European Corporate Treasury Benchmarking Study 2012

European Benchmarking Study 2012

Introduction

Treasury Today continues to strive for excellence, providing unbiased insight and analysis of the emerging trends in treasury and best practices being deployed. Our regional benchmarking programmes continue to gather rich data from around the globe and this year’s European Study is no exception. We are, therefore, delighted to be publishing this third report on the comprehensive findings from the European Study in association with J.P. Morgan.

This edition builds upon the Benchmarking Studies we conducted in 2010 and 2011 and really gets under the surface of treasury in the area of Key Performance Indicators (KPIs). The Study covers a broad range of issues from bank relationships, counterparty risk, foreign exchange and credit to risk management, technology and much more. We also get a good perspective on the Single European Payments Area (SEPA) - and how many companies are currently using SEPA solutions, as well as how prepared they are for 1^st February 2014, the defined end-date for migration to SEPA.

The results provide a good barometer of what is important in today’s treasury arena and highlight the key challenges being faced across several disciplines within the treasury departments across Europe in what has been a difficult 12 months to say the least.

The inability of the European economy to overcome its significant sovereign debt issues has continued to pile the stress on corporate treasurers in the region. And with countries across Europe struggling to hold on to their credit ratings and reduce their indebtedness, the possibility of a euro break-up has grown even stronger.

For treasurers, this uncertainty puts an even greater focus on best practice. The importance of good cash management and risk management processes is also heightened in these findings. Corporates are looking at their exposures and considering in great detail what possible effects the Eurozone crisis could have on them. They are also looking to benchmark their contingency measures against their peers – as well as against pioneering treasury departments from other sectors.

The corporate case studies in this report go some way to illustrate what is being achieved in the region and how some companies are responding to the many challenges they are facing.

We would like to express our sincere thanks to the many corporates who responded to this Study and we would, of course, welcome any feedback from you, our readers.

Findings revealed

Despite the obvious difficulties, treasury professionals are getting on with the job in hand. This may mean a greater focus on topics such as counterparty risk and liquidity, but innovation is important too, as the findings of this Study reveal.

2012 Study

The 2012 Study was conducted during a difficult period in Europe. The August 2012 bulletin from the European Central Bank (ECB) says: “the risks surrounding the economic outlook for the euro area continue to be on the downside. They relate, in particular, to the tensions in several euro area financial markets and their potential spill-over to the euro area real economy.

Downside risks also relate to possible renewed increases in energy prices over the medium term.” The ECB has also cut its 2013 growth forecast for the Eurozone from 1% to 0.6%.

Bank and sovereign downgrades only compound matters for treasurers operating in the region as the findings from this Study illustrate only too well. As such, we are delighted that so many treasury professionals, just short of 420, took the time to participate in making this such a truly successful project.

Treasury priorities

In 2012 the top five priorities for treasurers operating across Europe are:

1. Cash management/cash pooling structures.

2. Bank relationships and banking group organisation.

3. Improving cash flow forecasting.

4. Counterparty risk.

5. Funding/credit lines.

Key Performance Indicators (KPIs)

The 2012 Study goes much further than previous years in the area of KPIs. The most frequently used measures against six key treasury disciplines are:

1. Cash visibility.

2. Cash flow forecasting (accuracy) (top KPI under both core cash management efficiency and liquidity management).

3. Days sales outstanding.

4. Mark-to-market.

5. Net debt/EBITDA.

6. 25% of respondents say they use scorecards to measure their banks.

To find out more, order your copy of the findings today.