What gets measured gets managed
One of the issues in treasury management is the lack of metrics to measure, Treasury’s performance and the communication of these metrics to the senior management. Without formal objectives to track and measure treasury activities, managing and improving them becomes a new challenge. AFP’s Treasury Benchmarking Survey identified four metrics that can be used by corporate treasury teams to build their measurement and optimization toolkit in relation to the rest of the industry.
- FTE (full-time equivalent) staff levels: FTEs per billion dollars of sales for key activities such as cash management, debt and investments, in-house bank accounts, financial risks and treasury policies.
Number of FTEs for treasury operations
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- For managing treasury policies and procedures
- For managing cash
- For managing in-house bank accounts
- For managing in-house bank accounts
- For managing debt and instruments
- For managing financial risks
- Treasury cost: Cost per $1,000 of revenue, including internal and external costs as defined in the survey
- The total cost of treasury operations
- Personnel cost (including benefits) of treasury operations
- Systems cost of treasury operations
- Throughput: Units processed per FTE for activities such as payment transactions and bank accounts reconciled.
- Total annual number of cash receipts processed per “manage cash” FTE
- Number of bank accounts reconciled per “manage cash” FTE (including concentration, lockbox, disbursement, trust, and fiduciary)
- Cycle Times: Days required to complete activities such as resolving bank account discrepancies, developing short-term forecasts and generating the daily cash position.
- Days from the time a discrepancy is discovered in bank account reconciliation until it is resolved
- Hours to develop a short-term cash flow forecast
- Hours to concentrate/physically pool cash and establish a daily cash position
- Hours to reconcile single bank account from receipt of bank account statement through reconciliation of ending book balance
Treasurers oversee crucial business functions which are often overlooked. Developing and reporting benchmarks for treasury operations shines the spotlight on Treasury, its value as a strategic partner in the organization, and its impact on the day to day business. surpassing these benchmarks allows the organization to evaluate its growth, and effectiveness of its strategies.
Download the Treasury Benchmarking Cheat Sheet
January 4, 2017
