Cash Management in Manufacturing: Benchmarks, Technology, Challenges, Opportunities

In the first blog of the five-part blog series, Cash Management in a Digital World: Today’s Landscape and What’s on the Horizon, we focused on the aggregate results and implications of the Cash Management in a Digital World survey. This blog will analyze the results from treasury professionals that work for manufacturing companies.

The most common cash management challenges faced by treasury teams in manufacturing are:

• Lack of cash forecasting speed and accuracy
• Difficulties in collaboration with accounts payable (AP) and accounts receivable (AR)
• Time misallocated on non-value-add activities

Figure 1. Primary Tool Being Leveraged in Managing Cash

These issues are far from independent, and technology often plays a role in each of these issues. The use of a TMS as the primary cash management tool is high among the manufacturing companies surveyed (42%), while the use of spreadsheets is surprisingly low (18%). On the surface, technology in and of itself is not the main issue relative to the cash management challenges faced by manufacturing teams. The right technology and functionality are often less than half the battle that treasury teams face in leveraging technology to deliver cash management success. It is also about how technology is used to deliver visibility into all cash movements, make data driven decisions regarding payments and receipt types and timings, and facilitate collaboration between all those who impact cash inflows and outflows. This is an area of opportunity for manufacturing treasury leaders to explore, and may offer low hanging fruit to impact the bottom line.

Among survey respondents, treasury teams in manufacturing identified collaborating with AP and AR colleagues as the top cash management challenge more often than treasury teams that work at companies in healthcare, higher education, warehousing and transportation/logistics. Twenty-three percent (23%) of manufacturing treasury teams identified a lack of collaboration with AP and AR colleagues as the top challenge in cash management.  Almost half (49%) of treasury teams shared that treasury and AP work in silos and another 23% reported that treasury and AR work in silos. The evidence of a culture of cash management silos in manufacturing treasury teams is also evident in that 44% of treasury professionals reported that silos exist within their very own treasury team. 

The prevalence of a culture of cash management silos is confirmed in that 25% of treasury professionals reported that there was no real reason for the existence of cash management silos, and 26% shared that they have no incentive to collaborate within their treasury teams and/or with AP and AR colleagues. Treasury leaders in manufacturing should invest in creating a culture of cash management collaboration as cash management silos cause a drag on the bottom line.

Will manufacturing 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”. Over fifty percent (54%) of companies surveyed indicated they expect to add to their treasury staff in 2025 and 65% indicated that they expect to increase the professional development opportunities available to treasury team members.

The top three areas of focus of professional development of manufacturing treasury team members are upgrading cash management, data management, and data analytics skills. It’s important to note that each of the skills listed in Figure 2. are related to cash management related technology.

Figure 2. Top Skills for Manufacturing in 2025

The next question to address is if manufacturing companies will invest in upgrading technology related to treasury operations in 2025.  Over three-fourths (81%) of companies surveyed plan to do just that in 2025. It is clear that manufacturing companies will be investing in the technology and people that 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 download the comprehensive Cash Management in a Digital World: Today’s Landscape and What’s on the Horizon survey report.

Stay tuned for our next blog in this five-part blog series which will focus on an analysis of the results from treasury professionals that work for healthcare companies.