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RESULTS AND ANALYSIS

CORPORATEINVESTMENT

for Treasury & Accounting Professionalsconducted by

www.clearwateranalytics.com 2014 Corporate Benchmark Survey Results | 1

INTRODUCTION

;YLHZ\Y �̀�HJJV\U[PUN��HUK�ÄUHUJL�WYVMLZZPVUHSZ at U.S. corporations face numerous investment and

accounting challenges: historically low interest rates; impending regulatory reforms; high investment

performance expectations despite inviolable liquidity requirements; pressure to provide accurate and

timely information to internal and external stakeholders; and more. Forward-thinking organizations

are constantly seeking new and better ways to not only meet these challenges, but also elevate

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executives, and treasury and accounting professionals can draw on benchmarking data to gain

insight into other like-kind organizations, drive improvement in their own organizations, and enhance

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The 2014 Corporate Investment Benchmark Survey was designed with these objectives in mind.

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provided their impressions of the current investment environment, key accounting and reporting

processes, and investment allocations. The following report delivers a detailed overview of the

investment accounting and reporting environment for corporations, and provides key market

information that institutional investors can use for industry benchmarking.

In one keystone survey question, respondents were asked to identify their biggest investment-

related concerns. While the open-ended responses to this question varied, they were clustered in four

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(20.3%), and executing on strategy (15.2%) (Fig. 1). This report examines the survey results in the

context of these key concerns.

CONTENTS

Introduction 1

Survey Demographics 2

Portfolio Demographics 3

Investment and Regulatory Environment 6

Investment Strategy 8

Operational Processes and Staffing 12

Conclusion 19

Fig. 1

Key Survey-Related Concerns

The Investment Environment 29.1%

Operational Efficiency 27.8%

Risk and Compliance 20.3%

Executing on Strategy 15.2%


SURVEY DEMOGRAPHICS

Treasury and accounting professionals from nearly every type and size of corporation across

the U.S. responded to the survey over a two-month period in late 2014. More than 400

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The survey drew participants from a wide and diverse group of industries (Fig. 4). The

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hardware and equipment (11.9%), software and computer services (11.6%), healthcare

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25.9% Accounting

400+Respondents

18.2% CFOTreasury 41.7%

Other 14.2%

Non-Finance Executive 2.0%Portfolio Manager 3.0%

Other 5.7%Industry Consultant 2.7%

Auditor 0.8%

12.7% Accounting Staff

13.2% Controller

18.2% CFO

Treasury Staff 22.0%

Treasurer 9.7%

Assistant Treasurer 10.0%

Fig. 2

Financial Services 13.7%

Tech Hardware & Equipment 11.9%

Software & Computer Services 11.6%

Healthcare Equipment & Services 6.3%

Pharmaceuticals & Biotech 6.3%

Support Services 5.1%

Construction & Materials 4.8%

30Industries

Represented

40.3% All Others

Fig. 4

Fig. 3

Type of Industry

Survey Demographics Breakdown

Survey Demographics


PORTFOLIO DEMOGRAPHICS

As expected, investment portfolio sizes varied greatly—from portfolios with less than $100M

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were the most widely represented in the survey (41.1%) (Fig. 5). The second-most widely

represented set of respondents (19.4%) was organizations with portfolios ranging from

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invest in a combination of money market funds (MMFs) and individual securities (e.g., bonds,

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MMFs (Fig. 6).

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historically common asset classes topped the list (Fig. 7). MMFs were the most common

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The next tier of asset types included mortgage-backed securities (25.0%), asset-backed

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and futures (5.5%).

Fig. 5

Size of Investment Portfolio

< $100M 41.1%

$100M-$500M 19.4%

$500M-$1B 10.0%

$1B-$5B 17.3%

$5B-$10B 4.7%

$10B-$20B 1.8%

$20B-$50B 3.5%

> $50B 2.3%

Money Market Funds

(MMFs) and Individual

Securities (e.g., Bonds,

Commercial Paper)

Money Market Funds (MMFs) Only

31.8%

68.2%

Money Market Funds 95.5%

Government Agencies 67.7%

Corporate Debt 55.5%

Certificates of Deposit 53.2%

Commercial Paper 49.1%

Municipal Bonds 38.6%

Mortgage-Backed Securities 25.0%

Asset-Backed Securities 24.5%

Mutual Funds 20.9%

Common Stock 17.7%

Forwards 10.5%

Preferred Stock 9.1%

TIPS 9.1%

Options 8.6%

Futures 5.5%

Tier 1

Tier 2

Tier 3

Liquidity Portfolio Structure

Assets Currently Invested In

Fig. 6

Fig. 7


Target duration was widely distributed (Fig. 8); 25.3% indicated 1-3 months, 30.1% indicated

3-12 months, 24.5% indicated 12-24 months, and 20.1% indicated more than 24 months.

Respondents’ organizations were almost evenly split between companies with treasury,

accounting, or investment operations in a single country (52.2%), and those with operations in

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operates in six or more countries, revealing additional accounting challenges that we will explore

later in the report.

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comfortable investing directly in individual securities (such as bonds, commercial paper, and more)

or separately managed accounts (SMAs), and often hire one or several investment managers to

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achieve higher yields, and gain more nuanced liquidity control.

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��\ZL�MV\Y��HUK��\ZL�Ä]L�VY�TVYL�(Fig. 10). While those numbers are likely correlated

to investment portfolio size, it’s fair to presume that some organizations may simply have more

outside managers because they prefer to segment their portfolios to mitigate risk, or generally

require a more tailored investment strategy.

