As individuals and companies, we find ourselves in unprecedented circumstances that few, if any, could have foreseen. Business continuity plans have been triggered worldwide, but many of these plans did not anticipate the global reach of Covid-19, or the personal anxieties that we would all face. 2020 is the fifth anniversary year of the Journeys to Treasury partnership, comprising BNP Paribas, European Association of Corporate Treasurers (EACT), SAP and PwC. We are marking this special alliance with a ‘Journeys to Treasury Bitesize’ series, providing topical insights and support for treasurers as they navigate this challenging period.
During the current crisis, as people rapidly switched their working environment from the office to the kitchen table, the advantages of end-to-end digitisation have never been more apparent. For many companies, however, the weaknesses in their digital infrastructure have suddenly become apparent. From physical keys to banking systems behind locked office doors, passcodes held by employees without laptops, to hard copy documentation arriving in the mail to an empty building for signature, most treasury departments have experienced some challenge in a newly dematerialised working environment.
“In a fully digitised treasury environment, everything that can be done in the office can be done remotely, whether TMS access, payments processing, bank account and signatory management, reporting and linking to third party trading platforms for risk management. However, to fully realise these opportunities takes some investment and preparation, and many have had to set up workarounds quite quickly.” — Christian Mnich, SAP
While treasurers have conducted detailed business continuity planning (BCP), most assumed they would operate from another business location, as opposed to whole teams operating from home. As a result, some companies have only now realised the digital and business continuity gaps in their operations. One priority for many companies has been to replace the ‘wet’ signatures on documentation with electronic signatures, have been on the radar for some time, but progress was often slow in comparison with other priorities, particularly due to the need for consensus across multiple partners, including regulators and legal authorities, and concerns around fraud prevention.
“The shift to e-signatures has now been greatly accelerated, with multiple actors coming together to find pragmatic ways to keep business moving and ensure that critical processes, such as salary payments can be made on time whatever the BCP in place. This has required not only new processes to accept e-signatures, but also rapid bank processing of these mandates at a time when operations are in business continuity mode worldwide.” — Bruno Mellado, BNP Paribas
The crisis has also emphasised how important it is to maintain personal contact with our colleagues. With most of us working in a more isolated way, we are making even more of an effort than usual to communicate with our colleagues and contacts. In many cases, companies were not fully prepared for this. While they may have successfully digitised system access, connectivity, operations and reporting, they had not factored in, or made provision for, the importance of personal interaction and collaboration.
People and businesses have adapted quickly however, and recreated this personal contact virtually, as the massive expansion in the use of remote conferencing tools such as Webex, Skype and Zoom has illustrated. Pragmatism and flexibility Speed and pragmatism have been key to corporate responses to the pandemic. In treasury, new ways of working have not always been accommodated in existing treasury policies and procedures. Consequently, many have had to build workarounds and emergency policies to ensure continuity of critical activities, such as payments and liquidity management. At the same time, managing operational and financial risks remains a priority, even if this is done in a different way to usual. Banks such as BNP Paribas have been proactive in helping clients to test critical payment runs to identify and address digital gaps and test security and approvals in advance.
As Covid-19 has become a global pandemic, every organisation has been affected, in every region, which few business continuity plans had anticipated. For example, multinational corporations working with other multinational business partners will typically assume that if one business location is out of action, another will act as back up. The crisis has illustrated that these assumptions are not necessarily reliable, particularly as different locations face specific challenges. For example, in India, where many organisations have large operational or service centres, setting up homeworking for large numbers of employees can be more difficult. As the crisis starts to ease, BCP will not only be a higher priority, but it is also likely to include more complex scenarios.
“Think the unthinkable when reviewing your BCP.” — Bruno Mellado, BNP Paribas
“Identify and stress test your critical processes, both internally and with your partners. Remember smaller suppliers may be hit harder by human resource constraints.” — Christian Mnich, SAP
“Develop emergency policies to anticipate and adapt quickly to major changes in the business environment” — Sandrine Schaumont, PwC
While the Covid-19 pandemic is having a major economic and business continuity impact, it is primarily a public health and social crisis. Every one of us is affected in some way, and both as a result of the virus itself and the social impact, such as school closures. These issues are having a significant impact on treasury departments as people fall sick or need to take care of dependents. Outsourcing may, in theory, be a solution where teams are no longer be sufficiently resourced to function. However, by the time an outsourcing decision has been triggered, it is probably too late, as it becomes too difficult to effect a handover.
“Some companies are looking internally across related departments to meet resource constraints before looking externally. This can be challenging in itself unless teams have already been briefed and have relevant skills. Furthermore, senior management need to be sensitive to the fact that while some people are not able to work, for a variety of reasons, some people don’t want to work onsite if they are anxious about workplace risk.” — Sandrine Schaumont, PwC
Some companies are offering incentives to key employees that cannot work from home, so long as they can ensure a safe working environment. However, the crisis will change permanently the way we think about our systems, our business continuity, but most of all, our people.
Treasury is an international business function, and many people locate to different treasury centres and/ or work alongside the business to provide specialist input. But what could the crisis mean for international business travel in the future?
Future of International Business Travel
Status of Planned International Assignments
“We expect that companies and their global mobile workforce will reflect more on their international relocation and travel plans. However, people in key roles, such as treasury, will most likely end up travelling more to meet the needs of the business effectively.” — Sandrine Schaumont, PwC
*Survey conducted by PwC, with responses from over 350 corporations, primarily HR and People functions