imrpoving treasury cash management

Category: Banking.

The key goal of treasury management is planning, organizing and controlling cash assets to satisfy the financial objectives of the organization. The goal may be to maximize the return on the available cash, or minimize interest cost or mobilize as much cash as possible for corporate ventures. Dealing in forex, money and commodity markets involves complex risks of fluctuating exchange rates, interest rates and prices which can affect the profitability of the organization. Treasury managers try to minimize losses by adopting risk transfer and hedging techniques that suit the internal policies of the organization. The financial health of a company in terms of the above goals is indicated by measurable metrics called Financial KPIs (Key Performance Indicator). Monitoring these KPIs shows whether a business is achieving its long-term financial goals.

The fastest and most efficient way to keep track of an organization’s performance wrt financial operations is by setting up a financial KPI dashboard that displays the financial metrics. The perfect financial KPI report presents real-time updates on the organisation’s important financial figures. This dashboard will track several operations and present their efficiency in terms of KPIs, reflecting true financial performance. One of the key operations that need to be tracked is that of Treasury and cash management. Treasury and cash management is a process of knowing how much cash a company has and what to do with it. More specifically, it refers to the currency, jurisdiction, risk, entities and distribution of an organization’s available funds.

On a day to day basis, treasury services and cash management involve the collection, review, and analysis of data. Selling payment rails, wire services, and other traditional treasury services are a large source of bank revenue.

The effectiveness of the treasury and cash management unit can be measured by using the following 3 metrics, indicating if you are losing or generating revenue and how many employees support the treasury and cash management efforts. Below is a list of metrics for treasury and cash management:

  • Treasury & Cash Management Headcount Ratio: This can be calculated by dividing the number of company-wide employees by the total number of treasury and cash management staff members the company has at the same point in time.
  • Courier Expense per Branch: This can be gotten by dividing the total courier-related expense by the total number of active retail banking branch locations the bank manages over the same period of time.
  • Lockbox Items Processed per Lockbox Processing Employee: This can be derived by dividing the total number of lockbox items processed over a particular period of time by the total number of transaction processing and support staff members the company has that are involved in processing lockbox items.

Suggestions for improving your institution’s treasury and cash management

In this section, a brief list of suggestions for improving your institution’s treasury and cash management are provided:

Leverage Automation To Generate Cash Flow Statements

According to the Global Treasurer, a leading global knowledge resource for cash management professionals, using automation to generate cash flow statements is a no-brainer. This automation allows you to make excellent decisions in regards to moving and investing the cash of the company and scheduling debt payments. If you have a treasury management system (TMS), money market deposits, and holdings in money market funds are easy to track. However, monitoring the cash in the bank can be more difficult. The automated generation of cash flow statements is a move in the right direction.

Internet of Things

Internet of Things (IoT) is a recent technological breakthrough that has brought about a revolution in various aspects of corporate and private life. For example, it’s being used to handle routine payments like tolls. But it’s also making treasury and cash management services more effective by facilitating the transactions between these machines.


According to Financial Executives International (FEI), analytics is becoming more important than ever in a lot of banks across the U.S. Many banks use data analysis equipment to handle their cash management.

Some advanced machines are adept in the collection of massive data regarding processed transactions. Using these machines, you can further analyze important pieces of information like the frequency at which certain currencies are processed or the busiest days for processing business transactions for clients.

The use of analytics allows banks to keep up with important data that can help them measure their effectiveness. It also enables them to explore various avenues for growth. Therefore, banks will be able to provide better services for their customers by improving their back-office operations. Consequently, the bank will be more productive and boost its revenue.


To continue to grow the business and revenue of your institution, you can develop bold and ambitious OKRs. By focusing specifically on your bank’s treasury and cash management services, you can work towards the larger goals of your organization. You can develop an objective, pertaining to your organization’s cash and treasury services and add measurable key results or outcomes that will need to be completed in order to achieve your goal. These Key Results will reflect the financial health precisely only if you choose and measure the right set of metrics.

By combining the suggestions above with metrics or KPIs, you can create an objective that will focus on improving your organization’s treasury and cash management services. OKRs can help you to transform these suggestions into a strong goal for your bank.

For example, you may want to develop the objective: “Improve Treasury and Cash Management Services.” From there, you can create the key results that you’ll need to complete in order to make that improvement.

    Objective: Improve efficiency of Treasury and Cash Management Services

  • KR1: Increase Treasury & Cash Management headcount ratio from 5% to 10%
  • KR2: Manage expenditure within $3M
  • KR3: Establish an automated cash flow statement program

The type of KPI in KR1 is increase KPI, whereas in KR2, it is a control KPI and for KR3, it is a Milestone KPI. By improving your bank’s treasury and cash management services, you’ll ultimately contribute to your institution’s overall profitability and revenue. Therefore, your treasury and cash management OKR could potentially align with a larger, profit-based corporate OKR. For example, if your financial institution has the company objective to “Improve profitability”, or “Increase Revenue”, you can establish an alignment to show connection to cash and treasury management.

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