52.2% One

Three 11.9%

Six or More 19.0%

Five 3.1%

Four 3.7%

Two 11.0%

47.8%

15.3% – None

19.4% – Two

17.6% – One

Five or More – 17.1%

Three – 18.2%

Four – 12.4%

Fig. 9

Fig. 10

Operations in How Many Countries?

How Many Outside Managers?

1-3 months 25.3%

3-6 months 9.2%

6-9 months 10.0%

9-12 months 10.9%

12-18 months 16.6%

18-24 months 7.9%

>24 months 20.1%

30.1%

24.5%

Fig. 8

Target Duration


COST

INEXPERIENCE

NO NEEDMORE TO MANAGE

EXTRA WORK INVOLVED

LIQUIDITY NEEDS

STAFF LIMITATIONS

ALREADY HAVE TOO MANY

CASH BALANCES

TRUSTPORTFOLIO SIZE

INVESTMENT POLICY AND APPROVALS

SATISFIED WITH EXISTING STRUCTURE

GENERAL BANKING RELATIONSHIPS

COMPLEXITY

FEESADMINISTRATIVE

BURDEN

We asked respondents who use asset managers to identify what reasons they have for not

hiring additional asset managers (Fig. 11). The open-ended question yielded a number of

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hire additional investment managers. However, many simply indicated that their current roster

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current needs.

Reasons for Not Hiring Additional Asset Managers

Fig. 11


Increase About the Same Decrease

Short Term

(<1Year)

Medium Term

(1-3 Years)

Long Term

(3+ Years)

82.8% 75.3% 80.1%

17.2% 24.7% 17.9% 2.0%

Interest Rate Outlook

Fig. 12

INVESTMENT AND REGULATORY ENVIRONMENT

Results from The 2014 Corporate Investment Benchmark Survey revealed corporate investors’

concerns about the persistent low interest rate environment and the strategic and operational

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indicated that the current challenging investment environment was their top concern (see Fig.

1, pg. 1)—revealing a genuine uncertainty about whether the low interest rate environment

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not just the environment itself, but its implications on their corporate investment strategies:

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While corporations’ liquidity requirements and investment strategies vary, treasury and accounting

professionals deal with universal investment and regulatory challenges. When asked about their

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rates will remain about the same in the short term (less than one year) (Fig. 12). However, three-

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“The low-yielding environment is the biggest concern.”


The changing regulatory environment is impacting investment considerations as well. More than

ever before, corporations are faced with a changing regulatory environment that puts greater

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decisions and downstream accounting and reporting. While the spotlight is often on MMF

reform, treasury and accounting teams have to pay attention to much more than that.

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JVUJLYULK¹�HIV\[�<:�.((7�YLWVY[PUN�(Fig. 13). 44.1% indicated a similar level of concern

over tax reporting regulations. Respondents expressed a lesser degree of concern (those who

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(65.0%).

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corporate treasuries and investors. According to the survey results, while just over a third

(36.1%) remain neutral about the announced reforms, 55% are highly concerned or somewhat

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A majority of survey respondents indicated that their auditor is their most trusted source for

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themselves (55.1%) (Fig. 15).�6[OLY�ZV\YJLZ�PUJS\KLK�WLLYZ��HZZL[�THUHNLYZ��

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Concern with Announced MMF Reform

Who Advises You on Regulatory Changes?

8.9% Not Concerned

10.1% High Concern

36.1% Neutral

44.9% Somewhat Concerned

57.0%

Auditor Regulatory Body (e.g., Website)

Peers Asset Manager

55.1%47.5% 44.9%

Custodian

27.9%

Vendor

24.7%

Consultant

20.3%

Level of Concern Regarding:

US GAAP

Tax Reporting

Dodd-Frank

Money Fund Reform

IFRS

UK GAAP

Canadian GAAP

Not Concerned Somewhat Concerned Concerned Very Concerned Extremely Concerned

0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Fig. 14

Fig. 15

Fig. 13


INVESTMENT STRATEGY

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desired returns on MMFs and other traditional investments. As the leading provider of integrated

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the portfolio allocations of thousands of corporations, and we’ve seen institutional investors

employ a myriad of investment approaches to address these challenges. Some corporations are

staying the course, reducing their short-term revenue expectations by investing mostly in low-

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investing approaches, or by hiring asset managers to administer separately managed

accounts (SMAs).

To better understand corporations’ macro-level investment strategies, we asked respondents

a series of questions about their appetite for new investment types and their willingness to

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The likelihood that organizations are considering historically preferred asset classes is low,

presumably because they are already investing in them in high proportions (Tier 1). Tier 2 asset

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(12.3%) represented the security type mostly likely to be considered, followed by municipal

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registered the highest percentage of respondents considering (5.5%), followed by options

��MVY^HYKZ��M\[\YLZ��HUK�WYLMLYYLK�Z[VJR��. Fig. 16

What Asset Types Are You Considering Investing In?

Money Market Funds 11.8%

Government Agencies 10.0%

Corporate Debt 11.8%

Certificates of Deposit 8.2%

Commercial Paper 12.7%

Municipal Bonds 11.4%

Mortgage-Backed Securities 6.8%

Asset-Backed Securities 12.3%

Mutual Funds 4.5%

Common Stock 2.7%

Forwards 3.6%

Preferred Stock 2.7%

TIPS 5.5%

Options 4.5%

Futures 2.7%

Tier 1

Tier 2

Tier 3

“We’re concerned about managing return expectations in a low interest rate environment.”


