TREASURY HEADCOUNTS BENCHMARKING SURVEY2018

Transcription

1 TREASURY HEADCOUNTS BENCHMARKING SURVEY2018 INTRODUCTION THE SAMPLE OF RESPONDENTS In May 2018, the EACT issued a survey to study the size of Treasury departments. We received responses from 250 companies. The objective was to assess both the size and the scope of Treasury departments, as well as try to establish correlations between Treasury headcounts and size of companies, in order to help Treasurers benchmark themselves. In this report, whenever we write about the set of companies as in the sentence 20 % of companies, we refer to the sample of 250 companies that responded to our survey. We believe the sample size gives us comfort to generalize to the wider Treasury population, but we recognize that any survey introduces biases. The survey was distributed both directly by the EACT and indirectly by some national treasury associations (NTAs), members of the EACT. Upon request, we may distribute a specific study for the smallest 20% (less than employees globally) and the largest 20% (more than ). July 2018

2 THE SAMPLE AND DESCRIPTIVE STATISTICS The following table shows the descriptive statistics of the respondents: the average, median, some deciles. Description Average Median 20% percentile 80% percentile Min Max Global Turnover Foreign currency turnover Total balance sheet Nr of Employees globally Nr of Finance employees Nr of Treasury employees Turnover and balance sheet figures are expressed in millions of EUR. Treasury employees are defined as full time equivalent employees (FTE) reporting ultimately to the group Treasurer. Finance employees are defined as FTE ultimately reporting to the CFO or the highest-ranking Finance manager. It is interesting to note that the 250 responding companies employ employees in their Treasury departments. To put in perspective, the 23 National Treasury Associations (NTAs) members of the EACT have members working in around companies. So, the sample represents only 4% of companies but employs 26% of professionals that belong to a Treasury association. This needs to be nuanced because this study was sent to non-financial corporations only while some NTAs have among their members employees of financial corporations. Some data points help understand that a majority of Treasurers work in large organisations: 50% of Treasurers work in companies that employ more than employees, 50% of Treasurers work in companies that have a turnover in excess of EUR 10 bio, 50% of Treasurers work in companies that have a balance sheet in excess of EUR 13 bio. As in all surveys, we had to clean data. 2

3 SCOPE OF TREASURY The following charts shows which of 20 tasks fall within the scope of the Treasurer. In the survey, Treasurers where asked whether a specific function was performed within Treasury or outside of Treasury. A function could be performed both within and outside of Treasury, therefore the sum may exceed 100%. Treasury department is defined by the employees ultimately reporting (solid lines) to the group Treasurer. For instance, Treasury is performing Cash Management for 97% of respondents while for 18% of, such a task is also done outside of Treasury. Results confirm the core functions of Treasury: Cash management, Financial Risk Management, Subsidiaries funding. Quite interestingly, Treasury information systems are mostly managed by teams reporting to the Group Treasurer, which confirms the very specific needs and security requirements of Treasury. Commodity risk management is more balanced, almost equally done in and out of Treasury. Trade receivables credit, Investors relations, Insurance and Pension fund are most of the time done outside of Treasury but fall also in the scope of a sizeable number of Treasury departments. M&A is mostly done outside of Treasury, with probably some support of Treasury. Tax is almost exclusively done outside of Treasury. The responses to Treasury accounting and Cybersecurity reflect segregation of duty. Sales financing will be clarified in our next study. By this term, we meant the activity of providing funding for customers to purchase the company s goods and services. Some companies have specific financing (for example, leasing) branches, but the survey seems to indicate that Treasury has a significant role in the activity. 3

4 Cash Management -18% 97% Financial Markets Risk Management (FX, IR, Equity, Credit,...) -12% 96% Treasury regulations and compliance Subsidiaries funding Treasury Information Systems OUTSIDE of Treasury department -12% -10% -14% 95% 95% 90% Balance sheet management: Debt and Equity issuance -27% 80% Working Capital / Supply Chain Financing Investment Trade Finance / Documentary Credit -39% -33% -33% 70% 67% 74% Sales financing Commodity Risk Management -43% -37% 45% 51% Accounting of Treasury -69% 44% Investors relations -64% 36% Receivables Credit Pension Fund Cybersecurity -78% -64% -61% 36% 33% 32% IN Treasury department Insurance -68% 29% M&A -76% 29% Enterprise Risk Management (ERM) -74% 20% Tax -89% 6% For each company, we calculated a Scope Score representing the number of activities (from 0 to 20) performed by Treasury. Differences in Scope Score may explain deviations from regression (see below). The table below shows that, in average, Treasury departments accomplish 11 of the 20 tasks listed above, and the Treasury department with the largest scope has activities across 18 of them. Description Average Median 20% percentile 80% percentile Min Max Scope of Treasury Score

