Payment 
Treasury sets the rate every payment decision runs through and selects the modalities the firm uses to pay suppliers and collect from customers. The rate values payment float, sets the hurdle on early payment evaluation, and prices the supplier financing structures the technology and financing relationships make available. The Payment Yield line expresses the result.
Treasury is already allocating capital through payment structure. Payment Yield is the measurement that exposes it.
Treasury’s authority over these decisions is well-established in the academic record. Treasury manages the firm’s choice between cash holdings and credit lines as instruments of liquidity (Lins, Servaes, & Tufano, 2010), holds cash against cash flow uncertainty (Bates, Kahle, & Stulz, 2009), structures hedging policy to keep internal funds available for investment (Froot, Scharfstein, & Stein, 1993), and recommends accounting positions on financing arrangements that affect balance sheet presentation (FASB, 2022). Each authority shapes how the firm pays its suppliers.
Issue 23 introduced the Payment Yield line as the executive measurement that aggregates the financial return generated through supplier payment decisions (Jasinski, 2026c). The line consolidates returns that already post to the general ledger across AP, Treasury, and Procurement in different categorizations. The aggregation is the contribution. This issue picks up the function-by-function build the Office of the CFO needs to populate that line. Treasury contributes one upstream authority and three downstream inputs that move the line more than any inputs from any other function: the modality selection that decides which payment and collection mechanisms the firm uses at all, the cost of capital methodology that values float, the technology and financing relationships that return rebate and route financing infrastructure, and the classification position that determines balance sheet presentation of supplier finance program obligations. The Payment Yield line expresses those inputs in the same frame the rest of the finance function already reads margin, cost of capital, and working capital.
What Treasury already manages
The corporate liquidity literature establishes Treasury’s authority over the firm’s cost of capital position. Opler, Pinkowitz, Stulz, and Williamson (1999) document that firms with strong growth opportunities and riskier cash flows hold higher cash ratios, while firms with strong capital market access hold lower ratios. Almeida, Campello, and Weisbach (2004) provide the empirical signature, showing financially constrained firms save cash out of cash flows at a positive sensitivity while unconstrained firms do not. Bates, Kahle, and Stulz (2009) extend the analysis through 2006, finding the average U.S. industrial cash-to-assets ratio more than doubled from 1980 as cash flows became riskier. Treasury holds the firm’s cost-of-capital view at all times because the firm’s investment policy depends on it.
The hedging literature places Treasury in the same governance position. Froot, Scharfstein, and Stein (1993) developed the framework that hedging adds value when external finance is costly to the firm, by ensuring internal funds remain available for investment, with Stulz (1996) refining the goal as protection against lower-tail outcomes that would force the firm to forgo investment. Lins, Servaes, and Tufano (2010) survey CFOs across 29 countries and find lines of credit and cash hedge different risks, with cash buffering shocks and lines funding opportunity. Each finding centers on Treasury as the function that manages the price of capital across states of the world.
The 2025 AFP Liquidity Survey of 254 U.S. treasury professionals captures the operational version of the same authority. Safety is the top short-term investment objective for 61% of organizations. Bank products are the primary short-term investment vehicle for 46% of respondents. The Treasurer reads those rates daily. The rest of the finance function consumes them once a quarter at most. That asymmetry is the basis for Treasury owning the cost of capital methodology that Payment Yield reporting runs on.
How Treasury moves Payment Yield
Issue 2 introduced the formula that organizes the line (Jasinski, 2025a):
Payment Yield = Capital Return × Supplier Acceptance
Both terms operate inside the modality stack Treasury selects. Capital Return only exists for modalities the firm runs. Supplier Acceptance only matters for modalities the firm offers. Card programs, ACH infrastructure, wire access, lockbox arrangements, SCF facilities, embedded lending integrations, and direct debit programs all sit inside Treasury’s modality authority. Selection precedes optimization.
Treasury sets Capital Return through the rate and the contract structure. Treasury shapes Supplier Acceptance through the economics offered to the supplier base. Payment Yield is the product of those two forces. Payment Yield is a function of capital design, not payment execution.
Capital Return moves through the rate the cost of capital methodology assigns to float, the rebate the bank-negotiated card contract returns, and the classification that decides whether Tier 2 supplier finance obligations expand working capital capacity or consume covenant headroom. The float component is the largest single Treasury contribution at most companies. The yield on payment float is a direct application of the firm’s cost of capital, computed daily by Treasury and quoted in the same units the rest of the finance function uses for capital allocation decisions. The rebate component is the visible Treasury contribution because every basis point sits inside a contract Treasury negotiated with the card-issuing bank. The classification component is invisible until the auditor reviews it, at which point Treasury defends a position the company has been operating against for the full year.
