AFP Launches New CTC Guide on Treasury Metrics

As treasury plays an increasingly strategic role in the organisation, its visibility grows and with it senior management and board scrutiny. Moreover, the economic environment has shined a spotlight on treasury’s traditional activities of managing cash. Boards and senior management want greater visibility into liquidity, demanding new measures as a result.

The Association for Financial Professionals’ (AFP) new ‘CTC Guide, Treasury Metrics: Scorecards and Dashboards’, explains the trends behind the search for treasury metrics, outlines multiple approaches to creating a treasury scorecard or dashboard and includes real-life examples of dashboards and scorecards that companies use. It also offers helpful hints on how to begin building your own treasury scorecard.

“The AFP and the Corporate Treasurers Council have been discussing the issue of treasury metrics at our roundtables around the country for years,” said Craig Martin, executive director at the Corporate Treasurers Council (CTC) of the AFP. “This guide will finally provide you with a starting point for a scorecard or dashboard or some way of measuring treasury’s performance.”

A 2011 AFP survey, ‘Strategic Role of Treasury’, revealed that just over half of companies currently measure their treasury performance. A 2011 survey by McKinsey & Co echoes this result. McKinsey, too, found about 50% of treasuries currently have dashboards.

Several factors are behind the growing focus on treasury metrics:

  • Corporate culture: companies are increasingly focused on performance-related measurement metrics. Like other departments, treasury is faced with defining objectives, measuring progress and reporting those results to management. This puts pressure on treasury to establish unique measurement criteria and ways to capture that information and report it throughout the organisation.
  • Broader role: treasury’s growing strategic role means it is increasingly involved with an organisation’s business operations. This is great news for treasury, as its stature within an organisation then rises and it gains a seat at the strategic decision-making table. This strategic involvement gives greater urgency to the need to measure and report performance since treasury is increasingly engaged with an internal constituencies.

But it also means treasury is under greater scrutiny from senior management. At the same time, treasury has a growing incentive to publicise and ‘evangelise’ its message in order to insure it continues to play a vital strategic role. It needs to build credibility with an organisation’s business units and with management to ensure it is invited to join the decision-making process at the outset, when its cash and risk expertise are most helpful.

As treasurers get more engaged with the operations so does the value of their contribution to the organisation. “Measures like those found in the CTC Guide will give treasury the ability to report on its performance on both a technical/tactical and strategic/value added basis so that treasury as a whole can continue to take on broader responsibilities and add value to their companies,” said Martin.


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