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function for many corporations. They are designed to be stable, low-risk, cash-equivalent

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pursued (see Fig. 6, pg. 3).

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why they only invest in MMFs. Respondents provided three primary reasons for deploying a

MMF-only investment approach, including: daily liquidity for the entire portfolio, preservation of

JHWP[HS��HUK�H�ZPTWSPÄLK�HJJV\U[PUN�Z[Y\J[\YL�(Fig. 17).

However, with a persistent low interest rate environment providing historically low returns, plus

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are evolving. Although reforms are not as drastic as originally proposed, changes are inevitable.

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the upcoming reform that most concerned respondents, followed by the potential downstream

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most commonly mentioned areas of concern among corporations only invested in MMFs (Fig. 18).

However, when asked whether MMF reform would impact their investment strategies,

YLZWVUKLU[Z�^LYL�KP]PKLK!��PUKPJH[LK�[OH[�YLMVYTZ�^V\SK�OH]L�UV�PTWHJ[��^OPSL��

indicated that they anticipated somewhat of an impact, and that they planned on decreasing

their allocation to MMFs in the future (Fig. 19).�(�ZTHSS�ZL[�� PUKPJH[LK�[OH[�[OL`�HU[PJPWH[LK�

H�ZPNUPÄJHU[�PTWHJ[��PUJS\KPUN�JOHUNPUN�[OLPY�PU]LZ[TLU[�Z[Y\J[\YL�[V�H]VPK�44-Z�HS[VNL[OLY�

Fig. 18

Fig. 19

Top MMF Reform Concerns

How Will MMF Reform Impact Your Investment Strategy?

LIQUIDITY

FEES

UNCERTAINTY

PRICINGFLOATINGNAV

ACCOUNTING IMPLICATIONS

REPORTING

YIELD

ADDEDCOMPLEXITY

PRINCIPAL LOSS

SHORT-TERM VOLATILITY

COMPLIANCE

GATES

37.7% Somewhat – We Anticipate Decreasing Our Allocation

52.6% No Impact – Business as Usual

9.7% Significant – We Anticipate Changing Our Structure

1. Daily Liquidity2. Preservation of Capital

3. Simplified AccountingFig. 17

Why Do You Only Invest in MMFs?*

* Respondents who indicated they are not considering moving investments into SMAs.


So, despite concern about impending MMF changes, many organizations indicated

reluctance to consider alternative strategies, such as direct investing or hiring outside asset

THUHNLYZ�[V�HKTPUPZ[LY�:4(Z��0U�MHJ[��VM�JVYWVYH[L�PU]LZ[VYZ�^OV�J\YYLU[S`�W\YZ\L�HU�

44-�VUS`�HWWYVHJO��ULHYS`�MV\Y�PU�Ä]L�� PUKPJH[LK�[OH[�[OL`�^LYL�UV[�JVUZPKLYPUN�

a move into SMAs (Fig. 20). 11.9% indicated that they planned to move into SMAs within

one year, and another 9.0% indicated they would, but not for at least another year.

We asked this same set of respondents to identify the key reasons that keep them from

PU]LZ[PUN�PU�:4(Z��;OL�[VW�[^V�YLHZVUZ�^LYL�¸\UMHTPSPHYP[`¹��HUK�¸Z[YH[LN`�KVLZU»[�

HSPNU�^P[O�I\ZPULZZ�VIQLJ[P]LZ¹��6[OLY�YLHZVUZ�PUJS\KLK�¸WLYJLP]LK�HZ�H�YPZRPLY�Z[YH[LN`¹�

�� ¸KVU»[�OH]L�LUV\NO�Z[HɈ�[V�KLHS�^P[O�VWLYH[PVUHS�I\YKLU¹��¸IVHYK�W\ZOIHJR¹�

��HUK�¸KVU»[�\UKLYZ[HUK�HJJV\U[PUN�HUK�HUHS`[PJZ�PTWSPJH[PVUZ¹��(Fig. 21).

0U]LZ[TLU[�7VSPJ`�*VTWSPHUJL��7LYMVYTHUJL�4LHZ\YLTLU[��HUK�9PZR�(UHS`ZPZ

5V[�VUS`�OHZ�[OL�J\YYLU[�PU]LZ[TLU[�LU]PYVUTLU[�HɈLJ[LK�PU]LZ[TLU[�Z[YH[LNPLZ��P[�OHZ�HSZV�

HɈLJ[LK�PU]LZ[VYZ»�WLYZWLJ[P]LZ�VU�PU]LZ[TLU[�WVSPJ`�JVTWSPHUJL��WLYMVYTHUJL�TLHZ\YLTLU[��

and risk analysis. Among respondents’ top investment-related concerns, approximately one in

Ä]L��PUKPJH[LK�[OH[�[OL�YLN\SH[VY`�LU]PYVUTLU[�PZ�JYLH[PUN�JVUJLYUZ�HIV\[�JVTWSPHUJL��

performance, and risk (see Fig. 1, pg. 1).�6UL�YLZWVUKLU[»Z�YLMLYLUJL�[V�JVTWSPHUJL�Z\TTLK�\W�

[OL�NLULYHS�YLZ\S[Z!�¸>L»YL�^VYYPLK�HIV\[�JVTWSPHUJL�^P[O�V\Y�PU[LYUHS�PU]LZ[TLU[�WVSPJ �̀�HZ�^LSS�

HZ�YLN\SH[VY`�JVTWSPHUJL�¹�(UV[OLY�ZWVRL�[V�PUK\Z[Y`�^PKL�JVUJLYUZ�YLNHYKPUN�WVY[MVSPV�YPZR!�

Fig. 21

Reasons You are Not Pursuing SMAs*

14.8%

Board Pushback

Unfamiliar with SMAs

34.4%

Don’t Understand Accounting

and Analytics Implications

Perceived as a Riskier

Strategy

Don’t Have Enough Staff to Deal with Operational

Burden

Strategy Doesn’t

Align with Business

Objectives

Other

13.1%

19.7% 18.0%

31.2%

11.5%

Best Practices Tip: While SMAs are not for everyone, with the right tools and resources to administer their complex accounting and analytics, they can potentially provide institutional investors with the ability to achieve higher investment yields and the flexibility to meet liquidity goals.

