Corporate treasurers ready for post-pandemic recovery

Last year’s uncertainty saw some treasurers “holding back” on capital allocation, according to Garima Thakur, executive director and assistant corporate treasurer at Ingram Micro.

Speaking on the first of The Global Treasurer’s Future in Focus series – sponsored by Standard Chartered – Thakur said treasurers should “be on the ready” to support post-pandemic recovery through capital restructuring, funding and liquidity standpoints.

“When we talk about recovery, that’s going to look different for different companies,” she said. “The timing of it such as is it a bounce? Is it more of a gradual recovery? I think that emphasises the point that you want to be prepared for different scenarios, because we don’t know when it’s occurring.”

During the first half of 2020, caution among treasurers and a “fear that capital may not be accessible” saw the establishment of revolver draws and incremental facilities being set up, according to Thakur.

“A lot of treasuries really focused on building liquidity buffers, by going to the capital markets and raising debt” said Victor Penna, managing director and head of cash products, UK and Europe at Standard Chartered Bank. “A lot of treasuries then moved on to improving the liquidity structures and taking other moves to improve their liquidity structures.”

“As we went into the second half of 2020 and even the first quarter of 2021, banks remained well capitalised,” said Thakur. “A lot of those revolver draws got paid down and incremental facilities were not used. They were expensive. The banks made it almost punitive for companies to do this. The shift and the focus went into more opportunistic activity in the debt capital markets.”

“For us, it hasn’t been as tumultuous,” said John Jackson, retiring group treasurer at Severn Trent.

“I think the main takeaway from last year, for me, has been the fact that everything has been able to carry on,” he said.

“We’re now looking to put in place the revolving credit facility (RCF) that we couldn’t do last year. We’ve been asked to look at whether we can increase our capital expenditures through what is called the green recovery plan and that may well require us to do more funding than we anticipated.”

As the focus shifts to post-pandemic recovery, treasurers are keen to find a new normal.

“Last year was such an unusual year, a lot of the normal projects, treasury technology, request for proposals (RFPs), things that you would have otherwise wanted to have efficiency plays on were put on the back burner for a lot of companies, including us,” said Thakur.

“As we think about recovery, thinking of return on investment and prioritising some of those projects to see how those fit in from a resourcing and investment standpoint, and get those back on the radar would be another priority for us.”

Jackson said being able to work remotely successfully during the pandemic has meant business operations will change in the future and has encouraged them to look further afield for skills and business.

“I think in terms of Treasury, more generally, it’s going to be interesting to see.

“It may widen our ability to access global markets in the future, if you don’t need to physically go to visit Tokyo or China.

“But I get the feeling that this is the work, the remote aspects of what we’ve been doing over the last year has more implications than just whether we go to an office or not.”

This article is part of The Global Treasurer’s Future in Focus series sponsored by Standard Chartered, which recently released its second Borderless Business study on how treasurers and CFOs are thinking and planning for international expansion post-pandemic.