AFP Treasury Benchmarking Program

Transcription

1 2009 AFP Treasury Benchmarking Program Executive Summary Underwritten by:

2 2009 AFP Treasury Benchmarking Program Executive Summary Underwritten by

3 The Association for Financial Professionals in Bethesda, Maryland, supports more than 16,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards. Association for Financial Professionals 4520 East West Highway Suite 750 Bethesda, MD Phone Fax AFP@AFPonline.org Website by the Association for Financial Professionals. All Rights Reserved. Copyright IBM Corporation 2009 IBM Global Services, Route 100 Somers, NY U.S.A. Produced in the United States of America All Rights Reserved IBM and the IBM logo are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. Other company, product and service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. Copyright 2009 Deutsche Bank AG. All rights reserved. The information contained herein is strictly for informational purposes only and does not constitute and shall not be construed to constitute any contractual or non-contractual obligation or liability of Deutsche Bank AG or any of its affiliates, including Deutsche Bank Trust Company Americas (collectively Deutsche Bank ), nor shall this booklet or the content herein be construed as advice, an offer or a solicitation of any nature whatsoever nor is this booklet or its contents intended to be relied upon by any person. Deutsche Bank makes no rebooklet as to the accuracy, completeness, or timeliness of such information. Deutsche Bank shall not be held liable for the authentication of or compliance with the information contained herein nor does Deutsche Bank assume any obligation to update any such information.

4 2009 AFP Treasury Benchmarking Program Executive Summary

5 Introduction In 2008, the Association for Financial Professionals (AFP) launched the AFP Treasury Benchmarking Program, a partnership between AFP and the IBM Corporation and underwritten by Deutsche Bank Global Transaction Banking. The goal of this program is simple: to provide benchmark data for financial professionals so they can compare the performance of their organization s treasury operations against those of their peers. Thanks to the positive response from the profession to the inaugural survey, AFP, IBM and Deutsche Bank partnered again in 2009 for a follow-up survey and this time extended it to include financial professionals who are based in the United States and Europe. This year s participants include members of AFP as well as subscribers to London-based gtnews, an AFP company and the world s largest network of corporate treasury professionals.the addition of the gtnews subscribers makes the AFP Treasury Benchmarking Program a truly global and more robust survey. The 2009 survey was a huge success; the number of respondents to this year s survey was nearly twice that of our inaugural survey last year. The investment of time made by the financial professionals from the participating organizations contributed to the completion of this important research, and the enthusiastic participation of financial professionals worldwide played an important role in the success of this year s survey. This report highlights important treasury operations issues that have a direct impact on today s organizations and provides an outline of the key implications for optimizing your organization s treasury operations. This summary of the key findings supplements the customized peer reports that participating organizations received in exchange for and in gratitude for their participation in the project. The survey results have an important practical application for your organization. Using the information in this aggregate report, your organization will be able to compare its performance against the overall survey sample and against the top performers. As a result, we believe this report will help you identify improvement opportunities for your organization s treasury operation. Benchmarking is: a continuous, systematic process for evaluating the products, services, and work processes of organizations that are recognized as representing best practices for the purpose of organizational improvement. The Benchmarking Book, Michael Spendolini, 1992 Remember, simply comparing your metric to that of other organizations is not benchmarking. It is not the metric itself that is the driver of change. The practice or process that produces the desired level of performance is the driver of change. Improved business performance is an ongoing goal of most, if not all, organizations. With competition reaching new heights, companies are seeking new and better ways to enhance their efficiency and effectiveness and to generate dramatically improved levels of performance. Benchmarking the practices and performance of one organization against those of others can be a powerful tool. Its value lies in learning from the success of others and leveraging that knowledge to modify actions or behavior to improve organizational performance AFP Benchmarking Program: Executive Summary 1

