Global Crisis Monitor Week-7 (April 28-May 5): Summary of The Survey On the Impact of COVID19 on Corporate Treasury

About the Survey:

The Global Crisis Monitor is an ongoing survey, conducted by HighRadius in partnership with Strategic Treasurer. The intention behind the survey is to understand the sentiments of the treasury community at large, and also the current challenges Treasury departments and their organizations are facing.

In its seventh week (April 28-May 5), the survey witnessed a ~7.5% increase in the number of respondents bringing the total to 700 versus the earlier count of 650 from last week.

Impact of COVID19 on Treasury: What Has Changed in Week-7 (April 29- May 5):

Of the 700 respondents who participated in the survey, 27% cited having a positive outlook about organizational liquidity, 14% cited having a negative outlook and 59% remained neutral.

Thus, shifting the overall outlook on organizational liquidity towards a net positive this week, while implying diminishing challenges surrounding organizational liquidity in the forthcoming weeks.

While this was a positive insight, respondents from the survey showed lessening concerns surrounding:

1. Accounts receivables, since the outlook this week remained unchanged with 17% of the total respondents having a positive outlook against this metric

2. Access to short-term debts: More than 90% of the total respondents seemed less concerned about the organizational access to short-term debts, indicating an easier availability of short-term debts & lines of credit in the coming weeks.

Access to Debt & Liquidity: The Perspective in Week-7 (April 29-May 5):

This week’s outlook on most of the survey metrics, such as access to short-term loans, money market funds and commercial paper issuances, covenant requirements have remained positive, and have also shown a positive forward shift, in comparison to last week (April 22-28); implying better business conditions in the coming weeks, despite the pandemic

The outlook on the US government’s fiscal activities also saw a significant improvement in the outlook, in comparison to last week, indicating a positive outlook on the remediation steps being taken by the US government.

The outlook on accounts receivable remained stagnant this week at with only 17% of the total respondents having a positive outlook against it while implying a sluggish recovery of the metric in the coming weeks, but, with indications of a positive shift

Here is a representation of the outlook that treasury departments currently have on various liquidity instruments available to them.

1. Outlook on accounts receivable remained unchanged and stood at -5X, in comparison to last week (April 22-28), hinting at a sluggish recovery of this metric.

2. Bank lines of credit which earlier had a negative outlook of +3.5X last week, shifted to +4.0X this week, indicating better availability of short-term loans provided by banks, that can be leveraged by organizations

3. Money market funds, which were set up by the central banks to induce liquidity into the system had a positive outlook this week too and has shifted from +4.5X (outlook last week) to +5.0X, indicating a progressive shift of this metric in the coming weeks

4. The outlook on commercial paper issuance this week saw a slightly negative shift from +3.2X (which was the outlook last week) to +2.0X, indicating hindrances in issuing commercial papers to secure short-term debts

5. Covenant requirements & MACs had a neutral outlook last week among the respondents since it stood at 0X vs -1.6X (in comparison to week 6 – April 22 – 28). This week, however, the outlook shifted to +0.7X, hinting towards a progressive positive outlook against the metric in the coming weeks

6. The outlook for the US fiscal policy shifted slightly more towards the positive side by standing at 0X in comparison to -0.3X from last week, indicating a positive sentiment about the remediation initiatives being proposed by the US Senate

The Lasting Effect of COVID19: When Treasury Can Expect a Change

In last week’s survey, respondents cited that COVID19 was expected to reach its inflection point in less than 1 month, while financial normalcy was expected to be restored within 10-11 months.

However, this week’s results pointed out that financial normalcy can be expected to be seen within 10 months from now; hinting at slow recovery of current economic pressures and financial conditions.

A Projected Timeline of Health & Financial Inflection

• The expected point where the impact of the virus begins to diminish can be seen in the next 20 days which is a shift from the earlier expectation of 20-25 days from last week.
• The end of the COVID19 pandemic was expected to be seen within 10-12 months as cited by a majority of the respondents last week. The outlook against this metric has shifted positively, pushing the expectation to 10 months indicating a slower than expected recovery from the pandemic
• Financial normalcy was expected to be seen in 10-12 months last week. This week, however, the outlook shifted to 10 indicating a slower than usual recovery of current economic pressures and financial conditions.

Conclusion: Accounts Receivables remains the Top Concern for Treasurers in Week-7 (April 29 – May 5)

• Accounts receivables remained a top concern for treasury departments this week since it only had a small cohort (17%) of the respondents with a positive outlook against the metric. The outlook against this metric has remained stagnant in comparison to last week indicating a sluggish recovery.

We’ll continue to monitor and report on how the changing dynamics of COVID19 has been impacting Treasury and Finance professionals, and on the way, we will empower readers with valuable insights that can help mitigate risks.

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