Treasurers and Bankers Kept On Edge by Similar Issues: Study

By Maria Bruno-Britz

Well, Americans might not get enough sleep, but at least we can take solace in the fact that we're a productive country. JPMorgan Chase and gtnews decided to ask the world's treasury executives and bankers what kept them awake at night. The findings provide an interesting window into the minds of banks' treasury clients.Over 500 readers were asked to rank particular stressors in their lives on a scale of 1 (sleep like a baby) to 5 (gives me nightmares!) from which an "angst factor" was derived to compare levels of concern about different issues for treasurers and bankers throughout the world.

There were 502 respondents to the poll. Fifty-four percent of those were from corporations, 24 percent from banks and the remaining 25 percent comprised consultants and others. The results by region were divided as follows: Western Europe, 39 percent; North America, 28 percent; Asia Pacific, 19 percent; and the rest of the world, 13 percent.

The poll showed that corporations are most concerned about optimizing global cash flow and improving treasury efficiency. Bankers tended to agree with the latter, as they ranked improving treasury efficiency as the subject most likely to keep them awake at night as well. Overall, North Americans have the worst sleep, with 38 percent scoring answers rated four or five (nightmares), as opposed to 33 percent for Western Europeans and Asians. The poll also revealed that money often helps alleviate (or aggravate stress): three times as many stressed people are from companies with sales of less than US$1billion, than from companies with sales of more than US$1billion.

Over 50 percent of all corporate treasurers who responded to the poll said that the issue of optimizing global cash flow was a high priority. According to JPMorgan's head of treasury services for EMEA, Alex Caviezel, some things treasurers need to keep in mind to achieve an optimized global cash flow are: · Visibility, control and centralization. · Multi-currency solutions including cross-currency pooling. · Regulations. Corporations should focus on cash concentration to ensure they have a clear and robust structure with full control, enabling them to comply with Sarbanes-Oxley, Basel II and IAS 39. · Corporate access to SWIFT and SCORE should be considered. · Physical and financial supply chain--corporations should continue to use the traditional working capital solutions for liquidity management. However, they should also consider it from the point of view of procurement, IT, compliance, audit and shared services.

Further, almost 50 percent of the corporate respondents claimed to have a high level of concern about improving their treasury's productivity. This reflects the developing role of treasury, which is increasingly being seen as a department that can deliver an efficient service and bring financial returns, according to the study. Caviezel said this is a very important development for companies. "The role of the treasurer is really expanding--it now involves managing potential risks, not just financial, but reputational as well," he said in a statement.

As for technology, Asian and Western European respondents were least concerned with trying to keep up with technology (29 percent), while 37 percent of North American respondents felt this issue was concerning. According to Caviezel, ensuring technology is advanced is of great importance to companies in North America because of the level of competition in the market, so the technology for managing accounting and billing, information, forecasting or production, for example, is a differentiator. In Asia, the production costs are lower and the technology is less of a differentiator in that market. However, Caviezel said that Western Europe is puzzling: "Given the significant competition in that environment, then it doesn't seem logical that Western Europeans should be less concerned about technology than North Americans. Does it imply less concern about the efficiency of the treasury departments and the efficiency of the corporation, or less of a concern about future performance?"

Somewhat related to technology is preparing for disasters. Here, Western Europeans once again score on the low side. The results showed that preparing for disaster was a priority for Asians and North Americans, 28 percent and 22 percent, respectively. They rated disaster preparedness as a four or five more consistently than their Western European counterparts (14 percent).

When asked about fraud, the survey found that while 24 percent of respondents were highly concerned about securing company data, even more, or 36 percent, were very worried about fraud. One respondent, Mark Hodgkinson, general manager of Shell group treasury operations in Singapore, commented there was no increased risk of treasury fraud in Asia compared to the U.S. or Europe, especially if companies use a global cash infrastructure and SWIFT standard security messages.

Finally, regulatory changes seem to be of more concern in Asia Pacific than in other regions. Sixty percent of respondents from that region said that regulations would stop them from getting a good night's sleep. JPMorgan's Caviezel, said "Regulatory change is dictated by the ambitions of certain countries to align with global trends, for example China, and this means treasurers have to react to a constant stream of regulations." Keeping up with regulatory change is also a challenge for the North American and Western European respondents. U.K. pension regulations or Sarbanes-Oxley in the U.S.