Page 3 - MUFG Spring 2021

FOREWORD
Mark McCarthy
Managing Director, Working Capital and Payment Consulting
The global pandemic has impacted practically every facet of managing a business. Executives, managers and staff have responded to the effects of stay-at-home orders, acute changes in customer behavior, disrupted supply chains, access to liquidity and capital, and a variety of other challenges. This time of crisis has introduced unforeseen challenges and accelerated change that was already taking place in our economy. As is often the case in times like these, we’ve seen an explosion of creativity and collaboration to rise to the challenge. It is with this backdrop that we present MUFG’s first biannual Working Capital Consulting e-Magazine – a collection of articles and interviews from thought-leaders across our Corporate and Investment Banking teams – to provide our current and future clients with insights across the spectrum of working capital management. This publication reflects the way in which MUFG works together internally, and more importantly with clients, in a collaborative and cross- functional way to deliver comprehensive solutions tailored to our clients’ situations and objectives.
In times of crisis, the key to survival for any firm is its access to liquidity. Treasury staffs are tasked with ensuring the company can weather any financial system disruptions that may arise and are continually evaluating their options to fund their operations.
In a normal environment Treasury teams strive to generate cash flow through operating and financing strategies, and plan for times of stress. When Covid-19 hit the U.S. economy last March and
April, Treasury staffs put their crisis plans into action. The rush to raise liquidity, supported by federal government actions, significantly changed the interest rate environment driving rates to historic lows and flooding the market with record levels of cash.
Large, highly rated firms with access to capital were able to raise the liquidity they needed, but for companies down the credit spectrum, often suppliers to the higher rated firms, the dynamics of the pandemic created significant strain on working capital and liquidity. In certain sectors, challenges arose from excess demand overburdening suppliers’ production capacity and draining them of working capital causing a need for pre-payments, while in others there was a lack of demand putting pressure on revenue. Compounding those issues were disruptions in the workforce creating delays in manufacturing and delivery of goods triggering delayed payments. All of these situations have created the need for creative solutions to fill the liquidity needs of our clients. In this edition, Maureen Sullivan, Head of MUFG’s Supply Chain Finance business and Ed Gately, Head of MUFG’s Asset Based Lending business share their insights around how their teams help to solve these problems for our clients.
As a financial institution, the protection of our customers’ financial and data assets are our first priority. The pandemic gave rise to opportunistic cybercriminals as a large segment of the workforce connected to corporate networks from home. MUFG Union Bank’s Chief Information Security
Officer, Devon Bryan, addresses the importance of cybersecurity in a video interview on page 14. Additionally, we share some insights on how cybersecurity spending has been impacted as organizations focus on supporting network stability for the at- home workforce. Also, Ari Bensinger, Director in our Tech and Telecom Strategic Research group discusses how the pandemic has impacted technology companies providing the tools to navigate this environment.
In our Transaction Banking business, we saw a significant challenge with companies’ Accounts Payable groups managing the shift to work from home as well as increased demand from suppliers for electronic payment methods. We will talk about the accelerated shift to digital payments, as well as how companies have managed their payment processing operations in a remote work environment.
Finally, this past 12 months have been one of significant, historical challenge on many fronts, but the overarching theme we have seen at MUFG is one of resilience and community. MUFG has helped to support its employees, clients and communities through this time, and we all look forward to a time of stability and safety. I believe that despite all of the pain of this year we will look back on this as a time of creativity and strength that will have helped to create a better future.
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SPRING 2021 / MUFG TRANSACTION BANKING AMERICAS GROUP