With uncertainty the predominant theme for 2010, the need to keep the focus on cash and liquidity management remains as strong as ever. At the ACT’s annual cash management conference in February, ACT president Gerry Bacon said that every element of the current environment made the management of cash an absolute priority and suggested that treasurers needed to think about several key elements.
Forecasting remains a constant task, with scenario planning important in working out likely surpluses or deficits. The credit markets remain unpredictable, so a handle on funding – the when and what – if more cash is required needs consideration. This has to dovetail with working capital management, optimising internal liquidity while paying attention to supply chain finance and the possibility of suppliers and customers going bust.
Counterparty risk also remains a live issue: the counterparty risk that was under control last week may not be so certain the next. And for treasurers with cash to invest, the SLY principles – security, liquidity, yield – must be engraved on their hearts. While times are tight it is always tempting to save costs or hold off investments in systems and people, but doing so could be a costly mistake.
