Use revenue opportunity lost to measure commercial services billing success

How should financial institutions measure success in cash and treasury management services?

Some financial institutions focus on costs, while others measure success purely by fee income from customers. But those tactics miss an important point. I believe financial institutions should also include the data point for revenue not attained when it should have been. I like to refer to that measurement as revenue opportunity lost or ROL, and could include waiving fees due for a service or for an entire relationship.

I believe the most accurate measurement of success in treasury management can be found by looking at a combination of cost (profit margin), fee income, ROL and yield on customer balances. The more a financial institution analyzes those four measures of success, the more accurate any resulting strategy will be. In the end, organizations should consider focusing on determining where account concessions make sense – and where they don’t.


Financial institutions may ignore measuring cost data points if they think there aren’t precise unit cost factors for services. However, a unit cost factor doesn’t have to be true, it only has to be consistent so that accounts are measured on a level playing field. More sophisticated systems will likely have more than one cost per service – a fixed cost or variable, such as a set percentage of the unit price. And some systems may bring indirect costs into play with cost analysis – an add-on to a product family of treasury management services, for example.


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