Setting Relevant Treasury KPIs for 2025 and Beyond

Treasury KPIs are a vital tool for tracking the progress and success of various processes and projects. Collaboration on setting these metrics and communicating the goals to other stakeholders will be critical in the year ahead to support team morale and ultimately deliver successful outcomes.

In today’s corporate landscape, treasurers face growing demands from the C-suite to demonstrate their strategic value. As companies navigate complex global markets, defining the right KPIs has become essential to track treasury effectiveness and align it with business goals.

Ensuring liquidity and optimising cash flow are central to corporate treasury, so it is no surprise that KPIs have a vital role to play here.

Tariq Farooq, Head of Commercial Sales, GTS EMEA, Bank of America (BofA), asserts: “KPIs around cash management are essential. Typical cash management metrics include cash flow forecast accuracy, liquidity available, and average cash balances – key indicators that reflect how well a company can meet its financial obligations.”

Managing bank relationships efficiently is another area ripe for KPIs. Treasury teams can track bank fees as a percentage of total cash flow, the number of banking partners, and service quality scores – internal ratings of banking partners based on service reliability and responsiveness.

Mike Richards, CEO and Founder of The Treasury Recruitment Company, enthuses: “Bank fees are a good way for a treasurer to showcase themselves by demonstrating how well they have a handle on costs.”

The balance that treasurers need to strike with KPIs in the area of bank fees is to find a way to keep a cap on costs while simultaneously not alienating their banks.

Chris King, Co-Founder, Dukes & King, reflects: “KPIs that seek to look at transactional costs in isolation, without considering a holistic picture, should be avoided where possible.”

While it should clearly be an organisational goal to improve efficiency and reduce costs, banks ultimately have overall commercial objectives. “Achieving a minimal gain in a non-collaborative way while aggravating banks and then not being in a strong position for a refinancing is probably not a great outcome,” King adds.

If a company is highly liquid, its KPIs may focus on cash visibility and allocating this cash more effectively. Meanwhile, risk management KPIs are critical for firms with significant debt or exposure to financial volatility. Metrics such as hedging effectiveness and exposure coverage ratios can highlight how well treasurers manage market risks.

Baris Kalay, Head of Corporate Sales, GTS EMEA, BofA, outlines: “A highly leveraged corporate will have more KPIs on risk management exposures and short-term funding.”

Modern treasury operations increasingly rely on technology. Metrics such as automation rates – the percentage of processes automated – system downtime, and manual adjustments required are vital measures of operational efficiency.

Richards highlights another crucial aspect: “Efficiency is another metric, tracking levels of straight-through processing achievable through treasury systems.” Such metrics reflect how well treasurers leverage technology to reduce errors and enhance productivity.

Project-specific KPIs become essential as treasury teams take on transformation projects such as technical migrations or bank rationalisations. Tracking deliverables, timelines, and budget adherence helps ensure project success while showcasing the treasury’s strategic role.

Relevant KPIs for the year ahead

Through 2025, given evolving market conditions across the globe, treasurers must be proactive and adaptable.

Priyanka Rath, Global Product Executive, Liquidity and Account Solutions, J.P. Morgan Payments, emphasises: “Understanding potential scenarios in each market where the company operates is essential for achieving the company’s business objectives – both financial and operational. Treasurers can enable agile decision-making by developing comprehensive scenario analyses for each market, considering economic, political, and regulatory nuances.”

As inflation remains above central bank targets in key regions and the impact of new tariffs by the US on various trading partners is anticipated, it makes sense that treasurers would prioritise KPIs such as cash flow forecasting accuracy, days of liquidity available, and cost of capital for the year ahead.

As Kalay puts it: “Treasurers should consider how macroeconomic and geopolitical risks translate into measurable performance indicators. The companies that succeed will be those that anticipate change – and measure it effectively.”

Given the anticipated policy divergences among central banks, monitoring FX exposures will also be critical. One area to watch is deposit rates. While GBP forward rates have remained elevated, those of EUR and other currencies have pared back quickly as inflation eased rapidly in these territories. There could be a risk of this happening in the UK.

King elaborates: “With the potential for large shifts in outlook, consider how performance would be versus the KPI and whether any actions should be taken in the coming weeks, such as pre-hedging some of the reference rate exposure, for example.”

This dynamic is perhaps even more pronounced for those who monitor against USD rates.

“There are concerns that USD rates could either increase or decrease reasonably sharply, depending on how any tariffs are implemented, with the potential for impactful counter-responses,” King notes.

Another risk-related KPI that could carry a greater weight for businesses in the year ahead is the all-in hedge rate achieved.

“The yield curve or ‘carry trade’ has been a key market theme in the second half of 2024, with very large shocks in August 2024 from the Bank of Japan,” King explains. “However, yield differential is even more pronounced in EUR-USD than pre-August 2024, and GBP-USD and GBP-EUR moves have been quite sharp, particularly for longer dates. This should be a key consideration for anyone hedging greater than two years.”

