• Orchard Finance

COVID-19: Treasury support

COVID-19 is causing disruption for many companies in different sectors. For most companies the situation is highly impacting treasury and financing related matters. Treasury departments are thinly staffed and therefore vulnerable but remain crucial in these challenging times. Securing access to financing, to liquidity and maintaining active treasury operations in place are key concerns. Thanks to technology, working from home to coordinate with financial counterparties and local business units is well facilitated. To prepare however for growing uncertainties, we have listed below critical areas for a corporate treasury and their main points of attention.


For Orchard Finance, the health of our employees and our clients has key priority. We are continuously working with different clients on how to optimally continue to provide support in this situation, protecting business continuity for our clients and for Orchard Finance. Orchard systems are fully functioning in cloud environments that we have in place to facilitate remote working for our employees.



Treasury Organisation

SITUATION

  • Secured remote access

  • Absence of key treasury personnel due to illness

  • Authorization structures disrupted


WHAT CAN YOU DO NOW? ▪ Verify that the technology infrastructure can support remote operations across multiple locations ▪ Identify potential gaps in business continuity plans and resources for staff sickness and other key assumptions for scenario planning ▪ Agree meeting cadence and team’s ways of working ▪ Identify the impact on business, largest customers and suppliers and identify new or adjusted tasks/responsibilities


Financing agreements

SITUATION

  • Impact on financing needs

  • Access to (additional) funding sources

  • Possible covenant breaches

  • Increasing margins on uncommitted facilities


WHAT CAN YOU DO NOW? ▪ Define and model scenarios for mid term liquidity and covenants resulting from increasing working capital needs ▪ Assess the options to increase existing credit facilities or raise new funding ▪ Discuss scenarios with your main relationship banks ▪ Assess what the impact will be on your existing counterparty risk and investment policies


Risk Management

SITUATION

  • Challenges in trade finance products

  • Increased volatility in FX and capital markets

  • Stress on interest rate coverage

  • Counterparty risk is increasing


WHAT CAN YOU DO NOW? ▪ Assess to what extent changes in FX exposure increase your P&L volatility and how will this impact covenants ▪ Evaluate impact of increasing interest margins ▪ Evaluate payment and authorization processes to prevent cybercrime ▪ Assess the impact on the reporting process and year end closing


Cash & Liquidity Mangement

SITUATION

  • Liquidity visibility and control

  • Negative interest rates on credit positions / cash buffers

  • Cash flow disruptions

  • Cash repatriation issues


WHAT CAN YOU DO NOW? ▪ Identify immediate urgent actions to stabilize cash and liquidity positions ▪ Determine short-term funding need to manage period of reduced revenues ▪ Ensure that there is no significant disruption to your organisation’s ability to forecast cash flows and manage resulting currency cash flows ▪ Avoid cash balances to become trapped cash for a prolonged period


HOW ORCHARD CAN SUPPORT YOU


SHORT TERM SUPPORT - BASED ON ORCHARD’S EXTENSIVE TRACK RECORD


Analyse Impact

Orchard is able to support you in assessing the impact of the current situation in a short period of time


Prioritize activities

Orchard can provide you with concrete, prioritised and value added actions to mitigate risk and to have a clear chain of command


Manage action plan

Orchard can support with monitoring and managing a crisis-related situation in a pragmatic and result oriented approach


VIRTUAL ROUND TABLE DISCUSSIONS

Orchard Finance organises virtual round tables for Treasurers by Treasurers in the Netherlands and the Nordics. These are meant to share best practices on risk and liquidity management, finance agreements and business continuity. Interested to join? Please contact bart.hendriks@orchardfinance.com


SYSTEM SOLUTIONS SUPPORT

Orchard offers its proven excel based cash flow forecasting model which can be tailored to your specific needs upon request. Goal is a fast implementation of a cash flow forecasting process to fulfill your needs. Orchard works with different system suppliers to implement system solutions, for example in the area of cash visibility and cash flow forecasting. Please contact ariane.hoksbergen@orchardfinance.com for more details about the possibilities and available packages offered by Suppliers.


STAFFING

Orchard offers different staffing solutions, ranging from immediate senior or junior operational support to standby back-up capacity. We understand your vital treasury processes and have the resources available to be up and running for supporting your operations where needed. Support can be delivered remotely if needed. Please contact peterpaul.degalan@orchardfinance.com to discuss the various options available.


CONTACT

Debt Advisory

Rolf Michon

Partner

Tel. +31 622 80 73 22

rolf.michon@orchardfinance.com


Treasury Esther Goemans-Verkleij Partner Tel. +31 651 49 89 46 esther.goemans@orchardfinance.com

Staffing Peter Paul de Galan Partner Tel: +31 650 24 82 89 peterpaul.degalan@orchardfinance.com


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