WASHINGTON –– September 17, 2013 –– Companies
are finding ways to run their treasury functions with fewer employees than they
had last year, according to a report released today by the Association for
Financial Professionals (AFP).
The 2013 AFP Treasury
Benchmarking Program Survey, now in its sixth year, found that
a typical organization has 4.00 full-time equivalents (FTEs) in its treasury
operation for every $1 billion of annual revenue that the organization
generates, down from 4.35 FTEs reported in 2012. The benchmark or 80th
percentile organization has 1.36 FTEs in its treasury operation for $1 billion
of annual revenue, down from 1.46 in the previous survey.
operational costs of corporate treasury departments, personnel expenses account
for three-fifths of the total annual costs for corporate treasury operations.
Variances in personnel costs can mean the difference between a good and an
excellent or benchmark organization, since many companies are similar in their treasury
structure and sophistication of systems.
For cash management
activities, the typical organization uses 1.17 FTEs for every $1 billion of
annual revenue while the benchmark organization uses 0.39. In 2012, the figures
were 1.20 and 0.42 FTEs, respectively.
To manage debt and
investments, the typical organization uses 0.71 FTEs for every $1 billion of
annual revenue, less than the number of FTEs reported in 2012. The benchmark organization uses 0.25 FTEs for
every $1 billion of annual revenue in serving the function compared to the 0.24
FTEs reported in 2012.
“Companies no longer have the luxury of
managerial layers,” said Jim Kaitz, AFP’s president and CEO. “With an ongoing focus on cost-containment,
the right policies and procedures are essential when operating a lean treasury.”
The 2013 survey also focused
on the importance of treasury policies and their impact on risk mitigation,
financial performance, regulatory compliance, business continuity and other
outcomes. The survey examined four key
operational areas typical for centralized treasury functions:
CASH CONCENTRATION AND FORECASTING - For
an overwhelming majority of organizations, having a formal (written) cash
concentration and forecasting policy is vital for monitoring and optimizing
financial performance. Nearly three quarters of organizations have a policy for
this reason. Risk mitigation is also an important factor in a company’s cash
and forecasting policy. Almost half of organizations review their policies once
CUSTOMER/VENDOR CREDIT EVALUATION AND
APPROVAL - Most organizations have a written customer/vendor credit evaluation
and approval policy, with 82 percent citing risk mitigation as the main
objective. Almost four out of ten indicate the policy is to ensure regulatory
compliance. In two-thirds of organizations, the CFO or an executive management
team/committee oversees and reviews credit evaluation policies.
FOREIGN EXCHANGE (FX) AND INTEREST RATE
MANAGEMENT - Of those organizations with a formal, written FX and interest rate
management policy, 68 percent feel the policy is critically important, particularly
in how it mitigates risk. Almost half of organizations review their FX policy
on an annual basis, with the CFO and/or the board of directors having the
INVESTMENT MANAGEMENT - Three quarters
of financial professionals feel that having a written investment management
policy is critically important to their organizations. In more than half of
organizations with such a policy, the board of directors has oversight/approval
authority and policies are reviewed on an annual basis.
Report highlights and
treasury benchmarking data are available on afponline.org/benchmark .
ABOUT THE SURVEY
This is the sixth year of the partnership between
AFP and IBM to present benchmark data to financial professionals. The 40-question survey evaluated operational
issues for treasury departments that directly affect an organization’s success
and generated 554 responses. Corporate
treasury departments use the AFP Treasury Benchmarking Survey as a basis for
comparison with the best of their peers. The report identifies performance
levels of participants, analyzes performance by peer group, and defines
world-class (80th percentile) targets across key operational areas ranging from
processes to personnel to technology.
The Association for Financial Professionals® (AFP)
is the professional society that represents finance executives globally. Headquartered outside Washington, DC, AFP
sets the standards for the Certified Treasury Professional® and
Certified Corporate FP&A Professional™ credentials. The quarterly AFP
Corporate Cash Indicators™ serve as a bellwether of economic growth. The AFP
Annual Conference is the largest networking event for corporate finance
professionals in the world.