Supplier Acceptance moves through Treasury authority too, on a longer chain. The standard view holds that Treasury enables the mechanism: a supplier accepts virtual card when the payment pulls cleanly through a portal Treasury approved, accepts early payment discounts when Treasury arranged the funding source, accepts supply chain finance when Treasury secured investment-grade pricing from a bank the supplier already trusts. Wuttke, Rosenzweig, and Heese (2019) document that financially constrained suppliers adopt SCF faster when the economics favor them, evidence that supplier-side capital terms drive acceptance. Klapper, Laeven, and Rajan (2012) show discount and maturity terms moving systematically with supplier risk and bargaining position, evidence that the offer Treasury structures shapes the response. Treasury can structure the offer the supplier sees. A flat rebate contract from the card-issuing bank produces flat acceptance economics. A tiered rebate contract that pays 1.8% above 50% supplier acceptance and 2.0% above 65% puts the bank’s incentives directly behind supplier conversion, because higher acceptance produces higher card volume produces higher interchange revenue for the bank. The bank funds the conversion campaign because the contract structure made conversion the bank’s commercial interest. SA rises because the offer became economically dominant for everyone in the chain.
The same logic runs through Tier 2. A flat-rate SCF facility produces flat enrollment. A facility priced in tiers, with strategic suppliers accessing SOFR plus 100 basis points and long-tail suppliers accessing SOFR plus 250, gives the buyer’s strategic supplier base access to a cost of capital meaningfully better than they could source independently. Operating cash deployment carries the same leverage. Treasury controls where the company’s operating cash sits, and platform partners that want operating deposits as part of the relationship will negotiate platform economics that lower the supplier-side cost on payment products the platform issues. Lower supplier cost equals higher SA equals higher yield to the buyer. The leverage is Treasury’s. The conversion is the platform’s. The yield flows through the buyer.
The accounting frame on classification
ASU 2022-04, effective for fiscal years beginning after December 15, 2022, created the disclosure requirement under ASC 405-50 (FASB, 2022). The standard requires buyers in supplier finance programs to disclose the program’s nature, activity, and potential magnitude. The standard left the classification question to management judgment. Trade payable keeps the obligation inside accounts payable where DPO absorbs it cleanly and the working capital position looks unchanged. Short-term debt moves the obligation onto the debt line where it raises gross debt and consumes headroom under the debt-to-EBITDA covenant the company’s credit facility turns on. Same program, same economics, two different balance sheets. The Treasurer’s recommendation decides which one the company reports. Classification determines whether Payment Yield expands the firm’s capital capacity or competes with it.
The accounting decision is a Treasury decision because Treasury holds the relationship with the bank funding the program, structures the facility’s recourse and obligation provisions, and lives with the consequences of the classification through the next debt covenant test. The CFO signs the disclosure. The Treasurer builds the position.
Case study: a $180 million manufacturer
Consider a $180 million manufacturer running across 800 suppliers, with $45 million flowing through a virtual card program and a $7.4 million supply chain finance facility plateaued at 25% of trade payables. The modality stack is in place. Treasury selected the virtual card program over additional check volume four years ago and arranged the SCF facility two years later. The current Treasurer inherits the stack and works through four optimization moves: one that lifts Capital Return through the rate, one that lifts both Capital Return and Supplier Acceptance through contract structure, one that lifts Supplier Acceptance through tiered supplier-side pricing, and one that protects the capital capacity the line depends on.
Step 1: Lock the cost of capital methodology
The float line on the existing Payment Yield report runs at 4.5% applied to nine days of average payment float on $180 million in spend, producing approximately $200,000 of annual yield. The 4.5% is a legacy assumption carried forward from a 2023 refinancing. The rate no longer reflects the company’s cost of capital in 2026. The Treasurer locks the methodology to the current weighted average cost of capital of 6.0%, consistent with the model equity research analysts apply to the company’s valuation. The float line moves to $266,000. One methodology decision adds $66,000 to the Payment Yield report without a single change to the payment function itself.
Step 2: Restructure the technology and financing relationships
The virtual card program runs at a flat 1.5% on $45 million in annual volume, producing $675,000 in annual rebate. The contract renews in the fourth quarter. The Treasurer walks into renewal asking for a tiered structure: 1.5% on baseline acceptance, 1.8% above 50%, 2.0% above 65%. The bank funds the structure because higher acceptance means higher card volume and higher interchange. The contract closes at the tiered structure with the bank’s supplier enablement team running alongside AP and Procurement to drive acceptance. Twelve months in, acceptance reaches 60%. The rebate line moves to $810,000. The $135,000 of incremental yield runs through the company because Treasury restructured the contract to put the bank’s commercial interest on the conversion side of the equation.
Step 3: Restructure the supply chain finance facility
The SCF program covers $7.4 million in average outstanding buyer obligations at a flat SOFR plus 175 rate. Enrollment plateaued at 25% of trade payables because the rate offered no differentiation across the supplier base. The Treasurer restructures the facility into tiered pricing with the bank: SOFR plus 100 for the company’s 22 strategic suppliers, SOFR plus 175 for the next 85 in the growth tier, SOFR plus 250 for the long tail. The strategic suppliers see a rate inside what they could access independently. Strategic-tier enrollment moves from 60% to 85% over the following year. Program volume rises from $7.4 million to $11.2 million. The incremental Tier 2 yield to the buyer, modeled at 40 basis points on the incremental volume, produces $15,000 per year. The structural value sits beyond the dollar number. The program now covers the strategic suppliers at scale, which changes the negotiating posture on commercial terms in the next procurement cycle.