6 The objectives of the benchmarking survey are: To determine performance levels achieved by all Treasury Survey participants, To define the world-class (80th percentile) benchmark targets, To analyze performance levels by peer groups, and To provide a basis of comparison for your business entity s performance in order to identify performance gaps and evaluate improvement opportunities. This survey provides a starting point for understanding critical aspects of treasury operations by collecting cost, full-time equivalents (FTE), cycle time and service delivery data. Where applicable, this report presents data with both the median and the 80th percentile response for three cross-tabs (annual revenues, industry, and the geographic region of the organization). A summary of the major survey highlights follows this introduction. A glossary of terms associated with the project can be found at the end of this report. We welcome your thoughts on the 2009 survey of the AFP Benchmarking Program. Your comments and questions should be directed to research@afponline.org. AFP is grateful for the continued partnership with the IBM Corporation, which provided the critical technical support and benchmarking expertise, and Deutsche Bank Global Transaction Banking whose ongoing underwriting support allowed for the expansion of this year s survey. Most of all, all three organizations thank this year s participants for their valuable time in completing the survey. Key Findings Costs The typical organization operates its treasury operations at a cost of 69 cents per $1,000 of annual revenue with the benchmark performance (i.e., the 80th percentile) at 26 cents per $1,000 of annual revenue. But a simple median does not tell the full story as costs differ significantly by company size and industry type. For example, organizations with annual revenues between $6 and $10 billion spend 29 cents per $1,000 of annual revenue on treasury operations (with a benchmark performance of 15 cents) while smaller organizations with annual revenues between $100 and $499 million spend $1.50 per $1,000 of annual revenue (with a benchmark of 78 cents). Resources invested in treasury are overwhelmingly spent on personnel (72 percent). The typical organization spends $0.43 per $1,000 of annual revenue on personnel costs. Using the same comparison provided above, median personnel costs per $1,000 of annual revenue were 18 cents (with a benchmark of just six cents) for organizations with annual revenues between $6 and $10 billion compared to $1.00 (with a benchmark of $0.50) for organizations with annual revenues between $100 and $499 million). Industries that are likely to have greater labor costs per $1,000 of annual revenue (at least at the median level) are information/communications and finance and insurance. Manufacturing and energy were on the opposite end of the spectrum. Far fewer resources nine percent are invested in systems. The typical organization spends $ per $1,000 of annual revenue on systems, with the 80th percentile performance at $ Because systems are typically very scalable, -- the larger transaction volume associated with larger organizations can often be supported with little or no additional system costs compared to smaller organizations, generating meaningful economies of scale. Organizations with annual revenues between $6 and $10 billion typically spend $ per $1,000 of annual revenue (benchmark: $0.0054) while those with AFP Benchmarking Program: Executive Summary

7 annual revenues between $100 and $499 million spend $ (benchmark: $0.0367). Differences in spending on systems by industry type are less apparent with only financial/insurance companies and retail/wholesalers showing much of a difference from other industry types. Key takeaways regarding cost: DOES SIZE MATTER: Yes, the smaller an organization is the more intensive the investment for treasury operations relative to revenue. DOES INDUSTRY MATTER: Yes, financial services tend to incur the highest level of FTEs and Costs this is likely due to the regulatory requirements and strategic emphasis on cash management. In other words, financial services organizations view treasury as a competitive differentiator. DOES REGION MATTER: Although international participation was significantly lower than US observations, region is not a significant predictor of treasury operating costs. FTEs The typical organization has 4.2 full-time equivalents (FTEs) for every $1 billion in annual revenues. The benchmark organization has 1.7 FTEs for every $1 billion in annual revenues. As with costs, the number of FTEs deployed to serve treasury differ (on a normalized basis) by organization size. The typical organization with annual revenues between $6 and $10 billion has 1.6 FTEs per $1 billion of annual revenue, while those with annual revenues between $500 and $999 million utilize 5.5 FTEs. (To be clear, these figures are normalized to $1 billion in annual revenue-as a result, the typical $500 million revenue organization would have 2.75 FTEs in their treasury operation). Treasury staffing levels also differ dramatically by industry type. Finance/insurance (10.0), government (8.0), services (5.5) and information/communications (5.4) utilize more FTEs per $1 billion of annual revenue while energy (2.0) and manufacturing (3.1) utilize far fewer. Treasury staff are deployed to serve a number of treasury functions. These include (presented with the median number of FTEs per $1 billion annual revenue and the benchmark performance): Manage treasury policies and procedures (0.2, 0.1) Manage and reconcile cash positions (0.4, 0.1) Manage short-term investments (0.2, 0.1) Process and oversee electronic fund transfers (0.3, 0.1) Develop cash flow forecasts (0.3, 0.1) Manage cash flows (0.3, 0.1) Produce treasury accounting entries (0.3, 0.1) Manage and oversee banking relationships (0.3, 0.1) Analyze, negotiate, resolve, and confirm bank fees (0.2, 0.1) Manage in-house bank accounts (0.2, 0.1) Manage debt (0.3, 0.1) Manage intermediate and long-term investments (0.2, 0.1) Manage financial risks (0.3, 0.1) Survey respondents report that personnel costs average $100,000 per treasury operations FTE, including compensation and benefits. As the organization grows in size, so does average compensation per FTE expense. Organizations with annual revenues between $6 and $10 billion spend on average $105,800 per treasury operations FTE while those with annual revenues between $500 and $999 million spend on average $92,100. Energy companies spend the most per FTE ($125,000) while retail/wholesalers spend the least ($70,200) AFP Benchmarking Program: Executive Summary 3

