What Will be the Corporate Treasurer's Priorities for 2024?

While I don't have access to real-time information beyond my last update based on EACT survey 2023, I can provide some general insights into the priorities of corporate treasurers that may still be relevant in 2024. Keep in mind that the specific priorities of corporate treasurers can vary based on economic conditions and industry trends. You will find in this article some common priorities that corporate treasurers often focus on in 2024.

No surprise!

I'm afraid that 2024 won't hold as many surprises as we think when it comes to cash flow. Priorities often revolve around the same themes, the more jaded may think. Perhaps, and perhaps not so much... Indeed, for many, one of the main themes will be (re)financing, which is essential to the survival of the business. If financing costs and interest rates remain high, many companies will be in trouble (In the US more than 3tn$ of corporate debt is due for repayment over the coming five years). So many companies have really benefited greatly from the zero cost of capital. Many companies have just or are ab out to recover in terms of business performance and profitability and now they’ve got the interest burden on top creating a tremendous amount of liquidity pressure. The most highly levered companies are going to be more vulnerable. Higher interest rates have put a stop to most debt-backed buyout activity and made financing existing borrowings more challenging. The clock is ticking in both leveraged loan and private credit markets. One or two fires in a portfolio might be containable, but distress on multiple fronts could easily lead to a situation where owners cannot inject anymore equity. This is where Europe's lack of diversified sources of financing will be sorely missed. It is therefore easy to understand why the ECB, the Euro-Group and the future EU Commission have made it a priority to develop the Capital Market Union (CMU). In my opinion, this will be the first challenge facing (general) treasurers.

Hyper-Automation and Treasury Technology:

Evaluating and implementing treasury management systems (TMS) and financial technology solutions to streamline processes and enhance visibility. Moving to the next level of automation and potentially hyper-automation is key. Nevertheless, some corporations are first and still looking for renewing their existing tools. Many TMS renewal projects will keep many treasurers busy in 2024. However, the leading-edge treasurers are a step ahead. They are looking for hyper-automation and tend to the next level of digitization. We do believe that it will be a major challenge given system legacy. The solution will come from full revamping (not that frequent) or addition of what I call the umbrella solutions or ETL-like solutions, such as FENNECH F³). The ultimate objective is to further integrate and interconnect systems and limit semi-manual and import/export processes to accelerate processes, make them more robust and tend to the real-time treasury. This stage will be the most critical and the priority of the most advanced and modern societies. Shaping the digital office of the CFO is a more global priority in which the treasury will play a major role. Process automation help turning finance and treasury into a value creator. It doesn’t mean only treasury, but also AP automation, collections and disputes, electronic billing presentment and payment, cash-flow forecasting, data and document management and eventually a digitization of finance from end to end.

Other main priorities:

No one will be surprised by the presumed ranking. We believe that the main objectives include:

1. Liquidity & Cash Flow Management: Treasurers must ensure liquidity and managing cash flows efficiently to meet financial obligations, invest in growth opportunities, and optimize working capital.
   
   
2. Market Risk Management: It is vital to identify and mitigate financial risks, including currency exchange rate fluctuations, interest rate risk, and commodity price volatility, in volatile markets, full of uncertainties and surprises. Again, the currency management automation (CMA) is in our opinion, a key priority for treasurers to optimize FX management and mitigate P&L impacts due to delay in hedging.
   
   
3. Cybersecurity & risk of fraud: No one could contest there is a recrudescence of fraud cases. The top objective is to protect financial data and systems from cyber threats, which can have a significant impact on a company's finances and reputation.
   
   
4. Regulatory Compliance: we must stay updated with financial regulations and ensuring compliance with accounting standards and reporting requirements. 2024 and the new EU Commission will finalize many regulations.
   
   
5. Short-term Investment Strategy: Treasurer’s challenge will be to make informed decisions about where to invest surplus cash, considering factors such as risk tolerance, yield, and liquidity. There, the counterparty risk, still tough to manage, will oblige to consider less bank deposits, not too many MMF’s and more tri-party repos (full collateralized).
   
   
6. Working Capital Optimization: No doubt, it will remain highly ranked. Managing accounts payable and accounts receivable effectively to minimize costs and maximize cash flow remains an important objective for all of us. It is always a top priority because people remember it is the first source of funding of the company.
   
   
7. Debt Management and capital restructuring: Strategically managing corporate debt, including refinancing and debt issuance decisions, to optimize the capital structure. But for well managing the debt, we need excellent and reliable Cash-Flow Forecasts. The current interest rates environment is complicate for cash poor companies having renewal of long-term loans.
   
   
8. Sustainability and ESG Initiatives: We will help integrating environmental, social, and governance (ESG) considerations into treasury and risk management strategies, which are increasingly important for stakeholders. We have the coming CSRD and new disclosures related to ESG which will impose new reporting and also new focuses in terms of funding and asset management.
   
   
9. Mergers and Acquisitions: If applicable, supporting M&A activities by assessing the financial impact, funding options, and integration strategies. Nevertheless, we know that we will face more spinning-off rather than acquisitions and groups will continue refocusing on core business(es).

Staying on course, even in the storm!

Please keep in mind that the priorities of corporate treasurers can evolve over time, so it's essential to stay informed about the latest industry trends and economic developments to understand their specific focus in 2024. The coming 2024 EACT will help determining the new trends and focuses. However, I do not expect major changes. The ranking may evolve, but the priorities will remain rather unchanged. We should not forget to continue “partnering” with other departments of finance and with subsidiaries. I also believe that banking relations should remain another priority for every treasurer. Banking connectivity, often precarious even in large treasuries, should also be prioritized to optimize incoming flows to automate reconciliations and accounting postings, and further secure outgoing transfers. As you can see, staying on course will be our main objective, storm, or no storm.

François Masquelier, Chair of ATEL – Belgium – December 2023