Finance
Treasury Management
The discipline of managing your business's cash — where it sits, how it earns yield, how it moves, and how it is protected from bank and counterparty risk.
Treasury management is what turns 'my money is in the bank' into a deliberate policy: how much operating cash to keep liquid, how much to sweep into treasuries or money-market funds, how deposits are spread across banks to stay under FDIC limits, and how large payments are approved and moved.
For an owner-led business, treasury usually gets sharper attention after two moments: the first time you accumulate a meaningful cash cushion (typically $500,000 and up), and the first time a bank scare like the 2023 SVB event puts your deposits at risk. Between those moments, the money often just sits in checking, earning nothing.
A basic owner-level treasury policy has four parts: (1) a target minimum operating balance, (2) a rule for where the excess goes (sweep, T-bill ladder, HYSA), (3) an FDIC-coverage plan across two or three institutions, and (4) dual-approval controls on outgoing wires above a threshold. High-net-worth individuals apply the same framework to personal accounts.
Common pitfalls
- Treating treasury as 'set it and forget it' after opening a sweep — yields, bank health, and your balance mix change and need periodic review
- Confusing FDIC and SIPC protection when your money moves between a bank sweep and a brokerage sweep
- Holding too much cash relative to your obligations — over-conservatism has a real opportunity cost when good yields are available
- Not documenting the policy in writing — when the owner is unavailable, staff need a rule to follow, not a memory to guess at
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