In the Best Corporate Treasury Departments, People Do Matter, AFP Survey Finds

Partners AFP, IBM and Deutsche Bank Release 2010 Treasury Benchmarking Survey for North America and Europe

WASHINGTON, Nov. 7 /PRNewswire/ -- When it comes to managing corporate cash, people matter most, according to a recent survey by the Association for Financial Professionals (AFP).  Results of the third annual AFP Treasury Benchmarking Survey (www.afponline.org/benchmark) showed that human capital factors such as education and training of key finance personnel have a significant impact on the efficiency of treasury operations.

AFP, IBM, and Deutsche Bank conducted their third survey of financial professionals across the AFP membership and supplemented the survey group with readers of gtnews, a London-based AFP company and online resource for the treasury and finance community.

The 2010 survey sought to determine performance levels of participating treasury departments, analyze performance by peer group, define world-class (80th percentile) targets, and provide a basis for comparison. Organizations use this data to identify performance gaps and evaluate opportunities for improvement.

"Since treasury departments are responsible for keeping enough funds on hand to meet their organizations' operating needs, improvements in treasury department performance can influence the health of an organization," said Thomas Hunt, AFP's director of treasury services.  "In this survey, we wanted to identify and understand the traits that differentiate the top performing corporate treasuries."

Marilyn Spearing, Global Head of Trade Finance and Cash Management Corporates, Global Transaction Banking, Deutsche Bank, said, "The global benchmarking survey results allow our clients to offer 'best in class' treasury and cash management services by comparing their treasury organizations to those of their peers.  This year's results reveal the importance of human capital.  Deutsche Bank continues to invest in the strength of its talent and seeks employees who exemplify a 'passion to perform.'  These individuals drive excellence, contributing to the overall success of clients as well as the Bank."

Prior year surveys found technological systems to be only modest differentiators in treasury department performance.  This year's survey probed human capital differentiators and found that the education levels and tenure of treasury staff can have a significant impact on efficiency.  The proper balance of staff, process and technology is dependent on the size and maturity of the department and organization.

Human capital is an area where corporate investment clearly pays off. When important treasury functions are handled by highly educated staff or by staff with professional certifications, those companies tend to need fewer treasury employees, the survey found. For example, when MBAs and other advanced degree holders perform most treasury tasks, half as many people are needed.  When certification holders perform most treasury tasks, a third fewer people are needed.

Against a backdrop of changing regulations, new technology and significant financial upheaval, the survey also showed the importance of ongoing training to keep knowledge and skills up-to-date.  Benchmark performing treasury staffs spend on average 4-6 days in training and outperform companies that spend 2 days or less in training.

Robert Eimers, IBM Global Business Services, said "When we drill into the responses to this year's treasury benchmarking survey and compare those to prior surveys, the findings reveal a widening gap between aspirational goals and actual capabilities and a widening disparity between top performing organizations and average performing organizations."

KEY FINDINGS

SPEED - The best treasury departments execute important financial tasks more quickly, with significant differences between the typical and high-performing organizations:

• Developing a short-term cash flow forecast:  Typically four hours; 80th percentile two hours.
• Concentrating cash & establishing the daily position: Typically two hours; 80th percentile one hour.
• Producing a treasury accounting entry: Typically one hour; 80th percentile 1/2 hour.
• Resolving bank-account discrepancies: Typically three days; 80th percentile one day.

COST - The typical organization operates its treasury functions at a cost of 71 cents per $1,000 of annual revenue with the 80th percentile at 28 cents. Organizations with annual revenues between $6 billion and $10 billion spend 22 cents per $1,000 of annual revenue on treasury operations, with the 80th percentile at 10 cents, while smaller organizations with annual revenues between $100 million and $499 million spend $1.79 per $1,000 of annual revenue, with the 80th percentile at 83 cents.  

Resources invested in treasury overwhelmingly cover personnel, with 76 percent of the total costs of treasury operations going toward personnel in the form of compensation and benefits. The typical organization spends 45 cents per $1,000 of annual revenue on personnel.  Far fewer resources are invested in systems (9 percent). The typical organization spends $0.0408 per $1,000 of annual revenue on systems, with the 80th percentile at $0.0119.

STAFFING - The typical organization has 3.9 treasury full-time equivalents (FTEs) for every $1 billion in annual revenue, compared to 1.6 FTEs for the 80th percentile organization. Relative to revenue, smaller companies need more FTEs than larger companies do. Survey respondents report a median personnel cost of $100,000 per treasury operations FTE, including compensation and benefits.  

View more survey results on www.afponline.org/benchmark

About AFP®

The Association for Financial Professionals (AFP), headquartered outside Washington, D.C., serves a network of more than 16,000, members with news, economic research and data, treasury certification programs, networking events, financial analytical tools, training, and public policy representation to legislators and regulators. AFP is the daily resource for the finance profession.
AFP's global reach extends to over 150,000 treasury and financial professionals worldwide, including AFP of Canada; London-based gtnews, an on-line resource for the treasury and finance community; and bobsguide, a financial IT solutions network.

www.afponline.org

About Deutsche Bank

Deutsche Bank is a leading global investment bank with a strong private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With 82,504 employees in 72 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people.

www.db.com

About IBM®

Address your most pressing financial management issues with IBM's broad industry experience, insightful thought leadership and subject matter expertise. IBM finance management solutions integrate business strategy with financial operations, intervene with business intelligence through performance and information management, and use innovative leading technology and world class processes to measure and mitigate risk to drive value creation. For more information on IBM, please visit www.ibm.com/gbs.

www.ibm.com

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Tom Hunt

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SOURCE Association for Financial Professionals