When Treasury Needs to Blow Its Own Horn

# Treasury Management System (TMS)

# People and Talent

How metrics help treasury teams market their successes in good times.

Treasury teams get plenty of attention in financially volatile times, but in the good times their more mundane if still critical activities—reducing bank accounts, hedging foreign exchange, etc.—tend to go unnoticed.

“If we don’t convey the value treasury provides in good times and in bad, no one else will,” said Ed Scott, senior executive advisor at NeuGroup and former treasurer at Caterpillar, who co-led a recent NeuGroup meeting of assistant treasurers. He added, “The losers are your people who are not getting the credit.”

Develop metrics. One peer group member said his treasury department recently completed a treasury transformation, implementing a treasury management system (TMS), rationalizing banks and creating pooling structures. A year ago it began developing metrics to measure progress and determine what had been done correctly or not.

It’s all about the data. Pursuing metrics, he said, can’t be successful without “good, solid information.” Define, measure, analyze, improve and control, or DMAIC, is the Six Sigma methodology his team uses. “It’s all about quality and continuous improvement. That’s where the metrics help us go,” he said.

He displayed 14 metrics his team applies today under the categories of cash, currency, credit cards, bank fees and insurance, and he noted several others under consideration in areas such as treasury-staff productivity and financial metrics including hedging performance, FX spreads and cash-flow forecasting accuracy.

Trends, not points in time. The member said viewing a metric at a point in time provides little value. Instead, analyzing the trend is “where you really start to learn what you’re doing, and it generates lots of questions about the process,” he said. He noted activity-based metrics, such as how many banks the company has or its cash balances, provide important information. The most critical metrics to drive improvement are performance-based ones, such as how many banks and bank accounts have been eliminated, or how much interest was earned.

CFO stories. Mr. Scott noted that reducing the number of bank accounts also cuts fraud, bank fees and labor costs. “So how do you translate those things into the story your CFO wants to hear? What’s the value of doing that?” he asked the group.

The presenting member said treasury must create and monitor meaningful metrics that make a difference in the business and are actually read by the C-Suite: