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Corporations Expand Mandate for Treasurers, AFP Survey Shows

AFP Treasury Benchmarking Program - 2012 Survey: Treasurers under a microscope for cost reduction and improving efficiency as crisis subsides.

As a result of the critical role that corporate treasury departments played in sustaining their companies through the recession, companies are expanding the role of the treasury function, according a survey by the Association for Financial Professionals (AFP). With the crisis abating, corporations are not scaling back this role but doubling down on it while continuing to lower treasury banking costs and demand efficiency from the function.

The 2012 AFP Treasury Benchmarking Survey, underwritten by PNC, found that fifty-five percent of organizations expanded their treasury’s mandate over the past five years versus just five percent that narrowed the focus. This expansion is even more common at large companies with annual revenues over $1 billion.

Two-thirds of survey respondents said that their treasury department now oversees at least 18 functional areas ranging from cash flow forecasting to financial risk management, financial planning & Analysis, M&A, and investor relations –– all the way to employee benefit management. This expansion of the treasury role appears to be permanent, indicating the importance of treasury in good times and bad.

“The best companies are distinguished by great treasuries,” said Jim Kaitz, AFP’s president and CEO. “Yet, the current business environment means that companies are demanding a high level of efficiency in treasury cost structures and process design. Corporate treasurers find they must make necessary tradeoffs.”

Significantly, the corporate treasury departments that have expanded recently tended to do so with normalized cost structures that barely differ from departments that have not seen a significant change in structure, though they also tended to have larger staff to absorb additional work. Also indicative of the overriding efficiency concern: the two most common success metrics for treasuries are reduced banking expenses (79 percent of organizations) and improved efficiency (71 percent).

Treasurers surveyed did not think that cost efficiency itself was a universal measure of a treasury department’s success, due to variables in business type, borrowing structure and business model. Anecdotally, some companies measured treasury success by maintaining liquidity and paying down debt whenever possible. Others sought opportunities to repatriate overseas cash to pay down U.S. debt and measured success by the ability to keep interest expense below budget. A number of treasurers said they are judged on their ability to identify opportunities to put cash to use versus keeping it idle.

The 30-question survey evaluated operational issues for treasury departments that directly affect an organization’s success and generated responses from 715 organizations. AFP also conducted substantive interviews with corporate treasurers related to the survey for further insight on survey topics.

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.

Report highlights and interactive treasury benchmarking dashboards are available on www.afponline.org/benchmark

The Association for Financial Professionals (AFP), headquartered outside Washington, D.C., is the professional society for more than 16,000 members in corporate treasury and finance. AFP provides articles, economic research and data, treasury certification programs, networking events, financial analytical tools, training, and public policy representation to legislators and regulators. 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.

Introduction and Key Findings:

Download the Survey Report:

AFP Treasury Benchmarking Dashboard:

Jeudi 15 Novembre 2012

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