Cash & Liquidity Management

Treasury in a time of turmoil

Published: Jan 2021

In the latest episode of Treasury Dialogues, we discuss with Pramod Iyengar, CFO at global payments and money transfer business Veem, and Citi’s Will Artingstall how companies can ensure they survive and thrive in the Covid world.

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Portrait of Pramod Iyengar, CFO, Veem

Pramod Iyengar

CFO

Veem logo

Portrait of Will Artingstall, Emerging Payments & Business Development Director, Citi

Will Artingstall

Emerging Payments & Business Development Director

Citi logo

When the pandemic struck, a main concern for global payments and money transfer business Veem was the welfare of its core SME client base. Many of Veem’s clients faced revenue streams grinding to a halt and difficult questions around staff retention, says Pramod Iyengar, CFO at Veem. Although government stimulus and support in the first months of the pandemic helped, it hasn’t stopped the uncertainty for many businesses.

A key question for the treasury teams within Veem’s customer base – as well as Veem’s own treasury department – was access to working capital. “It was and continues to be very hard for a lot of SMEs,” he recalls. Indeed, access to working capital is one of the most important learnings from the pandemic so far, he believes, urging treasury teams to look at how they invest and deploy credit, and to optimise their spend and access to funding to weather the blips – the assumption that access to capital and liquidity will always be straightforward has changed. “Get a pulse on your business,” he says.

Access to working capital is certainly one factor separating COVID’s corporate winners and losers. That said, analysis of companies that have done well through the pandemic and those that have struggled, reveals a surprising picture, explains Will Artingstall, Emerging Payments & Business Development Director at Citi. Just like Veem’s client base, Citi found most companies faced disruption to their core business and had to pivot to some degree. Many were faced with resource constraints, particularly around their workforce, but technology companies have not been the straightforward winners.

The assumption that the tech sector has automatically fared better than, for example, an industrial giant, is simplistic. Artingstall explains that in many cases, organisations have responded with either “weather the storm” strategies or by focusing on growth. At the same time, tech companies have been challenged because they too still depend on physical supply chains that have been hit by the pandemic. Of course, reaching for growth in the middle of a pandemic is tricky. It involves addressing difficult questions like where to invest and what products to launch during an acute economic event, he says.

Dialogue demand

Both Iyengar and Artingstall note a sharp spike in demand for strategic dialogue between treasury teams and their banking partners. Companies want support in understanding how their products are working, and help planning (as much as possible) for the year ahead, says Artingstall. “We’ve seen a lot of engagement in strategic dialogue driven by COVID,” he says, noting that uncertainty is compounding the problem. “Nobody knows how long COVID will last or the right speed at which to execute strategies.”

It is these kinds of challenges that are also making strategic treasury important. Companies that have placed treasury at the heart of their business in a central, advisory role have weathered the pandemic best, says Iyengar. “We have learnt that rigidity doesn’t help,” he says. “It’s a team effort; especially at SME level.” Examples of how treasury can become a strategic partner to the business and integrate operations could include evolving online commerce capabilities or integrating global hedging strategies, he suggests. It is this kind of role that builds a healthy treasury; the back-end is important, but treasury needs to evolve and become a strategic player, he says.

The pandemic hasn’t altered Citi’s core advice to corporate clients, although the bank has strengthened its key messages around areas like cyber risk and digitisation backed by the next generation of financial infrastructure. Indeed, Iyengar notes that fraud risk and the need for tight internal controls has become a key treasury focus since March. “The importance of building up internal processes has been a learning curve for a lot of companies,” he says.

Perhaps one of the most important learnings from the pandemic so far has been the affirmation that Veem and Citi are people businesses. At Citi, the crisis has highlighted the need to support clients holistically, including ensuring they have the right governance in place or the technology to allow corporate treasury teams to work from home and get away from paper. Now the “dust has settled,” the emphasis has shifted to continuity and partnering for the long term, as well as keeping clients focused on the future.

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