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Treasury Strategy & Transformation
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Increasing Predictability and Reducing Volatility – Corporate Liquidity in a New Financial Cycle

A TMI/ATEB Roundtable

Helen Sanders

If we compare the experience of corporate treasurers today compared with this time last year, concepts of liquidity, credit and funding are now very different. Not only that, but the market itself has a different view of its participants. What does this mean in practice from a corporate perspective? What does the new world look like? What are the challenges and how we go about addressing them so that we still add value to our organisations?

Luc Vlaminck

The first question for a corporate treasurer is why the market has changed so dramatically, as we all have seen in our day-to-day jobs? Furthermore, how should we understand the consequences of these changes? We can then tackle these one by one and see if we can influence or eliminate each factor to allow us to access the market in the same way as we did before.

Mark Beard

We have seen that clients have begun to tighten up their financial activities in many ways. Many issues which, while they have always been important to treasurers, have come to the fore as we come to the end of a cycle in which corporations have built up enormous cash amounts. If you look at the statistics on this, this sort of activity comes in waves. After 9/11, for example, corporate clients started to clean up their balance sheets and became far leaner in their borrowings and their cash holdings. Since that time, we have seen an enormous build-up of cash and we are now entering a new phase in which corporations are being more disciplined about their balance sheets again as the external credit markets tighten. Potentially, this becomes more expensive depending on the volatility of your base currency but risk is becoming more highly prized. Therefore, with credit becoming relatively more expensive, companies are making greater use of internal sources of funding.