Strategic Treasury

A New Season Kicks Off What should a treasurer be doing to plan for the worst, whilst hoping it never happens?

A New Season Kicks Off

by John Gibbons, EMEA Regional Executive, J.P. Morgan

John GibbonsAccording to a member of my team, conference season started in September.  If what was meant by that remark was a six week respite from the plethora of industry events that has just finished, I would tend to agree.  But like many sports calendars these days, a season (which once referred to one of four periods in a year), now seems to last throughout the calendar with a few weeks’ rest for summer and winter holidays!  Industry forums are a very good (but not exclusive) way for peers to share and discuss their challenges and possible solutions.  And while demand for these events continues, who am I to question if there are too many?  Likewise, I feel I would be outnumbered if I made a bold suggestion that certain sports would benefit from a shortened season to allow recuperation for athletes and spectators alike. 

The challenges facing the Eurozone have similarities to our ‘new season’.  For the entire year, its future has been debated in the headlines and the topic has been more talked about than any Champions League saga, or goings-on at FIFA.  Yet did you notice that, following the public pledge in early August by ECB president Mario Draghi to do “whatever it takes” to prevent a break-up of the single currency, it all went eerily quiet?   European government officials joined many of us in taking a break; unsurprisingly, the world did not implode in our absence.  However, no sooner did we all start to drift back from our adventures, than the headlines were once again full of concerns about the future.  It’s as if everyone decided that the issues should be put on hold until we were back from our holidays, recharged and ready to tackle them once more.  When Draghi announced on 6 September the details of a new bond buying plan aimed at easing the debt crisis, you could not help wondering if “whatever it takes” is more “whatever it takes - within reason”. When you consider the concerns already expressed by Germany’s Bundesbank and the conditions the ECB president laid out in the plan, one must wonder what will happen next.

Meanwhile, nearly 1,800 of us are preparing to go to the South of France for EuroFinance, 6,000 of our US peers will be heading down to Miami for the AFP Conference, the Dutch, French and Italian Associations will host their domestic events, and many more conference companies are trying to find a new angle to attract corporates and banks alike. One wonders if anything other than the future of Europe and its currency will be discussed behind the closed doors of exhibition booths. To that point, what should a treasurer be doing to plan for the worst, whilst hoping it never happens?   

My team has already spent a considerable amount of time discussing preparations for market disruption with our clients and I suspect this will continue.  Most treasury professionals would agree that one of their primary responsibilities is to be ready for any market event, from a modest correction to a dramatic swing, but preparing for a disruption severe enough to affect normal business has never been such a priority as it is today.  From people and stakeholder management, to payments and collections transparency, balance management, supply chain and counterparty risk, technology, operations, through to the opportunities that might present themselves, the checklist of potential issues to be addressed in order to be fully prepared for any eventuality is a long one.

Now, I don’t want to be an alarmist but I believe that a well run organisation is one that is prepared for every eventuality. I don’t expect the River Thames to flood London, but I still have a plan in place for my business to continue if it ever did.

If you’re attending one of this season’s treasury events, you might consider spending some time discussing with your peers and banking partners what you may have missed in your own contingency plans.  SEPA is obviously part of that conversation and the deadline is already a month closer than the last time I mentioned it!  Increasing operational efficiency is still a very important issue, but if you end up with your cash being trapped, your supply chain broken, and/or your ERP crashed through a lack of planning, then all your hard work might be in vain.

As it is apparently a ‘new season’, then I believe that cautious optimism for the coming months ahead is the best approach to the many serious issues that need to be addressed by the politicians and central banks.  I encourage you to adopt the same approach and maybe, just maybe, you will finish the end of the season with a winning strategy and a winning team.

Save PDFs of your favorite articles, authors and companies. Bookmark this article, or add to a list of your favorites within mytmi.

Discover the benefits of myTMI

 Download this article for free