Here again, proactive approaches could be considered if treasury policy allows. “Treasurers could take basis risk, lock into the forward curve in isolation, or both depending on their circumstances,” King adds.

Automation KPIs will also be in focus in 2025. Measures such as the percentage of processes handled automatically or reductions in manual adjustments signal how well treasurers leverage technology to streamline operations.

“Digital transformation is my number one when it comes to trends driving KPI focus for next year,” says Farooq. As such, it will be a good idea for treasury teams to measure automation rates, data analytics capabilities, and the effectiveness of AI-driven real-time insights.

With treasury functions becoming ever more digital, operational risk KPIs should focus heavily on how the treasury ecosystem is protected. Metrics such as the number of detected fraud attempts, incident response times, and compliance with cyber-security protocols will be critical benchmarks. “Cyber-security will be under scrutiny in the year ahead,” Farooq predicts. “Treasurers should think about specific KPIs to prevent fraud and protect the organisation.”

With the various market challenges that treasurers face during the year ahead, stakeholder communication should also be on the priority list.

Rath advises: “Maintain open lines of communication with key stakeholders, including senior management and functional groups, to ensure alignment on financial strategies and the risk management approach.”

Tailoring KPIs to specific situations

In a world where corporate treasurers are expected to deliver precise financial management with lean teams and limited resources, implementing sensible KPIs is crucial but can be challenging.

“Treasurers tend to run small teams; they are always asked to do more with less,” states Kalay. “Therefore, implementing realistic KPIs is critical.”

This requires prioritisation and aligning goals with the treasury team and relevant stakeholders. To avoid KPI overload, treasurers might focus on a few high-impact metrics that correspond closely with the company’s strategic goals, such as cash flow forecasting accuracy, liquidity ratios, or cost of capital.

Setting KPIs in isolation can backfire. “The treasurer should involve the team when they set up the KPIs,” advises Farooq. “This ensures that the KPIs are attainable and align with the team’s capacity.”

Including team input ensures buy-in and promotes accountability. Treasurers should also consider team members’ workloads and specific areas of expertise when assigning responsibility for KPI targets.

Testing KPIs on a smaller scale can reveal potential issues before a full roll-out. “Pilot KPIs on a smaller scale before treasury fully implements them,” suggests Farooq. “This helps treasurers confirm that they are practical and the team can manage those KPIs.”

For example, if treasury team members want to improve cash visibility, they could run a pilot project on one business unit or region before scaling the initiative company-wide.

Working capital management is one area that can trip treasurers up when setting KPIs. While treasurers can monitor and steer working capital processes effectively, if they don’t have the autonomy to change payment terms for suppliers or customers they might be left with the awkward task of delivering on a KPI for which they have only limited control.

King reveals: “This can be very frustrating. However, there are many working capital levers that a treasury can deploy, and that could be considered in the KPI if the policy and risk appetite permits. This is where a treasury function can really add value and give control back to the business.”

In this scenario, the treasury’s autonomy and control must be carefully considered. “It’s vital to ensure that the operations are not just relying on treasury to bail out sub-optimal operational processes,” King notes.

A further KPI consideration is the technology available to treasurers. Before committing to advanced metrics, treasurers should evaluate whether their current systems and tools can support data collection and analysis.

Richards reveals: “Sometimes a company will have grand plans for what it wants from a treasury hire, such as enhanced cash visibility, but when asked about what system is being used, it turns out everything’s on Excel.”

He adds: “It’s fine to want robustness or security, but you can’t have that if the treasury works only on spreadsheets. KPIs and goals must be realistic.”

Measuring the intangibles

The treasurer now benefits from advanced reporting tools that deliver near real-time data from partner banks.

Rath enthuses: “Today’s reporting tools, combined with AI-driven analytics, empower informed decision-making. This is especially impactful in cash flow forecasting, where the latest solutions provide treasury teams with a comprehensive view of cash positions across multiple entities and banks. They also uncover flow patterns and optimisation opportunities, enabling the team to shift focus from routine analysis to strategic decision-making.”

Kalay agrees: “Greater data brings the ability to get process-driven KPIs.”

The shift toward real-time data and advanced messaging standards such as ISO 20022 opens up these new possibilities. “Instead of focusing on how many payments are executed, for example, treasurers can explore how to leverage the data that goes through the payment messaging and use that data as a business enabler,” Kalay adds.

This data-rich environment enables treasurers to track process-driven KPIs, such as payment-processing speed, transaction accuracy, and reconciliation efficiency. It also enables them to influence other parts of the business through better cash management and forecasting, elevating treasury from a cost centre to a strategic partner.

“Utilising payments data will also support the success of other departments and lines of the business within the company,” Kalay posits. “They can create strategies based on this data.”

Indeed, treasurers can now work in lockstep with the business and actively influence business decisions such as entering new markets, deploying cash, and gaining efficiencies at a group level.

Rath enthuses: “Technology can be instrumental in analysing customer usage patterns and running predictive analysis to drive thoughtful business decisions.”

