By Sheetal Shah, Head: Transactional Banking Sales, Nedbank CIB

Covid-19 and the national lockdown have created some of the toughest trading and operating conditions that businesses have ever experienced. Many businesses have chosen to prepare themselves for worst-case scenarios, rather than adopting a wait-and-see approach. They feared the pandemic may leave them financially vulnerable should a worst-case scenario materialise. For most businesses, this approach has entailed a few priority focus areas.

Protection of liquidity

The first cornerstone on which most worst-case business scenarios have been built, is the protection of liquidity to ensure greater operational resilience. Traditional collection methods have been thrown into disarray due to disrupted operations throughout much of 2020, and into 2021. As a result, corporate companies have had to partner with their banks to support their liquidity, often by drawing down on revolving credit facilities and overdrafts, or through the creation of new bilateral loans. In many ways, banks have had to go back to basics to respond to these business requirements. For Nedbank CIB, that has meant ensuring that we are able to provide our corporate clients with day-to-day visibility of their cash and real-time insights into their liquidity positions. Cash has once again become king for many businesses, and business cashflow forecast methods that may have worked in the past, have become invalid due to the vastly different success metrics and operational parameters.

Productivity in the new normal

A second cornerstone of the way many businesses have been positioning themselves to deal with a worst-case business and economic scenario is by focusing even more on productivity, particularly given the significant operational changes that have taken place in the so-called ‘new normal’ work environment. The pandemic has forced millions of employees to work from home, many of whom have never before experienced this type of working arrangement. Many new working arrangements were implemented hurriedly, leaving employees and managers to navigate largely unchartered territory, while also dealing with personal anxieties about the global health crisis.

Most businesses recognised that it would take effort to limit disruptions and feelings of disconnectedness while also ensuring a quick return to optimal productivity levels – and that’s what numerous companies have been focussing on for the past number of months.

Supply chain resilience

Supply chains have also been significantly impacted and have become a key pain point for many Nedbank CIB clients, primarily due to increased levels of counter-party risk, significantly higher levels of economic and market volatility, and the rapidly rising cost of goods.

Against this backdrop, one of the key areas that clients have been focusing on in recent months is the financial supply chain. Companies have taken to accumulating far more stock and inventory than they would ever have considered in the past, trying to avoid a repeat of the financially devastating stock shortages experienced during the first hard lockdown, grounding supply chains to a halt. It’s likely that this will be an ongoing trend for at least the next year, or until businesses are confident that the uncertainty around potential future restrictions has been addressed.

Ensuring good relationships with suppliers has also become a priority. Companies recognise the value of suppliers that are willing to prioritise their orders during times of restrictions or uncertainty; and many companies are looking to partner with their banks to access finance facilities that help them to build solid and trusting supplier relationships through a track record of reliable and timeous payments.

Digitisation

The pandemic has significantly accelerated the digitisation imperative across the vast majority of businesses. This large-scale digitisation has brought about significant changes in many areas of business, from buying processes to entire value chains, and many businesses have now established themselves as primarily digital organisations.

Before Covid-19, there were still many businesses that considered an online presence to be little more than an add-on to their physical presence. Today an effective e-commerce strategy is a central component of top-line income and a key to sustainable business growth.

Nedbank’s focus is on partnering with its corporate clients to deliver the support they require to drive the necessary adaptation in their businesses and integrate all of these preferences and behaviours into their new ways of working. We believe it is imperative that organisations ensure they partner and align closely with their banks to enable this adaptation, mitigate the risk of disruption going forward and set themselves up for resilience and sustainable success in the future.