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Insight to All Things Currency and Treasury Management

In case of a fire, it’s best to know how what the best escape route is and practice using it. American companies these days are working on their own type of fire drill, but theirs involves preparation for Greece exiting the euro.

According to a recent article in The New York Times, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone. Some examples include Bank of America Merrill Lynch, which has looked into filling trucks with cash and sending them over the Greek border, and Ford, which has configured its computer systems so they will be able to immediately handle a new Greek currency.

So, what does this new corporate fire drill mentality mean and why should we take note of this? It’s because this signals beginning of the beginning – a new euro is eminent and preparing for it is the only fiscally responsible course of action for CFOs, CEOs, boards and investors.

On September 12, Germany’s constitutional court will rule on the legality of the euro zone’s permanent bailout fund. However, whether the ECB finds enough funds to bail out Greece is not the issue. Italy, Spain and others will almost certainly break whatever bank is left after the Grecian question is answered.

So the bigger question for U.S. companies is not just how are they going to handle Greece, but what should they do about the impending euro storm overall? Already, some US firms are sweeping cash from European banks on a daily basis. This is an understandable tactic, but it is not a substitute for a viable long-term strategy.

Instead, multi-nationals should look at companies such as Google, which are leveraging proven cloud-based technology to weather the euro storm without drawn-out consulting and IT projects. These companies benefit from the very uncertainty their competitors suffer from.

Actively managing currency exposures – including but not limited to the euro – is the only sustainable response to the volatility the euro crisis has created.