How to Lower Cost of Treasury Management for CFOs in 2025

The global treasury management market is expected to reach $12.6 billion by 2030, up from $5.1 billion in 2023, according to recent industry projections. This growth reflects the increasing complexity and importance of treasury operations in modern businesses. As companies expand globally and financial markets become more interconnected, effective treasury management has become crucial for financial stability and growth.

Many companies maintain relationships with numerous banks across different regions and entities. While some diversity is necessary, an excess of banking partners often leads to higher costs, fragmented visibility, and communication challenges.

Research by McKinsey shows that almost half of multinational companies manage hundreds of bank accounts, and over 10% handle more than 1,000. This fragmentation can significantly increase operational costs and complexity.

By focusing on core banking relationships, companies can negotiate better pricing for services, reduce the number of systems and connections needed, lower maintenance costs, and increase transparency over operations.

When evaluating bank relationships, consider geographic coverage, product offerings, pricing structures, technology integration options, and service quality. Aim to select 2-3 global banks that can handle most of your needs, supplemented by local banks where necessary. This focused approach allows you to leverage your full relationship value with key partners.

As companies grow, particularly through mergers and acquisitions, they often accumulate an unwieldy number of bank accounts. This proliferation can lead to higher bank fees, increased manual reconciliation work, reduced cash visibility, and greater fraud risks.

To optimise your account structure:

Conduct a comprehensive audit of all existing accounts and their purposes.

Close dormant or unnecessary accounts.

Consolidate accounts where possible, organising them by entity or currency.

Implement virtual account structures to reduce the number of physical accounts.

Centralise the process for opening and closing accounts to prevent future proliferation.

A streamlined account structure not only reduces direct costs but also improves cash visibility and control, enabling more effective liquidity management.

Manual, spreadsheet-based treasury processes are time-consuming, error-prone, and costly. Investing in treasury management technology can dramatically improve efficiency and reduce operational costs. The global treasury and risk management software market is projected to grow at a compound annual growth rate (CAGR) of 8.4% from $5.88 billion in 2024.

When evaluating treasury technology options, identify your current pain points, prioritise must-have features, and look for solutions that integrate seamlessly with your existing banks and ERP systems.

Key areas to target for automation include:

Cash positioning and forecasting

Bank reporting and reconciliation

Payment workflows

Accounting processes

Risk management

While technology requires an upfront investment, the long-term savings from increased automation and productivity are substantial. However, using the wrong treasury management software can also lead to financial losses.

Payment operations often consume significant resources in treasury departments. By optimising payment workflows, you can achieve major efficiency gains and cost savings.

Focus on the following areas:

Shift from checks to electronic payments like ACH where possible.

Leverage API and ERP integrations for seamless payment processing and strategic timing to enhance working capital.

Consolidate payments through fewer bank channels and standardise payment formats, like ISO 20022 XML.

Strengthen approval workflows and payment controls to reduce fraud risk.

Use specialised providers for international payments to reduce fees compared to traditional correspondent banking.

Inaccurate cash forecasting can lead to inefficient liquidity management, causing companies to either keep excess idle cash as a buffer or rely too heavily on expensive external funding. This can significantly impact a company's financial health and decision-making processes.

To enhance your cash forecasting capabilities, consider centralising data from banks and internal systems to create a unified view of your financials. Utilising statistical modelling techniques can further increase the accuracy of your forecasts. Additionally, incorporating business intelligence insights, such as sales pipelines, can provide a more comprehensive perspective on your financial outlook. Regular variance analysis is also crucial in refining your forecasting models, allowing for continual improvement and adaptation to changing circumstances.

Better forecasting allows you to reduce idle cash, minimise borrowing costs, and make more strategic decisions on investments and capital allocation.

Working capital optimisation allows companies to free up cash from operations rather than relying on external funding. Key levers include improving collections processes, optimising inventory levels, extending payables where possible, and leveraging supply chain finance tools.

CFOs should collaborate closely with treasury, procurement, and business units to identify working capital opportunities. This cross-functional approach can lead to significant improvements in cash flow and reduced reliance on external financing.

Reducing treasury management costs isn't about cutting corners. It's about making smart, strategic decisions that improve efficiency without compromising effectiveness. By optimising your banking relationships, leveraging technology, refining cash management, handling FX risk effectively, and developing your team, you can significantly lower costs while enhancing your treasury operations.

Remember, this is an ongoing process. Regularly assess your operations, prioritise your initiatives, and track your progress. With the right approach, you can transform your treasury from a cost centre into a value-adding partner for your business.