Corporate treasuries may make a turn whenever interest rates or exchange rates move, but a survey by the newly re-named accountancy firm Andersen discovered that the management of treasuries in UK and European businesses was dominated by “complacency in the face of change”.
Many treasuries reported having objectives that were simply not supported by performance measures. More than 40%, for example, said that liquidity was an investment objective, but fewer than 10% had a valid performance measure other than the level of interest earned. A larger proportion (45%) said that diversification was a funding objective but, again, few had any metric other than borrowing costs.
The survey found that almost two-thirds of respondents use internal benchmarks to measure interest rate and forex risk management performance – even though a “good” performance against budget “may indicate an accurate budgeting process (but) sheds little light on whether treasury is adding value,” says the report.
Most treasuries have decentralised payables/receivables functions, and more than half (58%) do not use inter-company netting. Most companies deal with more than ten banks, but fail to address quality and service delivery issues.
Playing to Win: New strategies for Europe’s corporate treasurers; www.andersen.com.
View our archived webinar, including Oracle and a host of ‘Fast Data’ experts, to discover how financial professionals can help create a Fast Data business
Reinmoeller, professor of strategic management at Cranfield School of Management, has proposed an Eight Actions Model to help organisations increase margin and perform ahead of market expectations
When thinking about Iran as a potential market it’s important to go in with open eyes. This means being aware of some of the myths as well as being clear on the challenges
Third of UK companies with defined benefit pensions schemes are paying out more from their scheme in pensions than is being received in contributions