8 Key takeaways regarding FTEs: DOES SIZE MATTER: Yes, the smaller an organization, the more FTEs that are required to conduct treasury operations relative to revenue. DOES INDUSTRY MATTER: Yes, financial services tend to employ higher FTE levels. Again, this is likely the result of the regulatory requirements and a strategic emphasis on cash management. DOES REGION MATTER: No, region is not a significant predictor of FTEs Cycle Times With a large number of responsibilities and frequently scarce resources, treasury is focused on its ability to complete tasks as efficiently and effectively as possible. This year s benchmarking survey examined the cycle times on seven critical treasury functions. The typical organization develops a short-term cash flow forecast in 4 hours; the organization at the 80th percentile does so in 2 hours. Larger organizations typically take longer in developing a short-term cash flow forecast the median for organizations with annual revenues between $6 and $10 billion is 5.0 hours (with a benchmark of 3.0 hours) compared to 3.0 hours (and a benchmark of 1.2 hours) for those with annual revenues between $500 and $999 million. While there is not great variation in forecast times by industry, energy companies do typically spend 5.0 hours (benchmark: 2.6 hours) compared to 2.0 hours (benchmark: 1.0 hours) for finance/insurance companies. The typical organization needs two hours to concentrate/physically pool cash and to establish the daily position; with the benchmark performance at 1 hour. There is minor variation by organization size and industry type; however, smaller organizations (those under $500 million in annual revenues) spend just a single hour (including the benchmark organization) to concentrate/physically pool cash and to establish the daily position. It takes the typical organization one hour to produce a treasury accounting entry with the organization at the 80th percentile taking just 0.3 hours. There is little variation by company size or industry type. The median organization takes three days to resolve bank account discrepancies, while the benchmark organization needs one day. While there is minimal difference in cycle times by company size, organizations in two industries need far more time to handle bank account discrepancies: transportation/ warehousing (10.0 days with a benchmark of 4.4 days) and government (5.0 days with 3.0 days at the benchmark). Industry types with shorter median cycle times are energy, finance/insurance, and manufacturing companies (2.0 days). The median cycle time for an organization to process an internal fund transfer is an hour with the organization at the 80th percentile completing the task in 0.3 hours. Organizations with annual revenues between $1 and $10 billion, those that are retail/wholesalers and those in services typically need less time to perform the task. The typical organization spends two hours to process a borrowing decision, while the benchmark organization spends an hour. Information/communications companies spend a median of 4.0 hours (benchmark: 1.2 hours) while manufacturers will spend typically 2.5 hours (benchmark: one hour). Organizations spend a median of one hour to process investment elections while the organization at the 80th percentile spends a half hour. Those in the government sector/industry typically spend 3.0 hours to complete the same task with a benchmark performance of an hour AFP Benchmarking Program: Executive Summary