Fig. 20

Are You Considering Moving Into SMAs?

11.9% Yes: Within One Year

9.0% Yes: But More Than a Year Out

No 79.1%

* Respondents who indicated they are not considering moving investments into SMAs.


¸>L»YL�JVUJLYULK�HIV\[�V\Y�]PZPIPSP[`�PU[V�\UKLYS`PUN�WYVISLTZ��JYLKP[��SPX\PKP[ �̀�I\ZPULZZ��L[J��

VM�PZZ\LYZ�VM�KLI[�ZLJ\YP[PLZ�OLSK�PU�V\Y�PU]LZ[TLU[�WVY[MVSPV�¹�(UV[OLY�YLZWVUZL�PUKPJH[LK�[OL�

PU[LYYLSH[LK�UH[\YL�VM�HSS�WVY[MVSPV�TLHZ\YLZ!�¸*VU[YVSSPUN�YPZR��HUK�H[�[OL�ZHTL�[PTL�Z[Y\J[\YPUN�H�

WVY[MVSPV�[OH[�PZ�HISL�[V�LHYU�H�KLJLU[�`PLSK��PZ�H�[VW�JVUJLYU�MVY�\Z�¹

)LUJOTHYRPUN�:[YH[LNPLZ

)LUJOTHYRPUN�PZ�H�JYP[PJHS�[VVS�[OH[�JVYWVYH[L�PU]LZ[VYZ�\ZL�[V�UV[�VUS`�TLHZ\YL�[OLPY�WVY[MVSPVZ»�

performance, but to help measure risk as well. The majority of survey respondents (66.2%)

indicated that they use either one or two benchmarks to measure the performance of investment

WVY[MVSPVZ��^P[O��\ZPUN�Q\Z[�H�ZPUNSL�ILUJOTHYR�HUK��\ZPUN�[^V�(Fig. 22).�� \ZL�

three benchmarks, while 15.9% use four or more benchmarks. While one in ten (10.1%) change

benchmarks multiple times during the year, most respondents wait at least a year or more to

change them (Fig. 23).� ��JOHUNL�[OLPY�ILUJOTHYRZ�`LHYS �̀��JOHUNL�[OLT�L]LY`�VUL�

[V�[OYLL�`LHYZ��L]LY`�MV\Y�[V�Ä]L�`LHYZ��HUK��VUS`�JOHUNL�ILUJOTHYRZ�HM[LY�Ä]L�VY�

more years. 36.9% don’t change their benchmarks at all.

Fig. 22

How Many Benchmarks Do You Use to Measure Performance?

1 31.8%

2 34.4%

3 17.9%

4 6.6%

5 3.3%

6+ 6.0%

15.9%

66.2%

Fig. 23

How Often Do You Change Benchmarks?

9.4% Every Year

10.1% < 1 Year

18.1% Every 1-3 Years

10.1% Every 4-5 Years

15.4% >5 Years

36.9% Do Not Change Benchmarks

“Controlling risk, and at the same time structuring a portfolio that is able to earn a decent yield, is a top concern.”

Best Practices Tip: Organizations should be able to know portfolio status at any time, and instantly receive notifications if investments exceed prescribed exposure limits. Compliance monitoring based on daily accounting data can provide you with the confidence that your portfolio complies with investment policies.

Best Practices Tip: Treasury teams need to be able to easily disseminate portfolio performance information to stakeholders. Leading accounting and reporting platforms can calculate insightful performance data (e.g., multiple return types, benchmark comparisons, etc.) based on accurate and timely investment data, providing these teams with vital insight and transparency into portfolio performance.


ACCURATE REPORTINGSTAFF TURNOVER

SECURITYTIMELYINFORMATION

MANUAL PROCESSES

COMPLIANCE

RESEARCH TIME

SYSTEM ERRORS

TRANSPARENCY

OPERATIONAL PROCESSES AND STAFFING

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burden. They’re being asked to aggregate and reconcile investment information more quickly, close

the books faster, and decrease the turn time when preparing monthly/quarterly reports, all without

ZHJYPÄJPUN�HJJ\YHJ �̀�4HUWV^LY��[LJOUVSVN �̀�HUK�H\[VTH[PVU�HYL�RL`�[V�ZVS]PUN�[OLZL�LɉJPLUJ`�

YLSH[LK�JOHSSLUNLZ��¸>L»YL�JVUJLYULK�[OH[�YLWVY[Z�HYL�Z[PSS�THU\HS�PU�UH[\YL�¹�^YV[L�VUL�HJJV\U[PUN�

professional, when describing top investment-related concerns. This concern is shared by many

JVTWHUPLZ�^OLU�L]HS\H[PUN�[OLPY�PULɉJPLUJPLZ��;OL`�HYL�VM[LU�MHJLK�^P[O�H�Z[YH[LNPJ�JOVPJL!�

invest in new technology and software solutions to help automate manual processes and improve

