Treasury’s role in forging a cash-first culture

Making cash a shared priority is a strategic imperative for the treasury function. But what does a cash-first culture really look like? And which steps can treasury leaders take to embed cash discipline across the enterprise? Discover the tried-and-tested strategies shared by treasury leaders at a recent Taulia Treasurers Club event.

A cash-first culture can make the difference between navigating volatility successfully and falling victim to it. But what does this look like in practice?

In a nutshell, it’s about embedding cash discipline across the organization, and empowering the entire business to think ‘cash-first’. But to achieve that, treasury teams need to move beyond traditional financial policies and actively shape behavior, processes, and mindsets throughout the organization. This doesn’t happen by accident – rather, it’s achieved through deliberate design, partnership, and persistence that can only be achieved by following a practical framework.

A recent Taulia Treasurers’ Club event explored how a cash-first culture can help companies drive greater cash visibility, improve liquidity management and working capital management, and increase control and accountability over cash. Read on to learn about the peer-tested strategies discussed during the event and how they can be deployed to make cash a shared priority.

The blueprint: building a resilient and transparent foundation

A resilient culture starts with the ability to see clearly and plan for disruption. And for this, treasury teams need a clear view of their liquidity, both now and in the future.

Visibility over cash can be a challenge for companies with fragmented ERP systems and pooled accounts. However, by treating treasury as a ‘cash control room’ that brings together mission-critical information, treasurers can achieve the real-time, unit-level cash intelligence needed to plan ahead and optimize liquidity management.

When it comes to planning for disruption, it’s not enough to conduct periodic stress tests – a strategic treasury also needs to embrace dynamic cash flow forecasting that continuously adapts to new information as it arises. Scenario planning should be codified with ‘crisis playbooks’ that detail how the company would navigate different types of disruption.

The language of cash: redefining the metrics that drive behavior

In order to promote a cash-first mindset, it’s important to speak the right language – and that means using suitable metrics. Since traditional key performance indicators (KPIs) can be misleading, treasurers should focus on advanced metrics that can drive the right behaviors throughout the organization.

For example, it’s important to look beyond EBITDA – which overlooks changes in working capital – and introduce ‘behavior-safe’ KPIs that will encourage others in the organization to prioritize cash. For example, ratios such as the Cash Recycling Ratio and DSO (Days Sales Outstanding) can be more effective when it comes to measuring true operational health.

Attributing ownership clearly is also essential when it comes to driving behavior. For this, treasurers should assign cash flow responsibility at the business unit level using data enrichment and machine learning.

The cross-functional alliance: making working capital a team sport

Treasury may be the architect of the framework needed for a cash-first culture. But when it comes to executing the framework, the entire organization has a part to play. As such, effective cross-functional alliances are needed between treasury, commercial, procurement, and operations teams.

To make working capital a team sport, treasurers should consider forming a ‘cash council’ – in other words, a cross-functional team responsible for aligning goals and harmonizing data between different teams, as well as addressing any barriers to progress.

Working capital management programs such as supply chain finance and dynamic discounting should be framed around shared goals, such as supplier health and resilience, so that everyone understands the benefits.

And on the commercial side, companies should instill cash discipline by adopting cash-positive contract terms and billing hygiene.

Advanced smithing: mastering global cash and technology

In a global enterprise, forging a cash culture involves mastering complex challenges and choosing the right technology.

Challenges can arise when cash is trapped in particular jurisdictions, for example, due to local regulatory or tax constraints. To free up trapped cash, treasurers need to devise effective strategies for repatriation, including smart structuring, intercompany settlements, and coordinating closely with tax colleagues.

Additionally, technology plays a crucial role in supporting a cash-first culture. This means having the right tools for the job, such as electronic payables and virtual cards. However, these are targeted instruments, rather than cure-alls. When it comes to flexibility, there’s no substitute for an open, multi-funder platform that provides access to a diverse range of funding sources, as well as different levers for optimizing working capital.

Conclusion: culture is forged by leaders, not systems

Technology and platforms are essential enablers, but it’s important to remember that a true cash-first culture is ultimately driven by effective treasury leadership.

A cash-first culture originates from the top down and is embedded within the organization by fostering trust and educating its members. Above all, it means partnering effectively with people from the relevant functions – so rather than acting as ‘policy police’, treasurers should position themselves as strategic partners that empower the entire business to prioritize cash.