More than 90% of treasurers have seen their jobs and metrics shift in the past five years to take on more strategic challenges, according to research by Greenwich Associates and Bloomberg. The study found that many companies view the treasury department as the "centre of analytical excellence" and continue to add responsibilities, especially around data analysis.
Out of concerns about profitability, some of the largest banks in the U.S. have been advising companies to refrain from tapping existing credit lines to ride out the economic fallout from the coronavirus pandemic. "The banker is coming at it trying to manage two things -- the relationship profitability and their portfolio of risks and assets," said Howard Mason, head of financials research at Renaissance Macro Research. "The sense is that there's a relationship involved so relationship pricing and good will applies."
Federal Reserve Chairman Jerome Powell has mobilized the central bank to address the coronavirus pandemic by deploying tools more quickly and expansively than ever before, cutting interest rates, purchasing unlimited amounts of government debt and directly lending to businesses. "We learned our lesson. Moving early and aggressively is really important," says Patrick Harker, president of the Federal Reserve Bank of Philadelphia. "We needed to get the markets functioning."
Bank of America Global Research finds that companies are pursuing "de-globalization" as a way to have more control over supply chains. "Across 12 industries ranging from semiconductors to capital goods, companies in more than 80% of those industries are rethinking, or plan to rethink, at least some of their supply chains" says Candace Browning, head of Global Research.
Employers are looking for ways to provide workers fast access to funds they've already earned, and many are shifting from paper checks and direct deposit to companies like DailyPay and PayPal. While many people need quick access to cash, other employers are using the tools as a way to attract and retain employees.
Pricing for short-term corporate loans suggests the Federal Reserve's effort to boost liquidity is delivering results. Rates for commercial paper declined Friday. "The absolute amounts that the Fed has purchased that we know about aren't that big yet, but I think the fact that they are going to stand in the market is certainly easing a lot of concerns," says Marvin Loh, senior global market strategist at State Street Global Markets.
Credit insurers in the EU are receiving government guarantees in an effort to free the flow of loans for businesses shuttered by the coronavirus pandemic. Companies that sell insurance against defaults are bracing for a spike in insolvencies.
European companies have recently issued billions in bonds in an apparent bid to overcome weaknesses in the commercial paper market. "Over the last two weeks, there was no way to get any commercial paper issued at all," said Volker Heischkamp of Innogy SE.
Treasury and accounting departments at public companies are able to fall back on quantitative methods when over-hedging occurs. "During periods of greater market uncertainty, companies are required to adapt to this new environment and adjust their current workflows," according to Bloomberg.
Coronavirus is increasing demand for digital trade finance tools, and the pandemic is seen by the industry as a possible tipping point for moving away from paper processes. "We heard from a corporate that could not get hands on the goods because closures of courier services in China prevented the trade documents from reaching the bank issuing the letter of credit," said Jacco De Jong of Bolero International Ltd.
Research released by the Federal Reserve Bank of New York finds that measures such as social distancing were effective in helping US cities speed up economic recovery from the 1918 Flu Pandemic. "On the contrary, cities that intervened earlier and more aggressively experienced a relative increase in real economic activity after the pandemic subsided," according to this analysis.
Bank of America's Global Transaction Services (GTS) business provides comprehensive global treasury solutions across the breadth of the working capital cycle, including liquidity management, payments and receipts, commercial card, foreign exchange and trade and supply chain finance. With a history spanning more than 230 years, GTS services thousands of clients - small businesses, mid-size companies, large corporations, financial institutions and public sector entities - in more than 200 countries and 140 currencies.