LɉJPLUJ �̀�VY�OPYL�HKKP[PVUHS�Z[HɈ�

+PɈLYLU[�JVYWVYH[PVUZ�OH]L�KP]LYZL�VYNHUPaH[PVUHS�ULLKZ��HUK�[OL�HJ[\HS�Z[YH[LNPLZ�[OH[�[OL`�

LTWSV`�]HY`�JVUZPKLYHIS`�KLWLUKPUN�VU�ZWLJPÄJ�SPX\PKP[`�ULLKZ��KLZPYLZ�MVY�`PLSK��HUK�[VSLYHUJLZ�

for risk. However, survey data revealed that many corporations—no matter what type of investment

Z[YH[LN`�[OL`�JOVVZL·HYL�JVUJLYULK�HIV\[�VWLYH[PVUHS�HUK�Z[HɉUN�JOHSSLUNLZ��

0U�MHJ[��TVYL�[OHU�H�X\HY[LY�VM�YLZWVUKLU[Z��PKLU[PÄLK�¸VWLYH[PVUHS�LɉJPLUJ`¹�HZ�[OLPY�[VW�

investment-related concern, pointing to the acute data management, accounting, reporting, and

Z[HɉUN�JVUJLYUZ�[OH[�JVYWVYH[L�[YLHZ\Y`�HUK�HJJV\U[PUN�[LHTZ�MHJL�(see Fig. 1, pg. 1)��¸(JJ\YH[L�

YLWVY[PUN�VM�WLYMVYTHUJL�HUK�HJ[P]P[ �̀¹�¸NL[[PUN�PUMVYTH[PVU�PU�H�[PTLS �̀�HJJ\YH[L�THUULY�MVY�JSVZL�¹�

¸THUWV^LY�JOHSSLUNLZ�HUK�[OL�\ZL�VM�THU\HS�WYVJLZZLZ�¹�¸YLWVY[PUN�LYYVYZ�¹�HUK�¸[PTPUN�HUK�Z[HɈ�

[\YUV]LY¹�^LYL�Q\Z[�ZL]LYHS�[VW�JVUJLYUZ�(Fig. 24). Fig. 24

What Are Your Top Investment-Related Concerns?

“We’re concerned that reports are still manual in nature.”


To gauge how accounting and treasury professionals feel about their operational processes, we

HZRLK�¸>OLU�P[�JVTLZ�[V�PU]LZ[TLU[�VWLYH[PVUZ��HYL�`V\�WSH`PUN�KLMLUZL��WSH`PUN�VɈLUZL��VY�

UL\[YHS&¹�;OL�THQVYP[`�VM�YLZWVUKLU[Z��ZHPK�[OL`�^LYL�UL\[YHS��TLHUPUN�[OL`�HJRUV^SLKNLK�

[OH[�[OL`�OHK�¸ZVTL�VWLYH[PVUHS�PULɉJPLUJPLZ�HUK�ZVTL�THU\HS�WYVJLZZLZ¹�(Fig. 25). Nearly

VUL�PU�[OYLL��ZHPK�[OL`�^LYL�WSH`PUN�VɈLUZL��PUKPJH[PUN�[OL`�^LYL�¸PU�JVU[YVS��LɉJPLU[��

HUK�OHK�H\[VTH[LK�WYVJLZZLZ�¹�(�]LY`�ZTHSS�ZLNTLU[�VM�YLZWVUKLU[Z��HKTP[[LK�[OH[�[OL`�

^LYL�WSH`PUN�KLMLUZL��PUKPJH[PUN�[OLPY�VWLYH[PVUHS�WYVJLZZLZ�¸^LYL�V\[�VM�JVU[YVS��PULɉJPLU[��HUK�

JVUZPZ[LK�VM�[VV�T\JO�THU\HS�HJ[P]P[ �̀¹

The results revealed that while treasury and accounting teams acknowledge there are some

PULɉJPLUJPLZ��I`�HUK�SHYNL�[OL`�HYL�JVTMVY[HISL�^P[O�[OL�NLULYHS�Z[H[L�VM�[OLPY�PU]LZ[TLU[�VWLYH[PVUHS�

WYVJLZZLZ�HUK�HɈHPYZ��/V^L]LY��YLZWVUKLU[Z»�HUZ^LYZ�[V�RL`�VWLYH[PVUHS�LɉJPLUJ`�X\LZ[PVUZ�SH[LY�PU�

[OL�Z\Y]L`�YL]LHSLK�[OH[�KLZWP[L�V]LYHSS�JVUÄKLUJL�PU�[OLPY�J\YYLU[�WYVJLZZLZ�HUK�YLZV\YJLZ��ÄUHUJL�

teams are still dealing with persistent operational challenges that merit further exploration.

*SVZPUN�[OL�)VVRZ

>OLU�HJJV\U[PUN�[LHTZ�JSVZL�[OL�IVVRZ�MVY�PU[LYUHS�YLWVY[PUN�HUK�YLN\SH[VY`�ÄSPUN��[OLYL�HYL�[OYLL�

critical time periods: month end, quarter end, and year end. When we asked respondents how

long it takes them to close the books at each of these time periods, we expected that monthly

processes would take a fair amount of time, but that quarter- and year-end closes would take

ZPNUPÄJHU[S`�SVUNLY�ILJH\ZL�VM�[OL�HKKP[PVUHS�PU[LYUHS�YLJVUJPSPH[PVU�HUK�H\KP[PUN�ULJLZZHY`�[V�

complete these activities.