9 Key takeaways regarding cycle times: DOES SIZE MATTER:With a few exceptions, size is not a significant predictor of cycle time suggesting that size does indicate overall complexity when other factors are constant. DOES INDUSTRY MATTER: Yes, financial services tend to have lower average and benchmark cycle times than that of other industry groups. DOES REGION MATTER:No, region is not a significant predictor of cycle times Transaction Volumes At the typical organization, 14 bank accounts are reconciled per manage cash FTE while at the organization at the 80th percentile 38 banks accounts are reconciled per manage cash FTE. The larger the organization, the greater number of bank accounts that is reconciled per FTE. In organizations with annual revenues between $6 and $10 billion, FTEs typically reconcile 28 bank accounts (with the benchmark performance at 59 accounts) while FTEs at organizations with annual revenues between $500 and $999 million reconcile a median of 14 bank accounts with a benchmark performance of 32. The median number of cash receipts processed per manage cash FTE is 8,182 while at the 80th percentile performance is 142,857 cash receipts processed. The larger the organization, significantly higher is the number of receipts processed. Further, industry type greatly influences the volume of cash receipts processed per FTE, with finance/insurance and retail/ wholesale the great outliers. The median number of internal payments processed per manage in-house bank accounts FTE is 6,400 with the benchmark performance at 65,268. Delivery Method of Treasury Services Organizations structure their treasury operations in a variety of ways. For example, some organizations choose to decentralize their treasury operations such that each subsidiary or even each location has its own operation. Other organizations choose to consolidate treasury operations into a single location, while in other cases certain operations are outsourced to a third party. Overall, organizations typically conduct most treasury operations within a single corporate treasury operation. In addition, the greater importance that an organization attaches to a particular process, the greater the likelihood that process is completed at a centralized location. With few exceptions, most survey respondents indicate that they view their organizations current method of delivering treasury services to be at least somewhat effective, although the percentage rating them as very effective is not always above 50 percent AFP Benchmarking Program: Executive Summary 5

10 Percentage Delivering Process Using a Single Centralized Corporate Treasury Operation Percentage Indicating that Delivery Method is at Least Somewhat Effective (percentage rating very effective ) Manage debt 90% 89% (64%) Manage intermediate and long-term investments (44) Manage treasury policies and procedures (44) Manage and oversee banking relationships (52) Manage short-term investments (57) Manage financial risk (42) Manage in-house bank accounts (45) Analyze, negotiate, resolve and confirm bank fees (33) Develop cash flow forecasts (29) Manage cash flows (47) Manage and reconcile cash positions (68) Process and oversee electronic fund transfers (64) Produce treasury accounting entries (53) Systems Used Technology can play a significant role in reducing manual processes in treasury, reducing error rates, increasing throughput, and improving management and staff access to the information needed to effectively manage treasury. As such, the use of treasury systems can significantly impact the level of staffing and structure of treasury operations. The typical organization uses three systems to perform treasury processes. Perhaps not surprisingly, smaller organizations are likely to use fewer systems organizations with annual revenues below $500 million typically use two systems. Governments and finance/insurance companies are likely to use a greater number of systems a median of four while retailers/wholesalers and information/communications companies typically use two systems. Organizations are most likely to use a manual process and/or spreadsheets to handle a number of treasury processes including cash forecasting, managing cash flows, analyzing/negotiating bank fees, financial risk management, managing treasury policies and procedures, debt management, short-term investment management and managing and reconciling cash positions AFP Benchmarking Program: Executive Summary

