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The Measure of a Treasurer

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August 11, 2017

Treasury scorecards for various metrics are important in maintaining peak performance levels.

Tues Treas Man PieChart SmallWhile bank scorecards have been top-of-mind for treasurers for a while and come up in many meetings across the NeuGroup network, treasury scorecards can be just as important. At a recent meeting of the Asia Treasurers’ Peer Group (ATPG) members discussed their various areas of responsibility and how those activities are measured for efficiency and value to the company.

During the meeting members reviewed many metrics that one would expect, such as cash visibility and forecasts. But also bank account reduction, SOX compliance, counterparty risk, timely removal of bank account signers who leave the company, investment returns, and AR and AP for members who own that activity. Not all members measure all of these activities, but many measure one or more.

It is understandable why many of the traditional metrics are done and reported, but are these necessarily the most valuable activities to measure? Several members are in the process setting up new metrics however, not all goals are the same. For instance, one member’s metrics will measure the effectiveness of supporting the sales function and getting deals done. Another member will also be measured by the quality of his “customer service” to the business units. One member opined that the metrics she plans to create will be “meaningful metrics, not just operational.” Every metric should reduce cost or minimize risk, added another member, while another said metrics should also “give directional guidance for improving treasury.”

A novel metric one member shared concerns bank-account rationalization. This member challenges every bank account to ensure that its value is greater than its cost. Several members did cite one non-negotiable metric: compliance. There is no tolerance for compliance breaches. As for what to measure, one member offered an insightful view: “I know what [metric] will cost me my job.”

Although not necessarily a hard and fast metric, a couple of members noted that they encourage community involvement. The member says his team is allotted a certain sum for community “care” initiatives and has to report on how those funds are spent. Another member encourages employees to get involved in community events.

Deciding what is important to measure depends on the operation and the philosophical views of the treasurer and other top finance people. Perhaps there is some value in core operational activities, or perhaps it ends up as busy work in some cases. The notion of measuring what has the most value to the business, such as closing deals or reducing cost and risk, clearly has merit and that thought should drive metrics. The notion of avoiding compliance breaches surely will resonate with most. In the final analysis some members will take a new look at what is being measured and elect to drop some low-value measures in exchange for some that are more meaningful to the overall business.

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