;OH[»Z�NLULYHSS`�OV^�[OL�YLZ\S[Z�WSH`LK�V\[!�HJJV\U[PUN�[LHTZ�HYL�MHPYS`�LɉJPLU[�^OLU�P[�JVTLZ�

to closing the books every month, but require more time at quarter- and year-end (Fig. 26). The

majority of respondents (69.6%) indicated that it takes them a day or less to complete the monthly

JSVZL�WYVJLZZ��HUK��YLX\PYL�[^V�KH`Z��PUKPJH[LK�[OH[�P[�[HRLZ�[OLT�[OYLL�KH`Z�VY�TVYL�

How Much Time Do You Spend Closing the Books?

Year EndQuarterlyMonthly

0-2 3-4 5-8 2 3-4 5+ hours hours hours days days days

50%

40%

30%

20%

10%

Time:

Quarterly Close 62.4%Year-End Close 68.9%

Monthly Close 69.6%

Are You Playing Offense, Defense, or Neutral When It Comes to Investment Operations?

Fig. 25

61.7% Neutral (Some Inefficiencies and Some Manual Processes)

6.2% Playing Defense (Out of Control, Inefficient, Many Manual Processes, etc.)

32.1% Playing Offense (In Control, Efficient, Have Automated Processes, etc.)

Fig. 26



36.7% 19.9% 14.8% 12.2% 5.1% 6.6%

35.4% 21.2% 14.6% 10.1% 7.1% 6.1%

Creating MonthlyJournal Entries

Auditing/Reconciling Monthly Journal Entries

71.4%

71.2%


10.7% 15.2% 14.2% 21.3% 13.7% 16.2%

11.8% 16.9% 12.8% 12.8% 11.8% 16.9%

Board Packages and Management Reports

Creating Financial Statement Disclosures

40.1%

41.5%

at month end. Quarterly and yearly close processes take longer, because there’s more data to

aggregate and reconcile, and because there’s closer scrutiny on regulatory reporting. 62.4%

indicated it takes two days or more to close the books at the end of the quarter, and nearly one

PU�[OYLL��YLZWVUKLK�[OH[�P[�[HRLZ�TVYL�[OHU�Ä]L�KH`Z��@LHY�LUK�[HZRZ�[HRL�L]LU�SVUNLY!�[^V�

V\[�VM�[OYLL�� YLZWVUKLU[Z�PUKPJH[LK�[OH[�P[�[HRLZ�TVYL�[OHU�[^V�KH`Z�[V�JSVZL�[OL�`LHY�LUK�

IVVRZ��HUK�ULHYS`�OHSM��ZHPK�P[�[HRLZ�TVYL�[OHU�Ä]L�KH`Z�(see Fig. 26, pg. 13).

For associated month-end processes—such as creating monthly journal entries and auditing

HUK�YLJVUJPSPUN�[OLZL�LU[YPLZ·��VM�YLZWVUKLU[Z�PUKPJH[LK�[OH[�P[�[HRLZ�H[�SLHZ[�H�KH`�[V�

create monthly journal entries, and nearly a quarter (23.9%) indicated that it takes them two days

VY�TVYL��PUKPJH[LK�[OH[�P[�[HRLZ�[OLT�H[�SLHZ[�H�KH`�[V�H\KP[�HUK�YLJVUJPSL�[OLZL�QV\YUHS�

entries (Fig. 27).

0U[LYUHS�9LWVY[PUN�HUK�-PUHUJPHS�:[H[LTLU[�+PZJSVZ\YLZ

*SVZPUN�[OL�IVVRZ�PZ�H�WYLJ\YZVY�[V�V[OLY�JVYL�HJJV\U[PUN�WYVJLZZLZ��Z\JO�HZ�PU[LYUHS�YLWVY[PUN�

HUK�YLN\SH[VY`�ÄSPUNZ��*YLH[PUN�IVHYK�WHJRHNLZ�HUK�V[OLY�THUHNLTLU[�YLWVY[Z�JHU�IL�

WHY[PJ\SHYS`�[PTL�JVUZ\TPUN�HJ[P]P[PLZ��YLX\PYPUN�H�ZPNUPÄJHU[�PU]LZ[TLU[�VM�YLZV\YJLZ��>OPSL�

40.1% of respondents indicated that it can take up to a day to prepare these reports, over half

(51.2%) indicated that it takes more than two days—and 16.2% indicated that it takes more than

Ä]L�KH`Z�(Fig. 28).

Best Practices Tip: Daily processing, validation, and reconciliation of investment accounting data provides corporations with audit-quality month-end data and reporting every day of the month. As a result, end-of-the-month processes are much less of a production and close times at all period ends can be dramatically improved.

How Much Time Do You Spend:

Fig. 27

How Much Time Do You Spend on:

Fig. 28


��VM�YLZWVUKLU[Z�PUKPJH[LK�[OH[�P[�JHU�[HRL�\W�[V�LPNO[�OV\YZ�[V�JYLH[L�ÄUHUJPHS�Z[H[LTLU[�

KPZJSVZ\YLZ�Z\JO�HZ�-(:��HUK�PTWHPYTLU[Z��PUKPJH[LK�[OH[�P[�JHU�[HRL�[LHTZ�IL[^LLU�

[^V�HUK�MV\Y�KH`Z��HUK�� PUKPJH[LK�[OH[�P[�[HRLZ�Ä]L�KH`Z�VY�TVYL�(see Fig. 28, pg. 14).