11 Other System/ Manual Package Internally System Software/ Treasury Developed Spreadsheet ERP Module Workstation System Develop cash flow forecasts 82% 4% 7% 6% Manage cash flows Analyze, negotiate, resolve and confirm bank fees Manage financial risk Manage treasury policies and procedures Manage debt Manage short-term investments Manage and reconcile cash positions Manage and oversee banking relationship Manage intermediate and long-term investment Manage in-house bank accounts Produce treasury accounting entries Process and oversee electronic fund transfers The decision to use a manual process or a spreadsheet is frequently the result of organizations not perceiving the benefits of using a treasury workstation or other automated solution, or that the cost would outweigh the benefits of implementing and maintaining such a system. In other cases, the reason to choose a manual system over a more automated solution is a lack of resources (either monetary or IT). Treasury departments decide to automate a process with a number of goals in mind. Among the most widely cited goals of organizations that have automated at least some treasury processes are: Improved cash flow forecasting Reduce staff burden and manual errors Desire to integrate treasury operations within ERP application Ability to rapidly and accurately detail cash position Improve treasury reporting These results reconcile with the greater focus on cash visibility and optimization by senior executives within and outside of treasury and finance in response to the turmoil in global financial markets during In fact, many but not all organizations report that these goals were successfully achieved. In addition to the list presented above, other benefits realized from automating a treasury process include: Readily accessible and accurate data Provision of improved payment efficiency Improved payment efficiency In terms of living up to expectations, the greatest shortfalls were indentified in the areas of improving cash flow forecasting and the ability to consolidate information into a single robust application. The most frequently automated functions are manage in-house bank accounts, manage and reconcile cash positions, produce treasury accounting entries, and process and oversee electronic fund transfers. Other treasury functions are unlikely to be automated AFP Benchmarking Program: Executive Summary 7

12 Impact from Automation Automation has little impact on the number of FTEs deployed to complete treasury processes, with the exception of those used to manage cash. In addition, there is little to no correlation between cycle time and the decision to deploy automated solutions. Still, in some areas, organizations that have automated treasury processes are able to process a greater number of transactions than organizations that process the work manually. Manage Cash Organizations that automate most/all of their treasury functions related to managing cash tend to utilize fewer FTEs (per $1 billion of annual revenue) than do organizations that continue to rely on a manual process to complete the same tasks. But organizations that are heavily invested in automating the manage cash function have not improved cycle times to complete tasks over their manual brethren. Still, automated organizations reconcile significantly more bank accounts per FTE including concentration, lockbox, disbursement, trust and fiduciary) and process more cash receipts than do organizations that have kept most/all of their manage cash process manual. Manage Cash Automated Median Manual Median Number of FTEs for the process manage cash per $1 billion revenue Number of FTEs for the process manage & reconcile cash positions per $1 billion revenue Number of FTEs for the process manage short term investments per $1 billion revenue Number of FTEs for the process process and oversee electronic fund transfers (EFT) per $1 billion revenue Number of FTEs for the process develop cash flow forecasts per $1 billion revenue Number of FTEs for the process manage cash flows per $1 billion revenue Number of FTEs for the process produce treasury accounting entries per $1 billion revenue. 0.2 n/a Number of FTEs for the process manage and oversee banking relationships per $1 billion revenue Number of FTEs for the process analyze, negotiate, resolve, and confirm bank fees per $1 billion revenue Cycle time in hours to develop a short-term cash flow forecast Cycle time in hours to concentrate/physically pool cash and establish a daily cash position Cycle time in hours to produce a treasury accounting entry Number of bank accounts reconciled per manage cash FTE (including concentration, lockbox, disbursement, trust and fiduciary) Total annual number of cash receipts processed per manage cash FTE. 45, ,612.6 The typical organization that has automated its manage cash treasury processes spends $3.54 per $100,000 of annual revenue on all systems and $0.20 per $1,000 of annual revenue on all personnel. The comparables for manual organizations are $5.65 and $ AFP Benchmarking Program: Executive Summary

