To establish best practice and help our community to learn from each other’s experiences, we have launched a new series: Community Voices. The Treasury Today Group, along with our series partner, Association of Corporate Treasurers Singapore (ACTS), have reached out to corporates across the world to hear how COVID-19 is affecting their roles as treasury practitioners.

How has the COVID-19 pandemic affected your work?

COVID-19 is creating a momentous challenge. At all levels in Shell, we are taking rapid action to reinforce the financial strength and resilience of our businesses, including reducing capital expenditure and operating expenses. We have recently significantly increased our access to both short and long-term liquidity, by working with our banking partners and through the capital markets.

In Asia, some of our wholly-owned operating companies and joint ventures are operating in restricted markets in lockdown situations. We have faced challenges with revenue collection where customers could not pay on time due to lack of signatories or difficulties in accessing their payment systems. The sudden closure of the FX market in the Philippines for example, presented settlement and payment challenges at the time, which we managed to overcome.

The tighter liquidity observed in some markets has led us to review our liquidity planning and, in some countries, we decided to extend our short-term borrowing to longer tenures and to build in higher buffers and safety margins to pre-empt any liquidity surprises. We regularly test our unsecured facilities to ensure that they are available, and we also converted some of our uncommitted facilities to committed facilities. We continue to remain vigilant for any further developments.

How are you coping with your cash flow forecasting during this period of great volatility?

During this COVID-19 pandemic, there are a lot of uncertainties and the usual payment and receipt patterns are affected. We are adapting our financial framework wherever we need to and will continue to make changes where necessary. The business is also adjusting its operating model and strategies to cope with the lower demand. We stay in close contact with our business colleagues and have visibility on the potential impact on the cash.

Further challenges that we’ve experienced, like many other companies, have been shorter banking hours in many countries, as well as reduced trading hours for some FX markets. We had to rethink our processes to manage cash flow forecasting and the execution of the FX deals to ensure robust treasury operations during this crisis. Where possible, some of the cash forecasting activities were brought forward by a day to allow some FX executions to be done early on the following day, while our Shell business operations staff started work earlier than usual to work on the remaining items. We have also revised our tolerance limits to accept greater volatility and created higher cash and borrowing buffers.

Are you sticking to your pre-defined risk management strategies?

We follow our pre-defined risk management strategies, with some adjustments. For example, where we need external financing, we adopt a more prudent risk management strategy such as shifting the borrowings to longer tenures and having a more diverse panel of banks in each respective country. The situation remains fluid and we monitor the developments carefully.

What are your top priorities at this time?

We have three top priorities during this pandemic. The first is care for each other, for our colleagues, for our customers and for our communities. We put health and safety first. The second area is continuity. We aim to continue to serve our customers in every way we can. Where possible, we must aim to provide certainty. We need to ensure that our operations are delivering products that customers need to keep functioning. And finally, we are focusing on protecting the future health of our business, so we must always generate and preserve cash especially during these challenging times.

For the regional treasury team in Singapore, our priority is aligned with the overall Shell priorities. First and foremost, we ensure our staff are well taken care of. They have been able to work from home from very early on in this COVID-19 pandemic and we provided the necessary support to ensure that they can work from home effectively. We revised our business continuity plan which focuses on specific situations such as inaccessibility to the office, technical blackouts or cross team coverage. Together with our London office, we reviewed all our activities and worked out a plan to provide team resilience, focusing on key activities.

For the businesses we support in Asia Pacific, we assessed quickly whether we had sufficient on-demand facilities in restricted markets and in our joint ventures to ensure that unexpected demands can be met. We also gauged whether additional emergency facilities were needed. Generally, the liquidity in the market has tightened. Fortunately, in markets where we needed more facilities, we were able to secure these due to the early assessments that we did, our close monitoring of the market conditions daily and the strong relationships that we have with the banks.

How have you been managing team morale in your work-from-home set-up?

We have closely connected treasury teams in Singapore and China where people interact and support each other well. As we started working from home much earlier than others, the team has had a longer time to adjust to the new routine and to deal with each of the new challenges on an incremental basis, such as settling home connectivity issues before the requirement for home-based learning for school children came along.

We maintain an open communication channel with the team through regular connection, whether as a team or individually. We are honest with our sharing and provide updates so that staff can understand the priorities, the challenges and the dilemmas we are facing. We act on their feedback. It’s understandable that there is fear, but we also want the staff to know that we care and there is support around them.

Is there a lesson that the COVID-19 pandemic has taught you?

With material disruptions impacting our people, assets, communities, friends and families, our near-term focus is on care, continuity and cash. We are also maintaining our focus on our longer-term ambitions as a company: to thrive in the energy transition, increase shareholder distributions, and maintain a strong balance sheet. Today, stability, resilience and prudent management of our capital are key to delivering our strategy and achieve our purpose.

Do you think that this pandemic has shown that global economies and countries are distinct, or that we are all interconnected and dependent?

We already know about the amazing connectivity that technology enables and the benefits of Shell’s global supply chain. What this virus has shown is that we are all connected both virtually and physically, so, yes, we’re all interconnected and dependent on each other!

If you would like to be part of our COVID-19 coverage please email sophie.jackson@treasurytoday.com