Measuring Treasury Performance - Relevant KPIs

Report date: 
2 Jul 2020

There are three aspects to this issue:

The genuine question of judging objectively how well we do our jobs as treasurers. It’s frustrating and difficult to prove value added because it’s an opinion. But when our bosses ask us to provide KPIs it’s hard to say they don’t apply – so part of this discussion is how do you go about assessing whether you are doing a good job and how do you communicate that to management?  

The mechanical processes we run which can benefit from being measured. 

We are involved in business processes where improvement can be made by measuring activity – but this is not necessarily the same as a Key Performance Indicator.

All the participants struggle with the same issues: measurements are useful tools to judge how well repetitive administrative or manufacturing tasks are performed, but they are less effective when it comes to assessing core competencies of treasury, such as risk management. The key takeaways from the discussion:

It is very important to sit down with the CFO and define what are the key risk management and other priorities, such as the percentage exposure to be hedged, the level of borrowing or cash headroom etc. It then becomes meaningful to measure actuals against those agreed objectives.

However, treasurers need to keep the flexibility to change those agreed levels – for example, with the recent lockdowns, there has been a big increase in the desired level of cash to maintain.

Measurements improve processes – but it is important that they be used to identify problems and resolve them, not to allocate blame.

Bottom line: measurements have value – if used correctly. A lot of the treasurer’s job is about risk management and taking decisions to manage uncertainty. It is more important to communicate clearly with the management on the nature of the uncertainties and the reasons for the decisions than to have a numeric menu to assess performance.


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