Treasury departments are focusing on preserving cash and improving forecasting to ensure that their organizations weather the COVID-19 crisis, according to a new AFP Survey, underwritten by BMO.

In early April 2020, AFP conducted the Impact of the COVID-19 Pandemic Survey. The survey revealed that cash is organizations’ top priority in this crisis, and practitioners are taking somewhat drastic measures to preserve it. A majority of companies (69%) have delayed hiring new employees, and many of them (61%) are instituting a total hiring freeze.

Taking a long-term view, treasury departments are building liquidity buffers in case economic conditions worsen or recover slowly. Fully 70% of organizations have either delayed planned capital expenditures (41%) or are in the process of delaying them (29%).

The increased focus on potential future impacts of the pandemic on organizations’ liquidity has led to a high-profile role for treasury. Seventy-eight percent of respondents said their organizations are including representatives from treasury in meetings and discussions surrounding the pandemic. In addition to preserving cash, treasury has increased its emphasis on cash forecasting and expanded the time horizon for forecasts. A total of 88% of respondents are now making this a priority.

Protecting cash also means making sure companies do not lose money to unauthorized transactions. Seventy-four percent of organizations have either implemented or plan to implement strict compliance procedures to protect against fraud.

“Determining the amount of cash required to sustain the business is vital to weathering a crisis of this magnitude,” said Jim Kaitz, president and CEO of AFP. “Treasurers are guardians of corporate liquidity, and this pandemic is requiring them to go the extra mile to ensure the sustainability of their organizations.

“These results mirror what we’re hearing from our clients, that cash forecasting, adoption of digital payments, and renewed fraud mitigation processes are critical for preparedness,” said Sharon Haward-Laird, Head, North American Treasury & Payment Solutions at BMO. “Thankfully, a wide variety of industries and organizations are taking the necessary steps, working with their customers, suppliers and partners, including their banks, to navigate what’s ahead.”

Additional findings:

• Sixty-two percent of respondents had business continuity plans in place and a significant share of treasury professionals (95%) attest that these plans were effective when put into use.
• Sixty-five percent of companies have moved from paper to electronic payments since the start of the crisis.
• Treasurers at 78% of organizations confirm their team is involved in internal meetings and task forces regarding COVID-19.

For more information about the survey, please visit http://www.afponline.org/COVID19Treasury. For press queries, please contact Melissa Rawak at [email protected].