How to Measure Success in the Modern Treasury Function

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Throughout this series, we're exploring ways in which the role of Treasury can be expanded within forward-thinking businesses, and the scope for Treasury to become an even greater creator of value.

We've established that the purpose of Treasury is to manage the flow of money in a company to the most effective degree possible and that there are many opportunities for innovative Treasury professionals to apply new thinking and new processes to do that.

But how do we judge the outcome? What metrics might we use to measure the success of a Treasury Function within its organization?

Treasury - what constitutes success?

First, the desired outcome of any Treasury project (or, indeed, any project or process at all) will be specific to an individual business. However, there are a few areas in which Treasury can drive meaningful value, and on which, leaders are likely to want to focus.

• Cash management - the day-to-day management of cash in the business, and of the cash conversion cycle
• Liquidity - perhaps the most crucial priority for treasury - ensuring that the business has access to funds to manage its day-to-day obligations
• Cash resource optimization - delivering initiatives that will improve cash flow management
• Access to short-term finance - ensuring that working capital and other short-term financing are available, that lines of credit are not exhausted, and that borrowing is conducted in the most efficient way
• Investment management - ensuring that assets and investments are managed and optimized effectively
• Bank relationship management - managing day-to-day relationships with financial partners, including fielding pitches for new financial instruments and working with banks to develop solutions to specific needs

Measuring Treasury success

Of course, we also need metrics to monitor to determine whether the Treasury Function is meeting its objectives. Again, those metrics will vary by business, but some of the most important KPIs to keep an eye on might include:

• Cash concentration levels
• Bank fees
• Working capital costs
• Liquidity and investment performance
• Performance vs. forecast

Improving those metrics

As we have seen throughout this series, the role of Treasury isn't simply to monitor or manage - it is also to develop initiatives that improve performance.

There are two ways in which Treasury can impact the performance factors being measured: directly, and indirectly.

Direct impact involves the Treasury Function taking direct control of a process or activity. For example, Treasury is likely to liaise directly with banking partners on the adoption of new and tailored financial instruments designed to improve the operation of specific parts of the cash cycle.

Indirect impact, meanwhile, requires Treasury to assume the role of a business partner. In this arrangement, the focus of Treasury shifts towards relationship-building and cross-functional collaboration, positioning Treasury as the nexus through which all other cash-related processes flow. In this business partnering role, Treasury might work with, for example, sales or procurement to help optimize non-Treasury processes in a way that benefits the organization as a whole.

We saw some great examples of Treasury business partnering in the last article in this series, with veteran Treasury professional Bruno Massera. In the next article, we'll be speaking to another expert to understand their digital-first, cross-functional approach to Treasury optimization.

Do this today

Looking for ways to expand the scope of Treasury within your organization? Take some time today to think about the key metrics you are using to measure Treasury success. Are they truly meaningful for your business, and are they comprehensive enough to build an accurate picture of performance?

Then, think about the skills within your Treasury function, and consider new ways they can be put to work. In particular, think about how you can break down the silos that often surround Treasury and the Finance Function generally. How can you expand the scope of these functions, encouraging interdisciplinary collaboration, and ensuring that Treasury has a presence wherever cash is present.

And finally, make sure you subscribe to read the rest of the articles in this series!

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This was the fourth article on my series about Treasury. You can read the previous article(s) below. If you would like to be involved in this series and share insights about the latest developments in Treasury, don't hesitate to reach out!

If Cash Is King, Treasury Is The Most Important Part Of Finance..., Right?

The Innovative Treasurer - Always Looking For Ways To Drive Value Creation

Defining The Vision For Treasury

If you want to know more about what is happening in the wider Finance Function you can read my latest series "Finance Function 4.0" . You can read all the articles in the series below.

Welcome To Finance Function 4.0

The Finance Professional 4.0

Career Paths in the Modern Finance Function

The Art of the Possible for Finance 4.0

In The Age Of Automation, Finance Must Know Their Processes More Than Ever

Finance Transformation 4.0 - Your Action Plan

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box”?where you set the ambition for your transformation. You should join the?Finance Business Partner Forum?which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on?Twitter.

All Successful Business Partners Are "Leaders" ?(the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering??(part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset?(part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation??(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight?(part of case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg?is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the?Business Partnering Institute?and owner of the largest?group dedicated to Finance Business Partnering?on LinkedIn with close to 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a?long-time Finance Blogger?on LinkedIn with 60.000+ followers.