Not only are treasury and accounting teams tasked with closing the books and providing

period-end reporting, they are also responsible for disseminating portfolio information to key

constituents within and outside the organization. Survey results indicated that corporate treasury

HUK�HJJV\U[PUN�Z[HɈ�OH]L�THU`�TV\[OZ�[V�MLLK�(Fig. 29). When asked to identify to whom they

WYV]PKL�PU]LZ[TLU[�YLWVY[PUN��[OL�TVZ[�JVTTVU�YLZWVUZL�^HZ�*-6��MVSSV^LK�I`�[OL�

[YLHZ\YLY�VY�HZZPZ[HU[�[YLHZ\YLY��HJJV\U[PUN�KLWHY[TLU[��*,6�WYLZPKLU[��

JVU[YVSSLY�� PU]LZ[TLU[�JVTTP[[LL�� HUK�[H_�Z[HɈ��0U�[V[HS��YLZWVUKLU[Z�

PKLU[PÄLK�TVYL�[OHU��KPɈLYLU[�JVUZ[P[\LUJPLZ�[V�^OVT�[OL`�T\Z[�WYV]PKL�PU]LZ[TLU[�YLWVY[PUN�

When asked about the key challenges treasury and accounting teams face when preparing

PU]LZ[TLU[�WHJRHNLZ�MVY�LP[OLY�L_[LYUHS��L�N��:,*��VY�PU[LYUHS��L�N��IVHYK��PU]LZ[TLU[�

JVTTP[[LLZ��H\KPLUJLZ��YLZWVUKLU[Z�PKLU[PÄLK�¸^HP[PUN�MVY�KH[H�[V�ILJVTL�H]HPSHISL¹�HZ�[OLPY�

[VW�JVUJLYU��;OPZ�^HZ�MVSSV^LK�I`�¸THU\HS�KH[H�LU[Y`¹��¸HNNYLNH[PVU�VM�KH[H�

MYVT�L_[LYUHS�ZV\YJLZ��J\Z[VKPHUZ�¹��¸YLJHSJ\SH[PUN�HUK�]LYPM`PUN�KH[H�HJJ\YHJ`¹��

HUK�¸HNNYLNH[PVU�VM�KH[H�MYVT�PU[LYUHS�ZV\YJLZ��HJJV\U[PUN�¹��(Fig. 30). These challenges

typically extend and repeat themselves across multiple departments, and contribute to a vicious

J`JSL�[OH[�VM[LU�YLZ\S[Z�PU�TPZTH[JOLK�KH[H��K\WSPJH[LK�^VYR��HUK�ZPNUPÄJHU[�KLSH`Z�^OLU�

preparing period-end reports and investment packages.

To Whom Do You Provide Investment Reporting?

Key Challenges in Preparing Investment Packages

34.9%

CEO/President

41.3%

72.0%

43.4%34.9%

21.2%

47.1%

CFO Investment Committee

ControllerTreasurer/Assistant Treasurer

Accounting Dept.

Tax Staff

43.1% Waiting for Data to Become Available

36.0% Manual Data Entry

33.3% Aggregation of Data from External Sources (Custodians)

28.8% Recalculating and Verifying Data Accuracy

23.5% Aggregation of Data from Internal Sources (Accounting)

Fig. 29

Fig. 30


Cash Management

Treasury Workstation

Trade Execution Platform

Investment Accounting

Portfolio Performance & Risk Analytics

Investment Policy Compliance Monitoring

Spreadsheets Rely on Asset Manager Rely on Custodian ConsultantInstalled Software Web-Based Software Other

0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

57.1%

26.5%

33.6% 24.3%

44.7%

42.5%

40.6%

6WLYH[PVUHS�;VVSZ�HUK�7YVJLZZLZ

To learn more about organizations’ operational processes, we asked respondents

how—and with what tools—they handle core treasury and accounting functions

such as cash management, trade execution, investment accounting, portfolio

performance and risk analytics, and investment policy compliance monitoring.

The results indicated that corporations are more likely to use web-based systems

for some functions, but less sophisticated tools for others.

While some organizations still use spreadsheets for certain core treasury

functions, corporations are most likely to rely on web-based solutions for investment accounting

��WVY[MVSPV�WLYMVYTHUJL�HUK�YPZR�HUHS`[PJZ��HUK�PU]LZ[TLU[�WVSPJ`�JVTWSPHUJL�

monitoring (40.6%) (Fig. 31). Spreadsheets were the most common method for cash management

��HUK�[YLHZ\Y`�^VYRZ[H[PVU�[`WL�M\UJ[PVUZ��-VY�[YHKL�L_LJ\[PVU�M\UJ[PVUZ��

corporations mostly rely on their asset manager (33.6%), or use web-based software (24.3%).

:[HɉUN�HUK�9LZV\YJLZ

;OYV\NOV\[�[OPZ�YLWVY[��^L�OH]L�L_HTPULK�[OL�RL`�JOHSSLUNLZ�[OH[�JVYWVYH[L�ÄUHUJL�

departments face when performing core functions, and the impediments that keep them from

JVTWSL[PUN�ZVTL�[HZRZ�ZVVULY��.P]LU�HSS�[OL�Z[LWZ�[OH[�[YLHZ\Y`�HUK�HJJV\U[PUN�[LHTZ�T\Z[�

JVTWSL[L�VU�H�KHPS`�HUK�TVU[OS`�IHZPZ��ZVTL�JVTTVU�Z[HɉUN�HUK�YLZV\YJL�PZZ\LZ�HYPZL��

How Do You Handle the Following Functions?

