What are the implications of Brexit on treasury management?

The impact of the UK’s decision to leave the EU was immediately felt by treasurers – with volatile foreign currency markets and the weakness of the British Pound (GBP) cited as the biggest concerns of those we've spoken with post-Brexit. With a period of uncertainty ahead, as the detailed political and legal issues of leaving the EU are worked out, treasury teams will be at the forefront of navigating the liquidity and financial risks for businesses.

 

Some key challenges ahead for the Treasurer: 

  • Foreign exchange volatility – understanding exposures and the impact that volatile foreign exchange rates might have on the accounting, cash and economic positions of the group and key entities
  • Funding – how to fund corporate strategic initiatives and find liquidity during a period of heightened uncertainty and change
  • Cash Management – improving cash visibility, forecasting and structures to protect and make best use of this key corporate asset in uncertain times, ensuring it can be accessed readily
  • Counterparty risk – understanding counterparty risk and managing relationship with financial institutions, ensuring banking arrangements are fit for the new business environment.

Organisations will need to put in place effective processes and systems to enable them to plan and manage their treasury risks. Being able to readily access cash, adapt financing strategies to changing markets and manage relationships with financial institutions are just some of the issues key to developing a robust approach to treasury management.

 

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Yann Umbricht
Partner, Head of Treasury and Commodity Group
Tel: +44 (0)20 7804 2476
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David Stebbings
Director, Treasury Advisory
Tel: +44 (0)20 7804 2323
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David Godbee
Partner, Debt & Capital Advisory
Tel: +44 (0) 20 7213 4101
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