Sailors once gauged their proximity to land by watching how swells refracted off the bow. Navigating treasury transformation demands the same attention and discipline: set a clear bearing, read the environment for tailwinds, headwinds and shifting currents, and chart the most appropriate route to reach the destination safely and efficiently.
Charting the path forward starts with a current state assessment that pinpoints gaps, risks and opportunities relative to the desired future state, anchored in the organisation’s ambitions and constraints. From there, an implementation roadmap can be developed to bridge the two states by sequencing initiatives coherently, factoring impact, complexity and interdependencies.
Done well, transformation strengthens financial sustainability, optimises liquidity, institutionalises disciplined risk responses, and embeds scalable processes and effective controls, equipping treasury with the foresight to anticipate scenarios and the agility to take timely corrective action.
Value‑add treasuries shift the focus from execution to performance. They drive efficiency by standardising processes and automating core routines
Treasury maturity spectrum
No two treasury functions are the same. Varying maturities and ambitions place organisations at different points along the spectrum. Business complexity is a key driver, but operating model design choices and organisational culture also matter.
In a tactical model, treasury is execution‑heavy, focused on mechanical tasks such as funding accounts, navigating multiple bank portals and reconciling positions manually. As volumes rise, single points of failure, fragmented processes and control weaknesses create bottlenecks, and hamper scalability. The function becomes reactive, with reduced visibility and limited capacity to anticipate and manage scenarios effectively.
Value‑add treasuries shift the focus from execution to performance. They drive efficiency by standardising processes and automating core routines. They also share liquidity and market insights that enable better decisions across the business and generate tangible savings by reducing liquidity ‘leakages’, strengthening cash investment discipline and negotiating favourable banking terms.
Strategic treasuries operate with an enterprise lens. They influence capital allocation, working capital levers, dividends and balance sheet structure, translating market volatility into actionable choices. The hallmark is not complexity, but integration and consistency: policy‑aligned decisions, performance measurement and robust controls that scale with the organisation.
Target operating model (TOM) design
Treasury’s TOM should be articulated holistically as a comprehensive blueprint for the future state, ensuring that the right foundations, building blocks and enablers are in place to drive and sustain change. Progressing from a tactical to a strategic treasury requires:
- A persuasive business case that translates treasury work into outcomes leadership can measure and will sponsor. Executive backing is key because transformation involves investment and cross-functional change. Benefits quantification does not need to be perfect, but it must be transparent, defensible and directionally correct. The most credible cases combine:
Hard financial benefits: yield uplift from investing previously idle balances; avoidance of borrowing costs; improved spreads on deposits and FX execution.
Risk mitigation: reduced probability of covenant breaches, counterparty limit breaches and liquidity events; lower fraud and operational loss exposure through stronger controls.
Efficiency and scalability: higher productivity without linear headcount growth; system-embedded controls that reduce manual effort and human errors.
- A clear strategy to make the operating model measurable. Strategy should translate ambition into objectives, KPIs and design principles that shape treasury’s set-up and day-to-day activities. Typical themes include:
Liquidity visibility and optimisation: daily visibility, improved forecast accuracy, disciplined buffer sizing, efficient funds mobilisation, reduction of idle or non‑interest‑bearing balances, and improved spreads on cash investments.
Capital resilience: codified leverage thresholds aligned to Board-approved risk limits; protected debt servicing capacity and covenant headroom; managed cost of capital; diversified funding sources; reduced refinancing risk through maturity laddering and contingency planning.
Financial risk mitigation: the aim is predictability and affordability, not opportunistic profit. Effective mitigation of FX, interest rate, counterparty and covenant risk requires an end-to-end risk cycle: identifying exposures (budget/forecast process and financial statements); quantifying and stress-testing them (sensitivity and scenario analysis with pre-agreed triggers); defining permitted instruments, tenor and minimum coverage (with staggering to avoid concentration); and monitoring policy compliance and effectiveness as exposures and business plans evolve.
Operational efficiency and effectiveness: reduced operational risk through scalable controls, digitised workflows that minimise manual workarounds, strong segregation of duties, and auditability.
- Governance: a fit-for-purpose governance framework translates the Board’s risk appetite into actionable policy, suitable decision rights (delegation of authority) and independent oversight (eg, committee) that do not compromise agility at the expense of control.
- People and capability: define roles and responsibilities, segregation of duties, training/upskilling plans and stakeholder interaction touchpoints. Capability building is required not only with the treasury team, but also across critical internal and external stakeholders to ensure the broader ecosystem is conducive and service expectations are explicit. As automation increases, the skill mix can shift towards analytics, stakeholder partnering and policy governance.
- Processes: define end-to-end processes across cash, funding, risk, investment and banking, with clear control points and reporting requirements.
- Systems: technology is a major lever, but only when paired with connectivity and data governance. A TMS should be treated as a business-owned implementation, enabled by IT rather than run as an IT initiative. As treasury’s engine, the TMS sits at the centre of the finance technology landscape, interfacing with the ERP, trading, market data and banking platforms. Key design considerations include: modules in scope, workflow and reporting design, ERP integration points, data ownership and controls, and bank connectivity model (host-to-host/SFTP vs API vs SWIFT).
The true destination of treasury transformation
Treasury transformation is a multifaceted and dynamic exercise, but, with the right planning, it can be delivered with clarity and control. Ultimately, the destination is not ‘a new structure’. It is a treasury function that can deliver consistently on its mandate: enabling corporate strategy, safeguarding liquidity and building confidence in the way a company’s finances are steered, whatever the weather.
About the author
Sleiman El Homsi AMCT is group treasurer of Shamal Holding
