bothers treasurers right now?

Anonymity is a great way of revealing what really concerns people. When a bank has 85 Global treasury and cash management leaders from leading global multinational corporations gathered under one roof, the opportunity to probe their hopes and fears was not to be missed. So it was that the organisers of J.P. Morgan’s annual EMEA Cash Management Forum, held last week in London, posed four big questions.

Asked which of the following treasury topics is keeping you awake at night the most, the impending exit of the UK from the EU is starting to cause more anxiety. Last year 7.69% were kept from restful slumber by ‘Brexit’; this year the figure has risen to 12.5%.

Interestingly, ‘geopolitical change’ featured for 10.26% in 2017 but that has slumped to 3.13% for 2018. Perhaps treasurers believe they have seen everything, and now it’s just a case of managing the fallout. This could explain why ‘improving visibility of cash received’ and ‘making sense of new technology’ options more than double their votes, both rising from 5.13% to 12.5%. ‘Centralising cash management’ remained a broadly static but still major concern hovering around the 12.5% mark.

When asked how likely do you believe it is that we will enter a global recession in 2019/2020, the ayes have it, convincingly so. Absolutely no one thought it ‘not at all likely’ (defined as less than 25% chance). At the other end of the spectrum, a ‘very likely’ event (a 75% chance) grabbed 30.56% of the vote and the ‘somewhat likely’ (a 50% chance) took even more at 41.67%. The gathered pollsters demonstrated a residual hope that it won’t happen, with the ‘extremely likely’ (more than 75% chance) contingent polling just 2.78%.

Casting an eye over the changing face of Europe the factors concerning your company the most, placed ‘regulation’ at the top of the pile. It is a major issuer for over half (51.35%), up from just over one third (35.48%) last year. The implementation of the likes of GDPR, MiFID II, PSD2, changes to money market fund rules and the further roll-out of Basel III measures seems to be hitting home. There’s clearly more to come.

The other big issue cited was ‘cross-border trade and trade terms’, although tempering slightly from 29.03% to 21.62%, tackling the fluidity of movement of goods and services (and presumably payments and collections) is clearly still a huge concern, and one that will be thrown into a whole new light if Brexit negotiations are hampered in any way.

Of course, acknowledging the threats is one thing; being able to do something about them is more important. Asked how well-formed is your company and treasury strategy for the future of Europe? there were notable changes in approach.

In 2017, 21.05% said they had ‘not yet started, but were aware of the need’, with only 7.89% claiming their plans were ‘well-formed and being executed’. This year, just 5% had not yet started to formulate a strategy but 30% are now claiming their well-formed plans are under way.

It is unlikely that the almost diametrically opposed turnaround between planning and implementation, in just 12 months, is a coincidence. It suggests that treasurers are taking their perceived threats very seriously.

“What our polls show is that global treasurers and cash managers are shifting to execution when it comes to the changing face of Europe and regulatory change,” commented Tristan Attenborough of the J.P. Morgan Treasury Services team. “This audience sits at the intersection of corporate strategy and how that gets delivered financially every day. They want more control of this and it’s clear from our conversations with them that they also want technology to play a bigger part.”