13 Manage Debt Organizations that have automated their treasury functions that relate to managing debt utilize the same number of FTEs per $1 billion of annual revenue as do organizations that continue to process such transactions manually (0.3 FTEs). Similarly, the cycle time to process a borrowing decision is the same whether an organization processes such decisions manually or in an automated manner. Manage Debt Automated Median Manual Median Number of FTEs for the process manage debt per $1 billion revenue Cycle time in hours to process a borrowing decision, including determining the amount of borrowing, requesting funding, receiving the funds, and recording of the transaction in the general ledger Number of FTEs for the process manage debt and investments per $1 billion cost of continuing operations The typical organization that has automated its manage debt treasury processes spends $5.01 per $100,000 of annual revenue on all systems and $0.43 per $1,000 of annual revenue on all personnel. The comparables for manual organizations are $3.94 and $0.46. Manage Financial Risk Organizations that manage financial risk using an automated process utilize the same number of FTEs, on a normalized basis, as do organizations that process these treasury processes manually (0.3 FTEs per $1 billion of annual revenue). Manage Finacial Risk Automated Median Manual Median Number of FTEs for the process manage financial risks per $1 billion revenue The typical organization that has automated its manage financial risk treasury processes spends $5.78 per $100,000 of annual revenue on all systems and $0.48 per $1,000 of annual revenue on all personnel. The comparables for manual organizations are $3.92 and $0.44. Manage In-House Banks Organizations that have automated the methods by which they conduct in-house banking utilize the same number of FTEs, on a normalized basis, as do organizations using manual processes (0.2 FTEs per $1 billion in annual revenue). Similarly, cycle times are not improved for automated organizations over those that continue to follow manual processes. While the decision to automate in-house bank management is not correlated with less use of staff or improved cycle times, these organizations process twice as many internal payments than do organizations that process such transactions manually AFP Benchmarking Program: Executive Summary 9

14 Manage In-House Banks Automated Median Manual Median Number of FTEs for the process manage in-house bank accounts per $1 billion revenue Cycle time in days from the time a discrepancy is discovered during bank account reconciliation until the discrepancy is resolved Cycle time in hours to process an internal fund transfer from one in-house bank account to another in-house bank account Total annual number of internal payments (incoming and outgoing) processed for subsidiaries per manage in-house bank accounts FTE The typical organization that has automated its processes to manage in-house banking spends $5.00 per $100,000 of annual revenue on all systems and $0.50 per $1,000 of annual revenue on all personnel. The comparables for manual organizations are $4.07 and $0.43. Manage Intermediate and Long-Term Investments Organizations that use an automated process to manage intermediate and long-term investments utilize about the same number of FTEs as do organizations that complete such processes manually (0.2 FTEs per $1 billion in annual revenues). In fact, automated organizations utilize slightly more staff time on managing debt and investments than do organizations relying on manual processes. The decision to automate appears to have little impact on cycle times whether automated or manual, it typically takes one hour to process investment elections including release of the underlying settlements and recording the transactions in the general ledger. Manage Intermediate and Long-Term Investments Automated Median Manual Median Number of FTEs for the process manage intermediate and long-term investments per $1 billion revenue Number of FTEs for the process manage debt and investments per $1 billion revenue Time in hours to process investment elections including release of the underlying settlements and recording the transactions in the general ledger The typical organization that has automated its manage intermediate and long-term investments treasury processes spends $4.10 per $100,000 of annual revenue on all systems and $0.39 per $1,000 of annual revenue on all personnel. The comparables for manual organizations are $4.08 and $ AFP Benchmarking Program: Executive Summary

15 Manage Treasury Policies and Procedures Organizations that have automated their processes to manage treasury policies and procedures deploy 0.2 FTEs per $1 billion of annual revenue compared to 0.3 FTEs per $1 billion of annual revenue for manual organizations. Manage Treasury Policies and Procedures Automated Median Manual Median Number of FTEs for the process manage treasury policies and procedures per $1 billion revenue The typical organization that has automated its manage treasury policies and procedures treasury processes spends $3.64 per $100,000 of annual revenue on all systems and $0.56 per $1,000 of annual revenue on all personnel. The comparables for manual organizations are $4.22 and $ AFP Benchmarking Program: Executive Summary 11

