Cash & Working CapitalCOVID-19Risk Management

Policies Resembling Guardrails That Withstand Trigger Events

By November 5, 2020 November 24th, 2020 No Comments

Key takeaways from the Assistant Treasurers’ Leadership Group 2020 H2 meeting, sponsored by Chatham Financial.

By Joseph Neu

Policy and procedures off the back burner.  The pandemic put a wide range of policy and procedure review projects on the back burner and more members are starting to refocus on them now as immediate liquidity concerns recede.

  • A session on risk policy reviews, for instance, highlighted how valuable a review can be after an event trigger from a change in business, such as a major acquisition; a change in personnel, like a new treasurer or CFO; or a market change, including the impact of Covid on interest rates, FX, etc.
  • The more a policy resembles a set of guardrails that can be separated from tactics and procedures filled with prescriptive language, the easier it is to maintain a two-pager that remains valid through trigger events.
  • This allows the details, perhaps spanning 100 pages, to adapt to business change, process improvements, new technology and tools, people and other trigger events. It also allows strategies and tactics to be flexible enough to allow treasury to respond quickly, especially to changes in market conditions.

Covid crisis advancing cash forecasting.  Exponential improvements in cash forecasting are a huge silver lining in the Covid-19 crisis.

  • Member sharing during the projects and priorities discussion strongly suggests that two years from now, Excel will be replaced as the most important cash forecasting tool by business intelligence and other analytics applications alongside specialty forecasting modules that automatically pull data from the ERP and bank systems.
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Justin Jones

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