Geopolitical tensions, trade tariffs, the rise of generative AI, and escalating payments fraud have made 2025 a defining year for disruption. Across boardrooms and balance sheets, corporate treasurers are being called upon to safeguard assets, enhance cash flow visibility, improve risk management, strengthen payments security, and optimize liquidity management in an environment that remains uncertain yet fiercely competitive.

Liquidity management remains the bedrock of corporate treasury operations. It encompasses the strategies, processes, and tools that enable corporations to access cash when and where it is needed to meet short-term financial obligations. Effective liquidity management not only ensures operational continuity but also supports long-term financial resilience and strategic agility.

As highlighted in The Guide to Excellence in Treasury eBook by CTMfile and Strategic Treasurer, a leading treasury consulting firm, “What gets measured gets managed —as long as it is seen, understood, and linked to corporate goals.” This principle underscores why identifying and tracking the right liquidity metrics is essential for maintaining prudent control and driving growth.*

The Executive Guide: Selecting the Right Treasury Metrics by the Association for Financial Professionals® (AFP) further reinforces this perspective, noting that “Metrics give treasury teams a quantifiable way to measure performance, monitor progress and spark meaningful conversations with internal and external stakeholders.”

As outlined in the AFP Executive Guide, treasury metrics generally fall into two categories: efficiency metrics and effectiveness metrics. Efficiency metrics capture productivity and workflow, while effectiveness metrics measure how successfully a process achieves its intended outcomes.

AFP’s Executive Guide frames liquidity through paired efficiency and effectiveness metrics so that when the metrics work in tandem, efficiency supports effectiveness. When used together, these measures create a cohesive view of treasury performance—enabling treasurers to showcase measurable value to top management and align daily operations with overarching corporate strategy.

The following section explains the liquidity management metrics outlined in AFP’s Executive Guide—providing insight for corporate treasury and finance executives seeking to strengthen financial visibility, resilience, and performance.

Efficiency metrics: speed, visibility, and control

1. Cash visibility vs. total cash: This metric tracks how much of the company’s total cash is visible to treasury in near real time. High visibility minimizes blind spots, enabling better cash positioning, forecasting accuracy, and liquidity management
2. Time to produce daily cash report: This metric captures the time required to prepare the consolidated daily cash position. Shorter reporting cycles indicate process efficiency and enable faster investment, borrowing, and hedging decisions.
3. Percentage of automated reconciliations: The metric reflects the proportion of reconciliations completed automatically rather than manually. Greater automation reduces errors and operational risk while freeing treasury staff to focus on analysis and forecasting.
4. Cash forecast accuracy: Cash forecast accuracy measures the precision of projected cash inflows and outflows against actual outcomes over specific time horizons. Accurate forecasting strengthens liquidity management by improving short-term financing, investment, and working capital decisions.
5. Available liquidity: Available liquidity quantifies the immediately deployable financial resources —cash, marketable securities, accessible credit lines, and current portions of long-term debt, less net interest expense. It provides a clear picture of the company’s ability to respond quickly to operational needs, volatility, or unforeseen shocks.
6. Account balances vs. benchmark: By measuring actual account balances against established benchmarks or thresholds, treasury departments can identify excess cash or underfunded accounts. Variances highlight opportunities for pooling, sweeping, or redeploying funds to optimize liquidity.

Effectiveness metrics: resilience, access, and returns

1. Cash conversion cycle (CCC): CCC represents the number of days a business takes to convert its investments in inventory and other resources into cash from sales. A shorter cycle shows that a company can quickly turn its investments into cash, allowing treasury to boost financial agility, working capital efficiency, and handle internal and external pressures effectively.
2. Liquidity survival rate (days): This measures how many days a company can meet its obligations or sustain operations following a market shock, using existing liquidity. It serves as a key gauge of organizational financial resilience for decision makers.
3. Trapped vs. unrestricted cash: This metric compares the portion of cash tied up by legal, tax, or corporate structural restrictions with cash that is readily available for immediate use. Lowering trapped cash increases internal funding flexibility and reduces the need for external borrowing.
4. Interest income vs. budget: This metric measures the difference between earned interest on cash holdings and budgeted expectations, providing insight into treasury’s effectiveness in optimizing returns.
5. Interest income vs. market benchmark: This metric measures how interest earned on cash holdings performs relative to market benchmarks, highlighting whether the treasury’s investment strategy achieves competitive yields within defined risk parameters.
6. Total return on medium/long‑term cash vs. market‑based benchmark: This measure extends performance evaluation beyond simple yield capture by incorporating mark-to-market valuation changes and reinvestment impacts. This metric assesses how effectively treasury manages term liquidity against prevailing market conditions and determines whether portfolios are achieving risk-adjusted returns in line with benchmark indices. 

While efficiency and effectiveness metrics are vital for evaluating treasury performance, the function’s true value goes beyond the numbers. As the AFP Executive Guide observes, although these measures are quantifiable, capturing treasury’s strategic value can be more challenging. The AFP Executive Guide recommends three approaches to doing so: tracking the accuracy of long-term forecasts, analysing the volume and type of operational support requests, and developing self-service tools to empower other departments.

Together, these approaches underscore treasury’s evolving role—not only as a guardian of liquidity and risk but also as a strategic enabler.

Looking ahead, the AFP Executive Guide notes that the continued adoption of sophisticated technologies will enable treasury teams to collect data enterprise-wide and develop richer, more actionable metrics—speeding up reaction time, enhancing scenario planning, and supporting smarter, faster decision making.

Ultimately, efficiency and effectiveness metrics provide a foundation for optimizing performance, mitigating risk, and supporting corporate strategy. When complemented by measures of strategic value and amplified by technology, they enable corporate treasury to move beyond measurement—to interpretation, influence, and impact. As the AFP Executive Guide: Selecting the Right Treasury Metrics emphasizes, the right metrics do more than assess performance—they help treasurers demonstrate value, drive continuous improvement, and protect the financial health and future of their organizations.

 

 ⃰ Disclosure: Strategic Treasurer owns CTMfile.