16 Detailed Results The following section provides a detailed summary of the responses to the 2009 survey of the AFP Treasury Benchmark Program. Where applicable, summary data is presented with both the median and the 80th percentile for the overall survey data and is cross-tabbed by annual revenues, industry, and the role of the specific treasury department within the responding organization. Details about the survey methodology and the survey respondents follow the detailed results. Graphs depict the distribution of total cost of treasury operations by cost element and treasury operations FTEs by process Distribution of the total cost of treasury operations by individual cost element Distribution of FTEs in treasury operations by individual process Survey respondents indicate an average personnel cost of US$100,000 per treasury operations FTE AFP Benchmarking Program: Executive Summary

17 Median revenue per employee is $323,700; with 80th percentile at $708,600 (US Dollars) Median cost of treasury operations for respondents per $1,000 of revenue is $0.69; with 80th percentile at $0.26 (US Dollars) Total cost of treasury operations per $1,000 of revenue 2009 AFP Benchmarking Program: Executive Summary 13

18 Median personnel cost of treasury operations for respondents per $1,000 of revenue is $0.43; with 80th percentile at $0.18 (US Dollars) Median systems cost of treasury operations for respondents per $100,000 of revenue is $4.07; with 80th percentile at $1.29 (US Dollars) AFP Benchmarking Program: Executive Summary

19 Survey respondents indicate a median number of FTEs performing treasury operations processes per $1 billion of revenue of 4.2; with 80th percentile at 1.7 Survey respondents indicate a median number of FTEs performing the process manage treasury policies and procedures per $1 billion of revenue of 0.2; with 80th percentile at AFP Benchmarking Program: Executive Summary 15

20 Survey respondents indicate a median number of FTEs performing the process manage & reconcile cash positions per $1 billion of revenue of 0.4; with 80th percentile at 0.1 Survey respondents indicate a median number of FTEs performing the process manage short term investments per $1 billion of revenue of 0.2; with 80th percentile at AFP Benchmarking Program: Executive Summary

21 Survey respondents indicate a median number of FTEs performing the process process & oversee electronic fund transfers (EFT) per $1 billion of revenue of 0.3; with 80th percentile at 0.1 Survey respondents indicate a median number of FTEs performing the process develop cash flow forecasts per $1 billion of revenue of 0.3; with 80th percentile at AFP Benchmarking Program: Executive Summary 17

22 Survey respondents indicate a median number of FTEs performing the process manage cash flows per $1 billion of revenue of 0.3; with 80th percentile at 0.1 Survey respondents indicate a median number of FTEs performing the process produce treasury accounting entries per $1 billion of revenue of 0.3; with 80th percentile at AFP Benchmarking Program: Executive Summary

23 Survey respondents indicate a median number of FTEs performing the process manage & oversee banking relationships per $1 billion of revenue of 0.3; with 80th percentile at 0.1 Survey respondents indicate a median number of FTEs performing the process analyze, negotiate, resolve, and confirm bank fees per $1 billion of revenue of 0.2; with 80th percentile at AFP Benchmarking Program: Executive Summary 19

24 Survey respondents indicate a median number of FTEs performing the process manage in-house bank accounts per $1 billion of revenue of 0.2; with 80th percentile at 0.1 Survey respondents indicate a median number of FTEs performing the process manage debt per $1 billion of revenue of 0.3; with 80th percentile at AFP Benchmarking Program: Executive Summary

25 Survey respondents indicate a median number of FTEs performing the process manage intermediate and long-term investments per $1 billion of revenue of 0.2; with 80th percentile at 0.1 Survey respondents indicate a median number of FTEs performing the process manage financial risks per $1 billion of revenue of 0.3; with 80th percentile at AFP Benchmarking Program: Executive Summary 21

26 Survey respondents indicate a median time to develop a short-term cash flow forecast of 4 hours; with 80th percentile at 2 hours Survey respondents indicate a median cycle time to concentrate/physically pool cash and establish daily position of 2 hours; with 80th percentile at 1 hour AFP Benchmarking Program: Executive Summary

