Don’t Forget to Breathe!

Managing Ongoing Uncertainty in 2023

A series of market shocks in recent years have left treasurers facing enormous uncertainties. Adopting a strategy that mixes a back-to-basics approach with an eye on the future offers treasurers the best chance to insulate their organisation against future shocks and unwelcome surprises.

The past few years have been some of the hardest in living memory for corporate treasurers, as a collection of black swan events have given rise to tremendous uncertainty. Trade wars, COVID-19, supply chain shocks, the war in Ukraine, and soaring inflation and interest rates have come along a conveyor belt of doom, all testing the mettle of treasurers. Today, the world is holding its breath, waiting to see if there will be a significant global recession and what form that might take.

Liquidity, liquidity, liquidity!

At times of market stress, liquidity is a primary focus for corporate treasurers. In the current high interest and inflation environment, looking to maximise internal sources of liquidity can be an attractive option for corporates.

Martijn Stoker, EMEA Head of Liquidity & Account Solutions at J.P. Morgan Payments, outlines the situation: “With elevated inflation, we’ve seen interest rates rise sharply and, while we’ve not hit a crunch yet, market liquidity is slowing. Therefore, funding costs are going up significantly, which clearly increases refinancing risk. Overall, this increases the importance for treasurers of recycling their internal cash and using available internal balances as much as possible.”

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