5 CORRELATION ANALYSIS, WHAT IS THE RIGHT SIZE OF TREASURY? We have computed regressions (both monovariate and multivariate) to explain the number of employees in a Treasury department with various variables such as: 1. Global turnover 2. Total turnover in currencies other than the base currency of the group 3. Balance sheet size 4. Number of employees globally 5. Number of employees in the Finance function 6. The answers to whether some of the 20 specific functions were in the scope of Treasury (binary) 7. The ScopeScore which represents how many of the 20 functions are in scope Quite logically, in single variable regressions, we found that Treasury size was positively correlated with the first 5 variables but there was significant dispersion. R-square (R2) was used to assess the quality of the regression: from low (variables have no explanatory power if R2=0) to high (a regression is perfect if R2=1) The best explanatory variables are - The foreign currency turnover, with an R-Square of The global turnover, with an R-Square of 0.34 In the chart below, each dot represents a company with the X/Y coordinates being respectively the foreign currency turnover and the number of employees in Treasury. Considering the wide range of company sizes, we used logarithmic scale to make the chart more readable. 5

6 TreasuryHC CCyTurnover So, size obviously matters, but it is interesting to note that the foreign currency turnover is quite clearly the best explanatory variable on its own and the balance sheet size has much lower explanatory power. When adding variables to the foreign currency turnover, the following multivariate combinations slightly improved the regression: - Foreign currency turnover and Finance employees: R-Square of Foreign currency turnover, Credit in scope, Insurance in Scope and Sales Finance in Scope: those 3 functions are the ones that are quite equally in or out of Treasury, so they are quite discriminating. The R-Square was slightly improved to 0.53 For most regressions, we forced the intercept at zero (eliminated the constant), as smaller companies do not have a treasurer. Performing regression on logarithms of variables did not yield to better results. In future versions we will refine balance sheet management and add a question on geographical presence. 6

7 FURTHER, AD-HOC BENCHMARKING RESTRICTED TO SURVEY RESPONDENTS Below, you will see graphs where points represent individual companies with code names (a letter and a number). By design, we have guaranteed anonymity in this survey. But, in order to receive the survey results, most respondents have given their contacts details to the EACT. As a respondent, if you would like to be in contact with your peers to further benchmark, send us an stating the code of the company you want to be put in relationship with (ask for a zoom on a cross section if the code is unreadable). The EACT will then contact the company to verify if they accept to establish dialogue with you (referred to by code). If the answer is positive, the identity of both companies will be disclosed to each other o9 f0 100 l6 u0 c8 l1 a0 g7j0 m9 TreasuryHC 10 u4 u7 k9 d2 l9 v2 d3 j9 s4 z1 o7 y1 g5 a6 m3c3 v1 m5 q1 k6 o1 y8 j2 w8 y0 j1 w1 t5 t1 r1 p2 i1 s3 r6 x3f9 a7 m7 h8 e4 j3 f2 i0 x4 j6 f4 z7 h4 z3 r3 c1 n3 j5 v8y4 n9 z0 l8 o8m0 e6g1 l3 a3 z5 p3g0 a4 z2e9 b7v5g4 i8 e2 x8 i7q7 i9 d6 o2 y3k3 b9 b4 w2 k1 p4f6 x0 b0k5 w4e0 w5 e5 x7 l2n4 m6g9 p6 b1s0o6 j4 c5 s7 q5e7 j8 b3i4 m2 h0 b5 b8 t7 d7 c9l7 r8 v6 h9 g6 l4 d5 i5o0 y5 y6 q4 r0s2 j7 h5b6 o4 m4 l5 w6 d1 v0 n0 x6 n2 e8 i2 t4 a9 i3 u2 v4 q2 u5 n1 x5 k8a2 y2 k0f1z8 e3 p0 d8 l0 d0 q8 y7 x1 b2 t8 t2 t6k7c7 h3 q6 o5 p8r4 n7r2 w0 d9 m8 h1 d4 g8 c0q0f5 r5 u3 g2 r7 v3 a1 1 s8 n6 n5 x2 m1 u1 k4a5c6f8p7 k2 h2 v7 n8 e1 s1 c4 a8 w7 s Turnover Below is a zoom on a denser section 7

8 8 l3 x3 y7 i9 c8 a1 e2 j1 y8 q8 o1 z0 l5 t1 i7q7 v1 i8 g1 v6 g0 z7 b9 n9 e6 g4 j4 m0 p3 x4 y4 v3 v8 o8 m4 t5 v5 f4 d0 h8 l0 o4 s5 x0 o6 b7 l7 r8 s0 i0 d8 b6 b1 k3 y0 c9 w7 d7 h5 t7 z1 r7 b5 b8 g2 y3 y1 l6 f5 f6 p0 r5 u3 e3 g9 p6 z8 j7 p4 a8 f1 h0 k1 m2 q0 x8 c4 s1 c0 j5 k0 m6 e1 y2 a2 n4 s2 r0 l2 m7 q4 y5 y6 i4 k8 o0 x5 e9 g8 n1 i5 b3 d4 u5 z2 q2 h1 m8 x7 d5 d9 e5 n8 l4 w5 w0 j8 e0 e7 n3 r2 n7 r4 v4 w4 i3 l8 q5 u2 v7 a9 s7 c1 g6 h2 i2 o2 p8 t4 h9 e8 o5 n2 q6 x6 w2 h3 c7 p7 f8 k2 k7 n TreasuryHC Turnover