“And we assembled a team to look at receivables and work with customer and marketing sales groups to make sure that we knew what some of the likely impacts would be in terms of delayed payments; and then we had a team to look at delays around suppliers and procurement to look at the supply chain – and working with banks to keep suppliers up to date with cash.”
That emphasis on effective communication was echoed by Sharon Wang, who, as director of treasury at the Chinese e-commerce giant Alibaba Group has been central to the company’s efforts to ensure that operations weren’t too disrupted and that the business’s leaders were fully up to speed.
“We’ve definitely been working more closely with other senior members of the business’s management,” she said. “We are needed more than before. I think perhaps before we were a little bit invisible but now we are actively needed as a source of advice across the world.”
Wang explained that, as with the immediate aftermath of the 2008 global financial crisis, the pandemic has meant that treasury’s profile has risen once again. It was something Matthew Hurn, CFO, Alternative Investments and Infrastructure at Abu Dhabi-based investment firm Mubadala, agreed required a slight change of approach as the volatility and uncertainty continues.
“I think you’ve got to have a calm mind in the middle of it all,” he said, pointing out that the tone from the top matters. “There’s no need to panic, and for us leaders we have to bear in mind that this is the first time many of our people have encountered something like this. The adrenaline that first fired everyone up is starting to give way a little to more anxiety and fatigue. So focus on empathetic leadership – that means communicating clearly, with compassion, on a results-driven basis. And while there are problems out there to be solved we need to understand what the impact is on the business so that everyone understands.”
Certainly, the need for an effective liquidity strategy was echoed across a number of sessions – with David O’Neill of McKinsey reporting that three key themes are emerging. “Firstly, C-suite members urgently want to know the business’s liquidity position; secondly, we’re getting a lot of questions around what levers to pull to stay in business. And then thirdly, what is the recovery plan and what does the ‘new normal’ look like?”
In O’Neill’s view, as liquidity has risen rapidly up the agenda, there is a growing need for more granular focus and transparency around liquidity. “Leaders want to drill into 13-week cash-flow forecasts, they want to know when suppliers are due to be paid, what’s the capex situation, the FX exposure. There’s far greater desire to really test the company’s tolerances on covenants, headroom and so on.”
Achieving that in a timely fashion is placing some strain on treasury teams, making the importance of effective systems even greater. “We’re seeing companies scrambling to get visibility over their systems and focusing heavily on automating processes to achieve that,” O’Neill said. “And there have been challenges in supporting companies in the current crisis. But ultimately the resilience of companies and their treasury teams will make an enormous difference as the crisis proceeds.”