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Treasury KPIs Your Organization Should Track

Written by Keegan Chamberlin
June 3, 2022

Treasury KPIs or key performance indicators are essential to ensure your organization effectively and efficiently manages its cash. These metrics identify and help manage specific activities, financial line items, or present risks in ordinary operations, so you can better focus and track the strength of your cash management strategy.

Knowing your organization’s strengths and weaknesses regarding your cash flow, you can better prioritize specific key performance metrics and processes.


Why Should Organizations Measure Treasury Performance?

If you are not tracking your treasury’s performance, you are making decisions based on your gut, which, historically, isn’t accurate and can increase your organization’s financial risk. Treasuries need to focus on components used to calculate important KPIs and determine what to accomplish to improve the observed outcome. 

Tracking and measuring treasury KPIs helps your organization:

  • Gain needed control. Treasuries are responsible for high-value, time-critical transactions that can be pretty complex in nature. Missing a payment or making decisions based on inaccurate data can affect your entire organization in drastic ways.

  • Reduce risk. One of treasury’s core functions is to manage financial risks, such as foreign exchange, interest rates, liquidity risk, and counterparty and operational risks. Fortunately, established metrics are available for market risks, whereas operational and credit risks are a bit harder and more involved to measure.

  • Optimize processes. Before managing a process, you need to know the process’s inputs and outputs. With this information, you can develop metrics that monitor how well specific operational processes performed, which helps your organization determine whether or not a process needs re-engineering.

  • Demonstrate value to leadership. Treasuries are generally under-resourced, and often this is due to their inability to demonstrate their value to the organization. By actively measuring treasury performance, senior executives can grow to realize its value and provide the resources required to support the function correctly.


Strategic vs. Tactical Treasury KPIs

There are two types of KPIs: strategic and tactical.

According to Bernard Marr, a world-renowned business and technology thought leader, tactical or operational KPIs “seek to get closer and closer to ‘real-time’ measurement, so you can assess what’s actually happening in the business on an hourly, daily, weekly and monthly basis.” On the other hand, strategic KPIs are “more about monitoring progress or trends towards a stated destination.”

From a treasury perspective, strategic KPIs track treasury’s contribution to a new project or an achievement of a specific objective. These are developed on an “as needed” basis. Therefore, they cease to be relevant once the task or goal is complete.

Tactical KPIs are more of an ongoing measurement. They track the efficiency of processes, the minimization of error rates, and the achievement of target returns on assets. These KPIs measure recurring activities and continue throughout the organization’s existence.

Since strategic KPIs vary wildly between different treasuries and organizations, the rest of this article will focus on tactical KPIs your treasury should consider tracking.

treasury reporting forecasting guide


Tactical KPIs Your Treasury Should Be Tracking


Error Rate KPIs

Error rate KPIs track the accuracy of your cash flow operations over time, including cash forecasting, payments, and investments.


Accuracy of Cash Forecasts

The accuracy of cash forecasts KPI does what it sounds like; it tracks the accuracy of your forecasts over time. 

Formula: (Actual cash balance minus forecasted cash balance)/forecasted cash balance


Accuracy of Forecasted Investment Income

The accuracy of forecasted interest expense is similar to the accuracy of cash forecasts KPI except you compare your actual interest expense with your forecasted costs. 

Formula: Actual interest expense minus forecasted interest expense)/forecasted interest expense


Percentage of Payments Containing Errors

To tighten up quality control throughout your payment processes, it is critical to determine the number of payments that contain an error by type.

Formula: Number of payments containing errors/ number of payments


Percentage of Payments Released On Time

Similarly, it is essential to avoid late fees due to late payments. If your organization is continually behind in payments, this KPI can act as a warning to strengthen communication and processes.

Formula: Total number of payments released on time /total number of released payments

Liquidity & Cash Management KPIs


Percentage of Daily Cash Balances vs. Forecast

Calculating the percentage of daily cash balances vs. your forecast helps ensure that your forecast is accurate over your forecasted period. If not, it provides a signal to dig deeper into your daily cash flows and figure out the discrepancy.

Formula: Sum of daily cash balances/forecasted total cash balances


Percentage of Non-Interest Bearing Cash vs. Total Cash

This ratio takes into perspective your non-interest-bearing accounts compared to your total accounts. Non-interest-bearing cash is issued by a business for cash and is considered liabilities representing amounts owed by a company to a third party.

Formula: Total balances in non-interest bearing accounts or instruments/total cash


Percentage of Restricted Cash vs. Total Cash

Understanding how the amount of restricted cash your company has is critical so your treasury can ensure you have enough liquidity to manage its operations. A high percentage of restricted cash could lead to not being liquid enough. 

Formula: Total restricted cash/total cash


Days Cash Available

Your day cash refers to the number of days your organization has where it can continue to pay its operating expenses. 

Formula: Total available cash/average value of disbursements per day


How Trovata Can Help You Better Track Treasury KPIs

Trovata, our cash management platform, helps to streamline cash reporting, forecasting, analysis, and money movement. By reducing manual cash management processes, like bank data normalization, Trovata helps you better track your daily cash flow.

Through its extensive library of open banking APIs, Trovata makes it easier to automate the consolidation and normalization of your organization’s bank data across multiple accounts.

These banking APIs connect directly to your bank accounts and collect your balance and transaction data perpetually within a Multi-Bank Data Lake™. Machine learning algorithms and artificial intelligence deliver this data across the Trovata Platform, automatically updating accurate cash reports and forecasts across your instance. 

With a comprehensive dashboard that tracks your cash flow across all your key accounts, you can gain complete visibility into your cash flow and strengthen your cash management strategy.

Download the Essential Treasury Reporting and Forecasting Guide to discover how you can better track your treasury KPIs across your business with generated, accurate cash reports and forecasts.


treasury forecasting guide

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