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.
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
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
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
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
Orchard is able to support you in assessing the impact of the current situation in a short period of time
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 firstname.lastname@example.org
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 email@example.com for more details about the possibilities and available packages offered by Suppliers.
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 firstname.lastname@example.org to discuss the various options available.
Tel. +31 622 80 73 22
Treasury Esther Goemans-Verkleij Partner Tel. +31 651 49 89 46 email@example.com
Staffing Peter Paul de Galan Partner Tel: +31 650 24 82 89 firstname.lastname@example.org
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