Cash & Liquidity ManagementPaymentsBears wary of 2020 recession

Bears wary of 2020 recession

Recession not of grave concern for 50% of financial professionals, risks lie elsewhere.

Half of financial professionals see an economic recession as a possibility this year.

More than a third (34%) of respondents to a recent survey are unconcerned of a potential recession and the remaining 16% indicated they believe a recession is not imminent.

The survey was conducted by TD Bank.

Payment fraud and cyber security are also of significant concern to corporate treasurers and financial professionals, with 40% reporting these threats as a top operational challenge.

“Finance professionals clearly won’t be fretting much over the prospect of economic volatility in 2020, but cybersecurity is understandably a continued worry and the headlines show they are right to be concerned,” said Head of Corporate Products and Services at TD Bank, Rick Burke, in a press release accompanying the announcement.

Those who see economic headwinds in the year ahead said they are increasing capital reserves, holding off on large capital spending projects, accelerating debt payoff and refinancing debt to save cash.

“The half of companies that report that they are preparing for turbulence in the economy report they have strategies to maximise finances to weather potential challenges”, Burke added.

Opportunities in 2020

The survey also looked at growth opportunities for 2020. Nearly half (46%) said faster or real-time payments (RTP) was the largest innovation opportunity. 30% of respondents said they were already using faster payments for corporate treasury, while another 18% expect to adopt faster or RTP systems within the year.

However, faster and RTP solutions shouldn’t be overestimated. Christof Nelischer, Group Treasurer at International Personal Finance PLC said he is sceptical of the benefits and potential of RTP.

“As long as there is the concept of business days and value-based what matters to us treasurers is that obligations are settled on time,” he said, by email.

For financial professional who are not currently using or have a timeline for adopting faster or RTP systems, 16% said they recognised the need to implement one soon. 14% indicated they would like to adopt the new payments systems but were waiting to adopt a single solution that could address all end points.

Transitioning to a new payment system remains a challenge. In a 2019 survey carried out by TD, 32% of those surveyed said the ability to adapt to faster electronic payments was a top operating challenge.

Organisations also plan to invest or see opportunity in data analytics and reporting, cybersecurity and fraud protection, artificial intelligence, machine learning and robotic process automation, and automating payment and payment posting processes in A/P and/or A/R.

Nelischer said that adopting new technologies is not a question of whether but of when, and that organisations that are slow to adapt “will find out subsequently that adopting early would ultimately have been the better choice”.

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