Earlier this year, Euromoney and J.P. Morgan conducted a survey of global corporate treasurers to find out what they see as the biggest challenges they currently face, and assess their expectations for 2017. The survey enjoyed an overwhelming response, with more than 230 respondents sharing their thoughts, from over 30 countries.
Political risk and currency market volatility among the biggest concerns for treasurers.
Only one in five treasurers are well prepared for cyber attacks.
More than two thirds of treasurers plan to invest in new digital technology within the next three years, despite only a quarter believing digital technology will have a big impact on their business.
US rate rises expected to be gradual, but will still have a big impact on corporate treasury.
Nearly half of corporate treasurers have recently reviewed cash and liquidity management processes. The majority of the remainder plan to do so this year.
There is a clear disconnect between the sentiment among investors, which has been relatively upbeat about the implications of Trump's deregulation and tax reform agenda, and among treasurers, who are feeling the effects of the political uncertainty.
The survey shows rates remain a big concern among treasurers despite the widespread expectation that the Fed will continue to follow a very gradual path of hikes. Given the Fed funds rate has been set to less than 1% since 2008, it is little surprise that corporates are anxious about how comfortable life will be above that level.
With many expecting heightened currency market volatility to continue and perhaps even increase in 2017, there is a real focus on ensuring corporate treasurers have optimised their cash and liquidity management systems to ensure there is no disruption to operations.
The global economy is going through a digital revolution that has profound implications for all businesses, both positive and negative. New systems will improve how companies interact with their customers and manage internal operations but the increasing reliance on digital channels is also leaving them vulnerable to new kinds of risks.
24%- VERY LITTLE – WE HAVE
CONSIDERABLE WORK TO DO IN THIS AREA
47%- SOMEWHAT – WE WOULD
BENEFIT FROM BEING MORE PREPARED
21%- FULLY – WE UNDERSTAND
THE RISK AND HAVE APPROPRIATE MEASURES IN PLACE
9%- NOT AT ALL – WE ARE NOT
AT RISK/OTHER AREAS OF OUR ORGANIZATION ARE HANDLING CYBER SECURITY
The survey revealed that 45% of respondents expect big data to have the greatest impact in the area of cash management (forecasting and visibility) with another 30% expecting that big data will have the most impact by providing greater insights into customer behaviour. Treasurers should act by forging a greater partnership with the business in order to drive sales. Here are some top tips to consider:
Look outside the department
treasurers should partner first with business stakeholders to determine which data sets may prove most useful in driving sales or creating efficiencies. For example, treasurers may be able to improve cash flow forecasting by profiling data of web impressions gleaned from the sales/marketing team. Then, they should partner with their bank, who may be able to help extract suitable data from cash management, digital payment processes and transaction histories.
better cash flow forecasting in real time is now being made possible by “track and trace” solutions and improvements in the timeliness of payments. Elsewhere, mining card data obtained from the business can be married with payment data to surface insights that may drive new customer propositions and, ultimately, revenue.
Don’t end up data rich, insight poor
there is a danger of over relying on data for data’s sake. Data processing should help achieve specific treasury objectives: maximising shareholder value, optimising working capital efficiency, facilitating liquidity, and managing currency and economic risks.
Corporate treasurers want banks to show a greater level of commitment to their clients despite concerns that regulations like Basel III may make it harder for banks to serve their clients.
To learn more, please contact your J.P. Morgan representative.