However, adopting data-driven KPIs comes with a caveat: not all treasurers are tech savvy, nor do they need to be. Richards sees this divide regularly: “Data and tech are a big differentiator, but treasurers aren’t technologists, per se. Some treasurers love their tech and are great with data analytics and IT. But others feel that’s not their role – while they are happy to act as translators between IT and the requirements of the treasury function, it is not their driving purpose.”

According to Richards, leadership separates top-performing treasurers from the rest. “What these treasurers do have is the ability to organise people in such a way as to achieve the best results.” Successful treasury leaders know how to build teams with complementary tech and analytical skills while maintaining a strategic, big-picture focus.

Connecting with organisational goals

A well-functioning treasury cannot operate in a silo. The same is true regarding treasury KPIs, as if they are not supporting the company’s goals, they are of little value.

“The alignment of treasury KPIs with the overall business strategy is crucial,” underscores Kalay. “Treasury is becoming more of a strategic function. It’s not only managing risk or simply a cost centre – the tools that treasurers use are business enablers.”

Consider working capital optimisation, a classic treasury KPI. “By its very nature, this is not only touching treasury,” Kalay highlights. “Treasurers should work with colleagues in procurement, legal, tax, and IT to ensure the KPIs are in place and working well.”

This cross-functional approach helps ensure that treasury’s performance contributes directly to broader financial and operational goals.

Farooq emphasises that treasury’s role extends far beyond managing cash and mitigating risk. “It’s essential for treasury to align with the company strategy because it’s also important for treasury to support the business’ broader goals,” he says.

For example, if a company pursues growth through acquisitions, treasury KPIs should reflect that strategy. “There should be KPIs around liquidity and capital availability,” Farooq explains. This proactive alignment enables treasury to drive growth.

Treasurers also play a critical role in industries such as e-commerce, where efficient payment processing, fraud prevention, and cost management are essential. “As treasury is now playing a more strategic role, their KPIs will also impact other businesses,” Kalay notes. “This underlines the importance of co-ordination with other stakeholders when establishing these KPIs.”

In the same way, industry trends and market performance that impact other parts of the business can have a knock-on effect on treasury, which necessitates regular reviews of KPIs to ensure they are still fit for purpose.

Rath outlines: “Changes in the business environment necessitate open discussions about the relevance and achievability of these goals.”

For Richards, the connection between treasury and wider finance KPIs is crucial. “The most successful treasurers I’ve seen are the best supporters of their CFOs,” he says. “The more that the treasurer can help their CFO and support them around budgeting, FX, risk management – and align treasury’s KPIs with those of finance – the better.”

Working smarter, not harder

KPIs can be powerful tools for driving success, but treasurers must balance performance goals with team morale to ensure KPIs become motivators, not burdens.

Richards warns that setting overly ambitious KPIs can backfire: “Burnout is real, and nobody wants to join a team struggling with unrealistic expectations.”

To avoid this, he recommends focusing on steady progress rather than perfection. “It is important to set treasury KPIs together as a team and work on them with that outlook,” he adds. “Focus on progress, not perfection. KPIs can be used as a development tool.”

By collaborating on KPI design, treasury teams can align metrics with business goals and day-to-day realities. This participatory approach fosters engagement and reduces resistance. Clear communication as to why certain KPIs are on the horizon can significantly ease implementation. Kalay emphasises that transparency helps teams see the bigger picture.

“Outlining why the specific KPIs are set and why they are important is fundamental,” he says. “Being able to explain how they will help, not just treasury, but the whole company to achieve its targets, is extremely important in managing team morale.”

Communication within treasury and with external stakeholders should stretch beyond the KPI itself. It is also critical to ensure that non-controllable factors, such as market events, are factored in appropriately and shared with all who need to know.

King outlines: “It is essential that all stakeholders are made aware and bought into the concept of these non-controllable factors. This includes the CFO and board, and any remuneration.”

There can be myriad reasons why a KPI has outperformed or underperformed that were outside the control of treasury. In these scenarios, it is vital to ensure that communication from treasury for any extenuating factors is proactive and early. “Notifying significantly after the event isn’t particularly helpful, as often mitigating action could have been taken,” King adds.

Rath points out that the recognition and celebration of achievements when KPIs are met or exceeded are key parts of this equation. “This reinforces positive behaviours and motivates the team to maintain high performance.”

The right KPIs can also improve efficiency over time, as Kalay explains. “The more data involved in the process, the more it will create additional efficiencies in the coming cycles, months or years.”

When teams see that KPIs lead to streamlined processes and fewer manual tasks, they are more likely to embrace them. During the year, treasurers should share KPI results with the entire team transparently.

Rath notes: “Using dashboards or reports that clearly highlight successes and areas for improvement can drive a culture of accountability and continuous improvement.”

Effective treasury KPIs are more than performance metrics – they’re strategic tools that drive business growth, enhance team efficiency, and boost treasury’s visibility at the executive level. By aligning KPIs with corporate goals, involving teams in the process, and focusing on progress, treasurers can turn performance management into a powerful enabler of long-term success.