How treasurers should respond to the US election!

1. Scenario Analysis

If trade relationships change and supply chains into the US are restricted this will likely lead to rising inflation and costs. Running scenarios to understand how this could impact the business will identify if there will be a liquidity shortfall, and actions can be taken now to prepare.

2. Interest Rate Risk

Even though the President is not responsible for monetary policy, if inflation rises significantly the FED may respond with higher interest rates. If debt facilities are maturity and are in need of renewal, the long-term forecast should capture this potential impact.

3. Liquidity Planning

Changes in tax legislation, and repatriation regulation, interest rates will all impact available cash. Considering new financing arrangements, or renegotiating contracts to shorten working capital days are a couple of many levers that may be considered to weather the storm. Having a view of the options available and when to pull the trigger on each, will help to create a detailed liquidity plan for the coming years.

4. FX Risk

A few years of turbulent FX markets are likely to ensue therefore maintaining hedge ratios and reassessing the hedge program to support the business will reduce unnecessary fluctuations and aid the liquidity planning process.