Treasury Process Maturity

During unprecedented times, every dollar matters. Improving working capital has been at the forefront of every Treasurer’s mind as our current business environment lacks stability. Treasurers who want to prepare for uncertainty in the long-term must take a close look at their treasury processes, including collections, forecasting, and funding, to ensure they are operating at maximum efficiency.

Treasurers, Treasury Managers, and Treasury Departments require a high level of introspection in order to ensure they are taking adequate measures to protect the company’s bottom line. In thinking about Treasury Process Maturity, it’s important to take stock of the existing, more immature processes that are currently underperforming and hindering Treasurers from truly having optimized treasury operations.

Treasury Process Maturity refers to how close your existing processes are to being as complete and optimized as possible, with the capacity to change and improve as your organization and the current business environment fluctuate. Assessing the maturity of your processes involves measuring their effectiveness and efficiency. To do this, five critical enablers of process performance are used as a baseline to gauge where they lie on the maturity scale: 

  • Design –  what occurs during the target process
  • Metrics – how the process is measured
  • Owner – who is responsible and accountable for the process and its performers
  • Performers – personnel actually carrying out and performing the process and all associated skills, knowledge, and attitude
  • Infrastructure – existing support systems for both the process and its performers

After evaluating the process based on these critical elements, it is then ranked and placed on the five-tiered maturity scale.

Falling on the lowest tier on the scale, informal, indicates that your process is mostly manual and reactive, requiring constant maintenance to keep it running at all. If the process falls a step above this, it means that it is, at a basic level, functional. Processes at this stage of maturity run with minimal issues, but are non-standard and riddled with inefficiencies. The third tier on the maturity scale, standardized, refers to processes that yield reliable, predictable and manageable performance. Most treasury processes tend to live in either this level, or the level above, collaborative, where they are fully integrated with other processes and the overarching company strategy. Finally, processes occasionally fall under the leading category, meaning that they extend outside of the company to suppliers and customers, yielding world-class results. It’s important to note that not every process has to be or can be leading. 

There are a number of key benefits and considerations to be aware of when it comes to how Treasury Process Maturity can truly improve your organization:

  • Having a clear understanding of your current treasury processes and your capabilities and effectiveness can help set new targets and highlight processes that need a future redesign.
  • It can provide your organization with a clear understanding of your treasury current state through assessing processes using the five critical enablers and maturity scale. 
  • It baselines existing treasury processes against industry benchmarks and best practices, placing them into specific maturity tiers.
  • It highlights disconnects and gaps in existing treasury processes, showcasing major pain points that impede efficiency and effectiveness.
  • It provides a clear path to an optimal treasury future state, meaning that you’ll know exactly what next steps need to be taken to move your process up on the maturity scale and start seeing the benefits of high-performing processes. 

Learn more about our Treasury Advisory Services by downloading our informational One-sheet, available here.