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By Ernie Humphrey, Treasury Webinars
The previous blog in our five-part series analyzed the results from a survey of treasury professionals who work for manufacturing companies. This blog will focus on results from treasury professionals working for healthcare companies.
The most common cash management challenges faced by treasury teams in healthcare are:
Among survey respondents, treasury teams in healthcare identified a lack of forecasting speed and a lack of cash forecasting accuracy as the top cash management challenge more often than treasury teams that work at companies in higher education, warehousing, and transportation/logistics. Twenty-four percent (24%) of healthcare treasury teams identified a lack of cash forecasting speed as the top challenge in cash management, while 23% identified a lack of cash forecasting accuracy as the top challenge. This data suggests that treasury teams in healthcare might not have access to the right technology. Because spreadsheets and/or disparate systems require treasury teams to perform manual/repetitive tasks, it can be difficult to forecast cash accurately and/or to deliver forecasts in a timely manner.
The use of a Treasury Management System (TMS) as the primary cash management tool is relatively low among healthcare companies surveyed (30%) compared to treasury teams that work at companies in real estate (59%), manufacturing (42%), transportation/logistics (54%), and warehousing (38%), while the use of spreadsheets is relatively high (28%). A lack of technology may be a root cause of significant cash management challenges faced by healthcare treasury teams. This data represents an opportunity for healthcare treasury leaders to explore and may offer low-hanging fruit to impact the bottom line. Healthcare treasury leaders can invest in upgrading technology to mitigate or eliminate non-value add tasks related to cash management and to deliver more timely and accurate cash forecasts.
Figure 1. Primary Tool Being Leveraged in Managing Cash
The right technology and functionality are not the only challenges that treasury teams face in delivering cash management success. Cash management silos exist within many healthcare treasury teams, with fifty percent (50%) of healthcare treasury professionals reporting that their treasury and AP teams work in silos and thirty percent (30%) reporting that treasury and AR work in silos. Furthermore, 41% shared that silos exist within their very own treasury team. These results suggest that a culture that breeds cash management silos may exist in the healthcare companies surveyed. This can hinder cash management success.
The prevalence of a culture of cash management silos is confirmed in that 30% of treasury professionals reported that they have no incentive to collaborate, 22% shared that there was no real reason for the existence of cash management silos, and 22% shared that they are not expected to collaborate. Treasury leaders in healthcare should invest in creating a culture of cash management collaboration, as cash management silos cause a drag on the bottom line.
Will healthcare companies invest in having the right people with the right skill sets to more effectively manage cash in 2025? The answer is a resounding “yes”. Forty-three percent (43%) of companies surveyed indicated they expect to add to their treasury staff in 2025, and 70% indicated that they expect to increase the professional development opportunities available to treasury team members.
The top three focus areas for the professional development of healthcare treasury team members will be upgrading cash management, data management, and IT/software skills. Each of the skills listed in Figure 2 is related to cash management technology.
Figure 2. Top Skills for Healthcare Treasury Teams to Upgrade in 2025
The next question to address is whether healthcare companies will invest in upgrading technology related to treasury operations in 2025. Over two-thirds (67%) of companies surveyed plan to do just that in 2025. It is clear that healthcare companies will invest in the technology and people they believe will impact the strategic value delivered by their treasury teams in 2025. A blind spot that these companies would also do well to address is the existence of silos within their treasury teams and between treasury and AP, and treasury and AR.
If you want to discover more of the results, including analysis relative to industry and company size, and implications of the survey results, you can read the comprehensive Cash Management in a Digital World: Today’s Landscape and What’s on the Horizon survey report.
Stay tuned for our fourth blog in this five-part series, which will analyze the results from treasury professionals working for higher education institutions.
