• business continuity
  • Covid-19
  • liquidity

Liquidity facilities were key in helping companies survive Covid crisis, treasurers say


Liquidity facilities were more important than new technology and Supply Chain Finance in helping companies cope with the COVID-19 crisis, according to an exclusive survey of corporate treasurers conducted by EuroFinance.

by Manpreet Singh

Published: 2 June 2020

A few months ago, robotics, AI and upgrades of treasury management systems were all the talk of the treasurer community, but today these transformations are seen as having little or no relevance in dealing with the global coronavirus pandemic. This and other findings have emerged from a survey conducted by EuroFinance in late March/early April.

With 80% treasurers surveyed predicting that the business revenues could fall up to 75% due to shutdown caused by COVID-19 pandemic, two-thirds of treasurers said that shoring up working capital has become the greatest priority.

EuroFinance data: Business revenue impacted due to COVID-19
Source: EuroFinance

The business losses and shutdowns caused by COVID-19 were unanticipated but more than half of the treasurers said that they had a business continuity plan already in place through which they were able to maintain productivity throughout the pandemic while another 35% responded that they were delayed in their assessment and response to COVID-19 but now feel confident on where they stand today.

EuroFinance data: Organisation's preparedness for COVID-19
Source: EuroFinance

To what extent COVID-19 can impact business is still incalculable but treasurers are thankful for emergency measures being taken by regulators and governments to reduce the impact and losses of many businesses. Half of the respondents said that either central bank stimulus measures or lower interest rates were making a difference and helping them survive the pandemic. More than a third of respondents thought that easing bank regulations, such as liquidity rules, would be a positive step.

Measures taken by central banks/governments/regulators that can make the most difference to your business
Source: EuroFinance

Over 70% of respondents thought that the pandemic and its effects could last for 12 months or less. The most damaging effect of COVID-19 was on working capital, risk of an increase in leverage and disruption of the supply chain, treasurers said.

EuroFinance data: Main impact of COVID-19 on businesses
Source: EuroFinance

Questioned about treasury improvements put in place before the crisis, liquidity facilities and business continuity planning are the ones that four out of five treasurers are most grateful for, followed by cash centralisation and pooling. However, treasurers were not convinced that digital transformations before the pandemic such as AI, machine learning, robotics automation and changes in supply chain finance had made a difference.

EuroFinance data: Changes taken by business department before the crisis that they are most/least grateful
Source: EuroFinance

Once the crisis is over, a ‘new normal’ is likely to involve far less emphasis on physical workplaces or face-to-face contact. Almost two thirds of the treasurers surveyed thought that remote working would become routine in the wake of COVID-19, and only a minority agreed that remote working and lack of technology had damaged productivity in their business.

EuroFinance data: Change in treasury function as a result of this crisis
Source: EuroFinance