Fig. 31

Best Practices Tip: A world-class investment accounting and reporting solution can simplify the process of compiling accurate data and assembling investment reports across multiple departments. Today’s automated and integrated solutions eliminate the burden of manual data entry and repeated data aggregation processes, yet remain flexible enough to deliver customized data to key constituents.


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manpower (25.5%) (Fig. 32).�(Z�VUL�YLZWVUKLU[�WOYHZLK�P[!�¸[OL�]VS\TL�VM�^VYR�HUK�[OL�U\TILY�

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departments, we asked survey respondents about their investment accounting and reporting

resources. The results indicated that nearly 60% of all organizations require two or three

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involved with investment accounting and reporting.

The hiring outlook for corporate treasuries remains stable-to-optimistic. 60.9% of respondents

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operations, and it is often cited as a key reason why treasury and accounting teams cannot

accomplish core tasks more quickly.

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processes—to devote to core accounting and reporting tasks, we asked how respondents would

spend an extra hour in their day. Some indicated that they’d have more time for professional

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How Many Employees Dedicated to Investment and Reporting Tasks?

Hiring Outlook

1 20.3%

2 37.4%

3 22.5%

4 6.4%

5+ 13.4%

59.9%

60.9% Stable (Stay Much the Same)

3.1% Adverse (Downsizing)

36.0% Optimistic (We Expect to Grow)

Fig. 33

Fig. 34

What Are Your Key Impediments to Completing Key Operational Projects?

Fig. 32

25.5%

Staffing Complexity Manual Processes

Legacy Systems

17.0%14.2%

10.4%

Delays from Providers

9.4%

Accuracy

3.8%Other

19.8%


PricewaterhouseCoopers (PWC) 30.8%

Ernst & Young 23.9%

Other 17.0%

KPMG 16.4%

Deloitte 11.9%

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Which Auditors Do You Use?

Fig. 36

Fig. 37

What Are Your Biggest Auditing Challenges?

15.7% Administrative and Data

17.1% Educating Auditors

Complexity 4.3%

Audit Turnover 7.1%

11.4% Time Constraints

8.6% None

8.6% Pricing

Other 7.1%

Cost 4.3%

Accuracy 2.9%

Accuracy 2.9%

Revenue 2.9%

Compliance 2.9%

SOX Compliance 1.4%

Scrutiny 1.4% Classification 1.4%

Best Practices Tip: Key employee risk, which exposes organizations to inefficiencies if a departing employee takes essential knowledge about data and processes with him or her, is a common problem. Putting processes and systems in place—and standardizing practices—to ensure that efficiencies remain, even if there is turnover within your team, is important. Many corporate finance departments perform internal employee rotations so more employees have a comprehensive understanding of all key department processes.

What Would You Do with an Extra Hour?

ANSWERING EMAIL

STAFF COACHING

AT THE GYM

LEARNING A NEW LANGUAGE

LONG-TERM STRATEGIZING

AT HOME WITH MY KIDS

BRAINSTORMINGAUTOMATING

PROCESSES

ANALYZING DATA

OUTDOORS

INVESTMENT RESEARCH

ON THE GOLF COURSE

ON THE BEACH

RELAXING

READING

IMPROVING INEFFICIENCIES Fig. 35


CONCLUSION

The 2014 Corporate Investment Benchmark Survey was designed to deliver a comprehensive review of the current investment

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projections. With this, participants can better evaluate their own treasury and accounting operations, and benchmark their

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information more frequently than ever before. Time must be spent analyzing trusted data, not manually entering or processing

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enable these improved processes are imperative.


About Clearwater Analytics Clearwater Analytics® is the leading provider of web-based investment accounting, reporting, and reconciliation services for corporate treasuries,

insurance companies, and investment managers. Clearwater aggregates, reconciles, and reports on over $1.3 trillion in assets across 25,000+ accounts

daily. For over a decade, Clearwater has helped thousands of corporate clients, such as Cisco, Facebook, Oracle, SanDisk, Starbucks and Yahoo!,

streamline their investment and accounting operations. The company remains committed to continuous improvement of the solutions it is providing

to current clients, while encouraging prospective firms to rethink how they approach their investment accounting and reporting challenges.

*VUULJ[�^P[O�*SLHY^H[LY�[V�SLHYU�TVYL�

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JSLHY^H[LYHUHS`[PJZ�JVT

SPURLKPU�JVT�JSLHY^H[LYHUHS`[PJZ

*SLHY^H[LY�(UHS`[PJZ, the market-leader in investment accounting and reporting, helps thousands

of corporations around the world improve their overall investment operations processes. Clearwater

has modernized investment accounting and reporting, replacing manual, Excel-based processes

with an automated, web-based approach. Clearwater provides corporate treasury and accounting

teams with the tools to eliminate manual processes, reduce close times, improve internal reporting and

communication, maximize performance, reduce risk, and pursue their desired investment strategy.

INQUIRIES208.901.7787 [email protected] [email protected]

WORLDWIDE OFFICESBoise, Idaho New York, New York Edinburgh, U.K.

��*SLHY^H[LY�(UHS`[PJZ (SS�YPNO[Z�YLZLY]LK��;OPZ�TH[LYPHS�PZ�MVY�PUMVYTH[PVUHS�W\YWVZLZ�VUS �̀�*SLHY^H[LY�THRLZ�UV�^HYYHU[PLZ��L_WYLZZ�VY�PTWSPLK��PU�[OPZ�summary. All technologies described herein are either registered trademarks or trademarks of their respective owners in the United States and/or other countries.

03.2015

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