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Variance analysis is significant in treasury management because it focuses on analyzing the differences between projected and actual financial outcomes. This analysis helps treasury professionals understand how effectively the organization is managing its finances and operations regarding cash flow, investments, and other treasury functions. By identifying variances, treasury managers can assess the reasons behind discrepancies, which may include changes in market conditions, operational inefficiencies, or inaccuracies in forecasting.

This insight enables decision-makers to make informed adjustments to their strategies and improve financial planning. Utilizing variance analysis allows for continuous monitoring and refinement of financial projections, fostering a more responsive and adaptive treasury management environment. As a result, organizations can better align their financial performance with their strategic goals and enhance overall financial health.