Quality Staff Key to Treasury Efficiency


Companies have spent a lot of money over the years to automate their treasury operations. But a new benchmarking survey by the Association for Financial Professionals suggests that a bigger factor in improving treasury efficiency is having well-educated, regularly trained and seasoned employees in treasury departments.

AFP's third annual benchmark survey found that the educational level of treasury staff was a leading indicator of efficiency, says Tom Hunt, AFP's treasury services director. For example, when treasury functions such as bank account reconciliation or forecasting were done by employees with M.B.A.s, it took half as many people to handle the job as when M.B.A.s weren't involved. When certified employees did the same work, it took one-third fewer staff, the study found.

Similarly, the study found that for most treasury operations, those departments where staff spent an average of four to six days a year in training to stay current on industry, technology and regulatory changes significantly outperformed departments whose staff only received two days a year of such training. However, training beyond six days provided a declining benefit.

"The results of this survey were very compelling," says Hunt, Companies typically spend about three-fourths of their treasury budgets on personnel costs, he notes, but they can get very different results, depending on the education, experience, in-service training and tenure of their treasury employees.

There are some areas where the quality of a treasury's employees matters more than others. For example, longer tenure on the job had little impact on the performance of most treasury functions, with the exception of physically pooling cash and establishing a daily cash position, which seasoned employees can do much faster.

There are also trade-offs. The survey found that treasury departments whose the staff had longer tenure were actually slower at accomplishing some functions, but those departments also tended to be able to operate at significantly lower staffing levels.

In terms of establishing benchmarks, the survey found significant differences between the best-performing companies and average companies, particularly on cycle times. While a typical treasury takes two days to resolve bank account discrepancies, for example, benchmark treasuries handle them in one day. And while physically pooling cash and establishing a daily cash position is typically a two-hour operation, benchmark treasuries handle those tasks in an hour. The difference between benchmark companies and average treasuries was greatest in the area of short-term cash-flow forecasting, with benchmark companies doing that job in 1.7 hours, vs. 4 hours for a typical organization.

In the final analysis, AFP's Hunt says, "This third annual survey pretty much showed what you might expect: that it's the people who really make a department."

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