Step 4: Defend the classification position
The external auditor flags the ASC 405-50 disclosure for review when program volume rises. The Treasurer defends trade payable classification, anchored in the facility’s non-recourse structure and the buyer’s unchanged obligation to pay on original terms. The classification holds. The $11.2 million in program obligations stays off the debt line. The company’s debt-to-EBITDA ratio against a 3.0x covenant keeps its headroom intact at the new program scale. Tier 2 yield flows to the Payment Yield report and the covenant capacity that supports the company’s next credit facility extension stays where Treasury wants it.
Stack the four moves: $216,000 of incremental Payment Yield on the line and $11.2 million of covenant headroom protected at program scale, all of it produced inside Treasury’s existing authority and existing relationships. The payment function ran the same workflows. Procurement negotiated the same supplier terms. AP processed the same invoices. Treasury made four decisions and the line moved.
The function the literature already describes
The academic literature has spent thirty years documenting Treasury’s authority over cost of capital, hedging, and liquidity structure. Froot, Scharfstein, and Stein (1993) framed hedging as the discipline that protects internal funds for investment. Lins, Servaes, and Tufano (2010) documented the choice between cash and credit lines as a CFO-level liquidity decision Treasury implements. Almeida, Campello, Cunha, and Weisbach (2014) consolidated the field into a single conceptual framework for corporate liquidity management. The intellectual scaffolding is in place.
Payment economics extends the scaffolding to the payment function, where every decision applies a rate Treasury sets and runs through a modality Treasury selected. The Payment Yield line expresses what Treasury already produces in the same financial frame the rest of the finance function operates in. The Treasurer who walks into the next quarterly review with the modality stack documented, the cost of capital methodology locked, the technology and financing relationships restructured around acceptance, and the SCF classification position defended at scale brings the four Treasury authorities that shape Payment Yield more than any inputs from any other function in the firm.
The implication
Payment Yield is Treasury’s economic output. The rest of the organization consumes it. Treasury governs the return on how the firm moves money. The cost of capital that values float, the modality stack that determines which decisions the firm gets to make, the contract structures that shape supplier conversion, and the classification positions that decide whether Payment Yield expands capital capacity or competes with it. Each of those is governance work. The Payment Yield line is the measure that makes the governance visible. The next four function-issues, Procurement, Controllership, FP&A, and AP, complete the expression.
Payment Economics in Practice
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Advisory: The Payment Economics Institute works with finance leaders to measure and govern Payment Yield. Treasury engagements lock the cost of capital methodology, document the modality stack, restructure the technology and financing relationships, and resolve the SCF classification position. See engagement models →
About The Payment Economics Journal
The Payment Economics Journal examines how organizations measure and capture economic return from payment operations. Published weekly by the Payment Economics Institute. The complete framework lives at payment-economics.org.
Suggested Citation
Jasinski, D. (2026). Payment Economics for Treasury: How Treasury Produces Financial Return from Payments. The Payment Economics Journal, Issue 24. Payment Economics Institute.
Authorship & Intellectual Property
© 2026 Daniel Jasinski. All rights reserved. The Payment Economics Journal, Payment Yield, Capital Return, Supplier Acceptance, Payment Portfolio Manager, Payment Economics Practitioner, Payment Efficiency Index (PEI), and Payment Cost Ratio (PCR) are original frameworks and terms introduced by Daniel Jasinski. No part of this publication may be reproduced, distributed, or transmitted in any form without prior written permission, except for brief quotations in reviews and academic citations with proper attribution.
References
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Association for Financial Professionals. (2025). 2025 AFP Liquidity Survey: 61% of Organizations Choose Safety as Their Top Short-Term Investment Objective. Underwritten by Invesco. Available here.
Bates, T. W., Kahle, K. M., & Stulz, R. M. (2009). Why do U.S. firms hold so much more cash than they used to? Journal of Finance, 64(5), 1985–2021.
Financial Accounting Standards Board. (2022). Accounting Standards Update No. 2022-04, Liabilities, Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. Available here.
Froot, K. A., Scharfstein, D. S., & Stein, J. C. (1993). Risk management: Coordinating corporate investment and financing policies. Journal of Finance, 48(5), 1629–1658.
Jasinski, D. (2025a). Why payment economics is the missing discipline. The Payment Economics Journal, Issue 2. Payment Economics Institute. Read here.
Jasinski, D. (2026a). The payment efficiency index. The Payment Economics Journal, Issue 17. Payment Economics Institute. Read here.
Jasinski, D. (2026b). The capital activation layer: How payment decisions originate capital. The Payment Economics Journal, Issue 22. Payment Economics Institute. Read here.
Jasinski, D. (2026c). Payment economics for the Office of the CFO: How to create payment network yield as a discipline. The Payment Economics Journal, Issue 23. Payment Economics Institute. Read here.
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Wuttke, D. A., Rosenzweig, E. D., & Heese, H. S. (2019). An empirical analysis of supply chain finance adoption. Journal of Operations Management, 65(3), 242–261.