benchmarking for treasury · how to use kpi’s a key performance indicator (kpi) is a measurable...
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Benchmarking for Treasury
© 2018 Strategic Treasurer LLC.
Ben Haws, Senior Business Analyst, Axletree Solutions
Surveys By Strategic Treasurer
What Gets Measured Gets Managed
Friday June 1, 2018
Advising Clients, Informing the Industry.
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What Gets Measured Gets Managed
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About the Presenters
Benjamin Haws
Senior Business Analyst
Axletree Solutions
Ben Haws is a Senior Business Analyst and a SWIFT subject matter
expert at Axletree Solutions. Throughout his tenure with Axletree, he has
been working closely with internal and external experts to develop a deep
understanding of SWIFT and how it applies to streamlining treasury
operations. Currently, Benjamin is enrolled at Rutgers University as a
MBA candidate. He is a FinTech and treasury enthusiast.
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Topics of Discussion
© 2018 Strategic Treasurer LLC.
Introduction to Benchmarking
Why You Should Care About Benchmarking
Benchmarking KPIs: CLM, Forecasting, & Treasury Operations
How to Decide Which KPIs are Most Important to You
Final Thoughts
What Gets Measured Gets Managed
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Background: Defining Key Terms
World Class Practices – practices employed are top of the line across the board
Leading Practices – practices are above industry average and exceed expectations
Standards of Good Corporate Conduct – practices implemented meet expectations
Below Average – the majority of metrics & KPIs are behind industry averages.
Failing – almost all metrics are significantly behind industry averages
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How Standards Change Over Time
Leading Practice
Standards of Good Corporate Conduct
Target Range
Unacceptable
Level of Practice
Time
World Class Practices
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How to Use KPI’s
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a
company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching
targets.
Treasury KPIs:
• Percentage of accounts where daily visibility has been achieved
• Hedge Effectiveness
• Accuracy of cash forecasts 1 week in advance, 1 month, etc.
• Funds Transfers: speed at which funds clear
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Bank Account Management
51%
22%
14%
4%
8%
0%
10%
20%
30%
40%
50%
60%
Process is current, recordsare current.
Process is current, recordsare somewhat out of date.
Process is out of date, butour records are current.
Both process and recordsare out of date.
Unsure
2017 Treasury Fraud & Controls Survey underwritten by Bottomline Technologies
Describe your BAM Status. Our Bank Account Management process and records: 1
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Why Should I Be Thinking About Benchmarking
• Comparison results in growth &
more effective goal-setting
• Better understand strengths and
weaknesses of the firm over
industry
• Set objectives based off of key
industry metrics
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Reconciliation
14%
21%
12%
9%
12%
33%
0% 5% 10% 15% 20% 25% 30% 35%
100%
90% - 99%
75% - 89%
50% - 74%
25% - 49%
< 25%
24%
21%
17%
11%
5%
22%
11%
24%
16%
12%
9%
28%
0% 5% 10% 15% 20% 25% 30%
100%
90-99%
75-89%
50-74%
25-49%
<25%
2017 2016
2017 Treasury Fraud & Controls Survey underwritten by Bottomline Technologies
What percentage of your bank accounts are reconciled on a DAILY basis? 2
What percentage of your bank accounts are reconciled on a WEEKLY or more frequent basis? 3
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KPIs for Treasury: Cash Lifecycle Management
Safety
• Number of control events
• Credit quality
• Cash visibility
Cash Availability
• Number of unplanned overdrafts
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Visibility
2017 Treasury Fraud & Controls Survey underwritten by Bottomline Technologies
How frequently is your global cash position updated? 4
What percentage of your operating bank accounts do you have visibility to on a daily basis? 5
10%
52%
19%
15%
3%
0%
10%
20%
30%
40%
50%
60%
Real Time Daily Weekly Monthly Other
30%
27%
22%
7%
5%6%
0%
2%
0%
5%
10%
15%
20%
25%
30%
35%
100% 90-99% 75-89% 50-74% 25-49% <25% 0% Unsure
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KPIs for Treasury: Cash Lifecycle Management
Cost
• Total cost of processing payments;
internal and external
• Total cost of processing collections;
by type
Idle Cash
• Cash concentration
• Cash visibility
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KPIs for Treasury: Forecasting
Accuracy of Forecasts
Ability to generate forecasts weeks, months, years in advance
Ability to generate forecasts for business units, subsidiaries, individual projects, organization
Ability to generate forecasts for business units, subsidiaries, individual projects, organization
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KPIs for Treasury: Treasury Operations
FTE Staff Levels
Cycle Times
Throughput
Departmental Cost
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Deciding Which KPIs are Most Important
What are your core treasury objectives?
What areas would you like to see improvement in?
Are there any areas where you’re unsure of how you stack up in the market? (i.e.
strength of forecasting, use of technology, etc.)
What treasury objectives conflict with those of another department?
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Who Should I Be Comparing My Firm With?
Key Competitors
Complexity Region
Revenue Industry
Market Vertical
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Sample Data Points: Treasury Functions
86%
79%
71% 70%
62% 61% 61% 61% 59%57%
53% 53%50%
43%39%
34%
29%
17%
1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
What functions do you use or need in treasury? (Select all that apply) 6
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Sample Data Points: Treasury Functions
How much of the available TMS functionality that you purchased are you using? 7
What types of payments do you process through your TMS? (Select all that apply) 8
9% 9%
19%
22%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
<20% 21-40% 41-60% 61-80% 81-100%
58%
40%
18%
10%
16%
6%
37%
0%
10%
20%
30%
40%
50%
60%
70%
Wire /RTGS
LowValue /ACH
LowValue /SEPA
LowValue /Other
Checks Card We donot makepaymentsthroughour TMS
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Final Thoughts for Treasury
Measure. If firms are to grow, it is imperative they have a set of measurable objectives for
gauging success
Benchmark. Benchmarking one’s position against competitors or firms of similar build is an
excellent method to begin measuring your success and position vis a vis others
Contrast. Once you have benchmarked your performance against others, identify your target
performance level
Context. Do not forget the bottom line: Cost efficiency of Treasury Operations
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Contact Information
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Technology Tune-UpCash Forecasting: No Longer a Bridesmaid 20
Contact Strategic Treasurer Co-hosted with GTreasury
Thank you for participating in this event!
Benjamin HawsSenior Business Analyst
Axletree Solutions
Email: [email protected]
Direct: +1 732.296-0001
Strategic Treasurer Senior Consultant
Strategic Treasurer
Email: [email protected]
Direct: +1 (678) 466-2233
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Works Cited
1. 2017 Strategic Treasurer & Bottomline Technologies Treasury Fraud & Controls Survey.
2. 2017 Strategic Treasurer & Bottomline Technologies Treasury Fraud & Controls Survey.
3. 2017 Strategic Treasurer & Bottomline Technologies Treasury Fraud & Controls Survey.
4. 2017 Strategic Treasurer & Bottomline Technologies Cash Forecasting & Visibility Survey.
5. 2017 Strategic Treasurer & Bottomline Technologies Cash Forecasting & Visibility Survey.
6. 2017 Strategic Treasurer & TreasuryXpress Treasury Technology Use Survey
7. 2017 Strategic Treasurer & TreasuryXpress Treasury Technology Use Survey
8. 2017 Strategic Treasurer & TreasuryXpress Treasury Technology Use Survey