The results of 2010 AFP Treasury Benchmarking survey (3rd annual), conducted by Association for Finance Professionals (AFP), IBM & Deutsche Bank, were released during the AFP 2010 conference held at San Antonio. More than 500 companies around the world responded to the survey.

AFP Treasury Benchmarking Program’s mission is to provide benchmarking data for financial professionals so they can compare the performance of their organizations’ treasury operations against those of comparable organizations. It provides financial professionals with the data needed to identify best practices and to improve treasury processes within their organizations

The objectives of this year’s survey were to:

• Determine performance levels achieved by participants
• Define world-class (80th percentile) benchmark targets
• Analyze performance levels by peer group
• Provide a basis of comparison to help companies identify performance gaps and evaluate opportunities for improvement.

Last year’s survey emphasized technological differentiators, this year’s survey emphasizes human capital, especially the training, professional development, advanced degrees and credentials that are linked to the best treasury departments.

KEY FINDINGS

• Companies that provide their treasury and finance staff an average of four to six days training performed better than their peers
• Besides earning $65,000 per FTE compared to $80,000 per average treasury FTE, each benchmark treasury employee does the work of two and sometimes four treasury staffers
• Larger companies have higher costs than smaller treasuries per full-time employee, but the larger companies have fewer FTEs
• smaller treasury organizations have higher system costs and more FTEs
• cycle times for various treasury functions do not vary much between larger and small organizations.
• the gap between median and benchmark performance is widening, with the top 20 percent of treasury departments getting better and more efficient in cycle times.

METRICS

• SPEED
  

  Item	Typical	80th percentile
  Developing a short-term cash flow forecast	4 hrs	2 hrs
  Concentrating cash & establishing the daily position	2 hrs	1 hr
  Producing a treasury accounting entry	1 hr	0.5 hr
  Resolving bank-account discrepancies	3 days	1 day

• COST

Item	Typical	80th percentile
Treasury function operation cost per $1,000 of annual revenue	$0.71	$0.28
Treasury operation spend per $1,000 of annual revenue for organisations with annual revenues between $6 billion and $10 billion	$0.22	$0.10
Treasury operation spend per $1,000 of annual revenue for smaller organizations with annual revenues between $100 million and $499 million	$1.79	$0.83
spend on systems per $1,000 of annual revenue	$0.0408	$0.0119

• STAFFING
  

  Item	Typical	80th percentile
  full-time equivalents (FTEs) for every $1 billion in annual revenue	3.9	1.6

QUOTES from the surveyors

• 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.“
• Thomas Hunt, AFP‘s director of treasury services. said “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. In this survey, we wanted to identify and understand the traits that differentiate the top performing corporate treasuries.“
• 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.“