27 Survey respondents indicate a median cycle time to produce a treasury accounting entry of 1 hour; with 80th percentile at 0.3 hours Survey respondents indicate a median cycle time to resolve a bank account discrepancy of 3 days; with 80th percentile at 1 day $ $ $ $ $ 2009 AFP Benchmarking Program: Executive Summary 23

28 Survey respondents indicate a median cycle time to process an internal fund transfer of 1 hour; with 80th percentile at 0.3 hours Survey respondents indicate a median cycle time to process a borrowing decision of 2 hours; with 80th percentile at 1 hour AFP Benchmarking Program: Executive Summary

29 Survey respondents indicate a median time to process investment elections of 1 hour; with 80th percentile at 0.5 hour Survey respondents indicate a median number of bank accounts reconciled per manage cash FTE of 14; with 80th percentile at AFP Benchmarking Program: Executive Summary 25

30 Survey respondents indicate a median number cash receipts processed per manage cash FTE of 8,182; with 80th percentile at 142,857 $ $ $ $ $ Survey respondents indicate a median number of internal payments processed per manage in-house bank accounts FTE of 6,400; with 80th percentile at 65, AFP Benchmarking Program: Executive Summary

31 Activity Map and Process Overview The following processes and activities were included as part of the Treasury Operations survey. These processes may cross departments and/or site locations. To ensure consistent collection of survey data, some survey respondents needed to assimilate data from other departments or entities in order to reflect the complete costs and activities for this module. Cost Definitions Revenue/Net Revenue Total annual revenue is net revenue generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. Revenue for Government Agencies Revenue for government agencies participating in benchmarking surveys is defined as budget authority, fees and other funding that is associated with the delivery of services under the agency s mission. To avoid potential distortions of revenue as compared with private sector organizations, survey respondents from government agencies were asked to exclude from revenue funds that pass through the agency to other organizations. These exclusions cover grants, benefit payments, and royalties, fees, debt collections, etc., where the funds are not retained within the agency for internal use. Total Cost of Continuing Operations For purposes of this study, survey respondents were asked to include all costs associated with generating the income that results from continuing operations. Total cost of continuing operations include cost of goods sold, selling expenses, and general and administrative expenses. Excluded were the following costs: taxes, extraordinary items, unusual or infrequent items stated below the Income from Continuing Operations line, and gains or losses due to discontinued operations or changes in accounting principles. Personnel Cost Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and part-time salaried/hourly employees) contributing to each respective process. Personnel cost included all of the following costs. Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits. Fringe: Includes contributions made towards the employees government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This also includes special allowances, such as relocation expenses and car/transportation allowances AFP Benchmarking Program: Executive Summary 27

32 Systems Cost Systems costs include all expenses, paid or incurred, in conjunction with: Computer hardware or computer software acquired by the organization or provided to the organization through service contracts. Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees were not included in depreciation of new system implementations. Survey respondents were asked to include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should have been captured in the separate cost category labeled outsourced cost. All salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support. Overhead Costs For the purpose of this study, survey respondents were asked to provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. The costs include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Excluded were systems costs that are allocated, since these were captured separately as systems cost. Outsourced Cost In determining outsourced cost, survey respondents were asked to include the total cost of outsourcing all aspects of each process to a third-party supplier. Excluded were one-time charges for any type of restructuring or reorganization. Outsourced costs also included costs for intra-company outsourcing (i.e., reliance on a shared services center). Other Cost Other costs are costs associated with the specified process, but not specifically covered in personnel cost, systems cost, overhead cost and outsourced cost in this questionnaire. These other costs include costs for supplies and office equipment, travel, training and seminars. Included also are the cost of telephones, except for that portion captured in systems cost AFP Benchmarking Program: Executive Summary

33 For more information about the AFP Treasury Benchmarking Program: IBM: Robert Eimers Treasury Practice Leader, North America IBM Business Consulting Services US Phone: AFP: Kevin Roth Managing Director Association for Financial Professionals

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