Treasurers report a thaw in frozen credit markets, and warming relations with bankers. Coming from the primary managers of companiesâ cash and caretakers of banking relationships, this could mark an important turning point in the credit cycle. Fifty-six percent of treasurers believe that banks are delivering acceptable lending terms to healthy companies, up strongly from 32% who felt the same in the previous quarterâs poll. Around two-thirds of respondents say that credit conditions have improved or stayed the same so far this year. More than half of treasurers are comfortable with their companiesâ cash flow forecasts for at least six months into the future, yet another sign that conditions are stabilising.
âEven if these improvements are sustained, it will take time before the cost and availability of credit returns to anything approaching normal, as we once knew it,â says Carolyn Meier, Managing Director of EuroFinance. âIndeed, nearly 60% of treasurers do not expect the banking system to fully recover until the second half of 2010, at the earliest. While any signs of âgreen shootsâ are welcome, it is too early to celebrate a blossoming recovery just yet.â
Almost three-quarters of treasurers say that they now have more influence on company strategy than before the financial crisis. However, this greater responsibility does not necessarily come with greater resources. A third of respondents say that their treasury departments are either âefficient for now, but unsustainable in the long termâ or, more worryingly, âoverstretched and approaching breaking point.â More treasurers say that the crisis has forced their departmentsâ staffing levels to be cut (13%) than those who have received extra manpower in response to the turmoil (8%).
Meier adds: âGiven the extra responsibility heaped on treasurers, it is somewhat worrying that so many feel that they do not have the right resources to deal with their increased workloads. With liquidity and credit management so crucial to corporate success in these cash-constrained times, firms would be wise to heed their treasurersâ advice on the state of the departments.â
Looking back, treasurers say that liquidity, credit and foreign-exchange management processes were their companiesâ most vulnerable treasury processes, respectively. Liquidity management, in particular, is now receiving a lot of attention, with 57% of treasurers now looking to bolster processes, policies and procedures in this area.
Finally, any hopes that looser credit markets and more optimistic treasurers will translate into a new M&A boom are possibly premature. The bulk of treasurers do not expect dealmaking activity to pick up until next year, with nearly half of respondents expecting an M&A revival in the second half of 2010 or later. Over the next year, treasurers say that their companiesâ focus will be inward - 70% of respondents say that their firmsâ primary use of cash will be to reinvest in their businesses or pay down debt.