The economic downturn caused by Covid-19 has forced corporate treasurers to re-evaluate their cash management, trade finance and working capital strategies. Whether it be optimising account structures to maximise liquidity, digitising trade processes to ensure business continuity, or extending liquidity support to suppliers, treasurers have been drawing on a range of tools to maintain operations and minimise disruptions, explains Giovanni Solaroli, UniCredit’s CoHead of Global Transaction Banking.
The past few months have been quite extraordinary for corporate treasurers, as they move to adapt to the economic shock caused by Covid-19. Liquidity, of course, has been the primary concern – needed to keep both companies and their suppliers in business. Meanwhile, the shift to remote working has thrown up technical challenges, requiring treasurers to identify ways in which trade and document signing processes, among others, can be carried out digitally. To address these, corporates have been turning to a combination of traditional tools and new platforms and solutions.
Pushing liquidity up and down the chain
Top of the list of priorities is adequate working capital. Whilst most large businesses have been able to draw on existing bank facilities to tide them over, this kind of financing is less readily available to those further down supply chains.
We’ve seen businesses move quickly to support their suppliers here, engaging their banks to make early payments based on approved invoices through supply chain finance or ‘reverse factoring’.