Treasury Management Internation Logo

Corporates will Strengthen Reserves for the Next Crisis

Published 

New Investec research [1] shows nearly three out of four (73%) corporates and large SMEs are looking to strengthen cash reserves as part of the long-term switch in risk management, so they are in better shape for any future crisis.

The change in policy and planning builds on experience during the Coronavirus crisis which has seen companies substantially boost cash reserves – Investec’s research shows one in six (16%) say their cash reserves are now at an all-time high.

Its study among 100 senior executives at corporates with total cash deposits of more than £6.17 billion and average reserves of around £62.3 million found 58% had seen cash reserves increase over the past year. Around one in five (17%) say reserves are 40% or more higher than last year.

The research for Investec, which provides bespoke deposit accounts for corporates with between £5 million and £150 million on deposit, found that for those companies that have seen cash reserves rise, the main reason for this was that their revenue had increased during the Coronavirus crisis. Around 58% say this, but more than half (51%) say cancelling investment projects has boosted reserves while 44% attribute increased reserves to cost-cutting. Around one in three (34%) have sold assets while 17% say Government crisis loans mean they have more cash.

Companies generally say they have cut back on investing in their operations during the crisis with 82% confirming this. Around one in five have reduced investment by 20% or more compared with two years ago.

FJ Eigelaar, Head of Client Group Funding at Investec, said: “The Coronavirus crisis has changed business attitudes on a wide range of issues and appears to have driven a shift in views on cash reserves.

“Many companies are already cash-rich following the crisis and nearly three out of five now plan to keep more cash on reserve, so they are in better shape when or if the next crisis or unforeseen event comes.

“That should mean increasing the emphasis on cash management and ensuring that reserves are in the best possible range of accounts so that companies can react appropriately.”

Investec’s study found not all companies have seen cash reserves increase – 38% say they fell during the past year with 9% saying they are 30% or more lower. Around three-quarters (73%) of corporates and large SMEs who have seen their cash reserves fall say it is because they used it to fund operations, while 58% had to use the money to fund projects they were committed to but no longer had all the funding for because of the crisis.

Investec offers a wide range of bespoke deposit accounts for corporates and large SMEs for minimum deposit sizes of £5 million. Products include notice accounts, instant access accounts and its Access 50 account offering higher rates than notice accounts and also the flexibility of fee-free instant access up to 50% of the deposited amount.

For more information on Investec’s Cash Management Solutions for corporates go to https://www.investec.com/en_gb/corporate-banking/cash-management.html

[1] Investec commissioned the research company PureProfile to interview 100 senior executives at UK companies with at least  £5 million in cash reserves in September 2021

Most recent episodes

Lessons from Innospec on Building a Strong Cash Culture

Without ready access to the key metrics of cash forecasting, Andrew Hawes (Innospec) knew the business could do little more than react to events. But without the collaboration of key stakeholders too, he knew that...

35:08

How to Make Your TMS the Ultimate Investment Tool

The right TMS can be a huge asset to treasury. But these one-stop shops often fall short when it comes to short term investment workflows. In this podcast, Ed Lopez, James Griffin (Calastone), Jeannot Jonas (Carrier...

01:24:00

Best Strategies for Driving Cash Visibility: Advice You Can’t Google

What are the best strategies for facilitating cash visibility, and how can treasurers promote everlasting tech adoption within their departments? Serrala’s Nancy Zhang...

35:23

Innovations in Retail Payments

The fallout from the pandemic has radically accelerated changes in consumer behaviour on a global scale. The payments sector has had to quickly adapt in order to keep up with the emerging demands of both digital consumers and retail corporates, resulting in some...

36:40

The Future of ESG in Treasury

In this podcast, Melissa Moi, Peter Jameson and Venkat ES from Bank of America join TMI’s Eleanor Hill to determine where the ESG journey is heading next. Our expert panel consider how changing regulation, technology solutions and metrics including ESG KPIs...

26:50

HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...

25:12

HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...

16:24

The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...

33:16

HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....

20:58

Lost in Transaction: Overcoming Payments Pitfalls

From simple errors to duplicates, fraud and sanctions violations, there are a number of areas where payments can go wrong – especially in the real-time environment. In this podcast, TMI speaks to Andrew Ferrao...

34:25