Treasury Today Country Profiles in association with Citi
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January 2010

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All change?

With the start of a new year, a new decade and a tentative world recovery, one would hope for some cautious optimism from the treasury community. But the spectre of recovery is still overshadowed by uncertainty and volatility in commodities, currencies and markets. Rapidly rising public debt and unemployment is adding to the gloomy hangover from 2008-2009. Many companies are only just encountering the real effects from the financial crisis. Those who had credit secured through the volatile period may now have to refinance at higher costs and with more onerous terms (although margins have thankfully come down recently). Some supply chains are only now being disrupted as partners with lower credit ratings are cash squeezed without recourse to finance. In the words of one Fortune 500 treasurer, “For the banks, the crisis may be over, but for some companies, it is just starting.”

Contributing to uncertainties for treasurers are the many regulatory and legislative proposals popping up around the world. Unpalatable as it may be, as governments seek to appease their electorates (particularly those facing an upcoming election), regulation may end up harming business considerably. If current proposals in key economies go through in their current form, it may completely change the way companies fund, invest and manage risk in their business. Suggested rules up for adoption around the globe cover hedge accounting, the use of over the counter derivatives, money market funds, bank liquidity and rating agencies to name just a few. It looks set be a very busy year for treasury.

After an incredibly difficult 18 months for many companies, vigilance against external events will still be required in 2010. But by now, most companies are comfortable with being uncomfortable; dealing with instability is part of the job description. So where should treasury focus in the coming years? 2009 put the profession into the spotlight so perhaps it is time for treasurers to use that visibility to move forward with strategic projects that will, if not guarantee, then certainly enhance a company’s ability to manage cash, liquidity and risk, to keep them healthy and solvent no matter how volatile the external environment.

Pie in the sky? Maybe not. This next decade will be the one where many treasury initiatives from electronic bank account management and SWIFT to new supply chain, trade and risk solutions come to fruition. Standardisation will gain true momentum and companies will become less reliant on their banks, more open to collaborative efforts that make use of the strengths of all parties in a transaction. Projects that once looked costly from a stand-alone perspective, will become natural steps forward to increase the visibility and efficiency of cash and most importantly of all guard its safety.

In the coming year, Treasury Today will be bringing you analytical articles and insight into many of these issues and the new products and developments in treasury, to help you make informed decisions for the future. We’ve added to our editorial team and product line: you will find the same plain language and trusted editorial copy, but more of it and now with deeper analysis and insight into the news that matters to the treasury world. You will also see a new look and feel to the magazine in the coming months alongside a brand new website with advanced treasury resources and a comprehensive archive.