How can treasurers manage cash in 2024?

How can treasurers manage cash in 2024?

Cash Management: a look at the year ahead

Mike Rigby looks at the year ahead with cash management experts and discusses the impact of geopolitics, interest rates and technology on how treasurers will manage their cash and liquidity in 2024.

We have all learnt that this world can be very uncertain, but I would say that, looking forward, treasurers need to remain calm and deal with the issues when they come, in the most efficient and logical way.

Mike Rigby

Managing Director, Head of UK Specialist Sales, Barclays Corporate Banking

Possible risky times ahead

Potential risks are still major concerns for a number of treasury functions. This was best summed up by Winny Li, Group Treasurer at pharmaceutical company PPD, when she said: “Everyone is seeing the impact of geopolitical risk and how that affects us day-to-day. As a treasury team in a global company, we have had to learn about sanctions policies and how to become involved in strategic decisions."

Kevin Cook, Founder and CEO of cash management platform TreasurySpring, echoed these views. He added that treasurers need to understand what the geopolitical environment means for interest rates. Many people haven’t experienced rising interest rates before, so have been trying to work out what they should be doing with their cash and what they should be doing with borrowing.

While people widely agree we have probably reached peak interest rates with the three core currencies of the US dollar, sterling and euro, there is less agreement on the path of decreasing rates. There is a wide disparity of opinions on when and at what pace we will see rate cuts.

Kevin Cook

Founder and CEO, TreasurySpring

Rate cuts might be expected to follow a smooth path but have tended to be precipitous previously. This uncertainty could have an impact on credit availability. Kevin observed that there were growing concerns among institutions such as the IMF over the level of real estate exposures within the banking sector. “Over the course of this year, there are many things that make predicting the path of interest rates challenging, with stability being unlikely.”

Austin Matthews, Assistant Treasurer at media and telecoms group Sky, noted that other risks could be found in inflation, consumer demand and issues such as supply chain strains. He added that his organisation had seen more requests for parent company guarantees and letters of credit. “We have been planning for this, making sure we have the resources available to deal with these requests.”

Technology matters

How can treasurers maintain their focus looking at the year ahead? Matthews suggested that, with intense regularity, his team would be drilling into the numbers to see what lies behind them.

I would advise everyone to do the same – it is not just the numbers you are being presented with, it is what’s behind the numbers. We are trying to get into the detail to make sure everything is robust and that the results make sense.

Austin Matthews

Assistant Treasurer, Sky

As treasurers, you should be utilising your IT systems wherever possible and to think through what your requirements are so that you can build something that is good for your organisation. Eliminating manual intervention as much as possible from the source going into the reports, but still a need the human analysis to make sure data can help with the decision-making process.

Practical guidance

In terms of practical cash investment recommendations for the coming year, Cook suggests that treasurers ensure they have a good panel of options to easily access decent rates. Being able to access higher rates of interest can act as a buffer so that organisations can maximise the value of their cash. “From a cash investment perspective, if you think that rates are going to go down, and assuming you have good visibility and forecasting tools, and you know when you are going to need that cash, you can lock in today a rate that you are happy with long term.”

On the borrowing side, treasurers could review what refinancing needs were coming up, looking at when they are due, and whether they are fixed or floating.

It might be a good idea for treasurers to review their supply chains to identify the weakest points where organisations might need credit support, guarantees or collateral. Have you got visibility; do you have the tools to tell you what the credit situation is across your supply chain?

Building on this, Li suggested that treasurers should make sure their foundations, structure and treasury framework are working for them, recommending that companies have a good relationship with banks or their financial partners.

Since the pandemic, people are realising that treasury is becoming more and more strategic, and also just how important cash is – if you manage your cash well, then you will serve your shareholders well too.

Winny Li

Group Treasurer, PPD

Mike Rigby wishes to give his sincere thanks to:

Kevin Cook, Founder & CEO, TreasurySpring
Winny Li, Group Treasurer, PPD
Austin Matthews, Assistant Treasurer, Sky

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