38% of startups fail due to cash flow issues [1]. Treasury management can help you avoid this by ensuring liquidity, protecting deposits, and managing cash flow timing gaps. Here are 7 practical strategies to strengthen your startup’s financial foundation:

• Set Up Multi-Bank Cash Protection: Use treasury tools to distribute deposits across multiple institutions, ensuring funds remain protected even during banking disruptions.
• Build Cash Reserve Guidelines: Allocate reserves into operating liquidity, emergency funds, and strategic buffers to cover 6-18 months of expenses.
• Automate Treasury Systems: Save time and reduce errors by automating tasks like cash positioning, expense reconciliation, and forecasting.
• Create Cash Flow Forecasts: Develop accurate, scenario-based forecasts to prepare for growth, stress, or unexpected challenges.
• Define Investment Rules: Match investments to your growth stage, balancing liquidity and returns with clear policies and limits.
• Manage Multiple Currencies: Use multi-currency accounts and hedging strategies to reduce foreign exchange costs and risks during international expansion.
• Scale Treasury Controls: Implement tiered approval workflows, role-based access, and automated monitoring as your startup grows.

These steps help you maintain liquidity, manage risks, and streamline financial operations, ensuring your startup is well-prepared for growth.

Treasury Best Practices: What Every Startup Should Know About Protecting and Growing their Cash

1. Set Up Multi-Bank Cash Protection

Startups on the rise need strategies to manage liquidity risks, particularly given the banking challenges of recent years. In fact, 85% of CFOs now prioritise multi-bank strategies to mitigate risk ^[2]. As finance experts emphasise, monitoring cash across multiple accounts has become a critical necessity.

Treasury platforms simplify multi-bank protection by automating key processes:

How Treasury Platforms Help

💡 Automated Allocation: Treasury tools such as Round Treasury ensure balances remain diversified and protected without manual intervention.

💡 Integrated Transfers: Round Treasury connects with 2,000+ bank accounts, making fund movement seamless and efficient.

💡 Instant Alerts: Get real-time warnings if cash concentrations exceed recommended thresholds.

To stay protected, startups should distribute deposits across multiple banks, ensuring they remain within FSCS protection limits of £85,000 per bank.

2. Build Cash Reserve Guidelines

Setting clear cash reserve guidelines is essential for avoiding cash shortages, particularly since startups often take four years to become profitable^[3].

Here’s a structured way to allocate reserves across three key tiers:

💰 Operating liquidity – Keep high-yield business accounts for easy access.

📈 Strategic buffer – Invest in low-risk, short-term securities for stable returns.

🔒 Emergency funds – Use FSCS-backed deposits for safety.

✅ Key Metrics to Stay on Track:

• Maintain reserves equal to three times your monthly burn rate.
• Ensure 110-130% liquidity coverage for 30-day outflows.
• Limit monthly reserve withdrawals to less than 25%.

💡 Scalability Tip: For every 10% increase in revenue, add 0.5% to reserves to maintain financial stability.

Platforms like Round Treasury help automate reserve allocation and send real-time alerts when key thresholds are reached.

3. Automate Treasury Systems

Automating treasury tasks can improve accuracy and drastically reduce manual effort.

Begin by automating essential tasks such as:

• expense reconciliation
• payment processing
• cash forecasting

Round Treasury automates cash monitoring, forecasting, and fund allocation, allowing startups to reduce manual finance work significantly.

4. Create Cash Flow Forecasts

Accurate cash flow forecasting ensures your business is prepared for unexpected events.

Analyse six months of historical data to build three key scenarios:

💡 Pro Tip: Use automated forecasting tools to integrate real-time banking data and reduce forecasting errors by 78%^[4].

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5. Define Investment Rules

💰 Match investment strategies to your growth stage to balance liquidity and returns:

✅ Investment Safeguards:

• Maintain six months of operating expenses in liquid assets.
• Set 3-month duration limits on bond investments.
• Avoid concentrating more than 80% of funds in a single institution.

6. Manage Multiple Currencies

For international startups, managing currencies efficiently is key to minimising conversion costs.

Setting Up Currency Accounts

7. Scale Treasury Controls

As a business grows, scalable treasury controls become essential.

✅ Approval Workflows – Set up tiered approval processes:

✅ Risk Management Enhancements – Once cash reserves exceed £50M, strengthen safeguards by:

• Conducting quarterly stress tests.
• Keeping bank exposure below 15% of total cash.
• Distributing funds across at least three banking partners.

Round Treasury provides advanced transaction verification, ensuring secure fund movements with real-time alerts.

Next Steps: Strengthen Your Treasury Strategy

To effectively manage treasury operations, follow these three steps:

✅ Set Up Multi-Bank Protection – Open multiple accounts across FSCS-insured institutions.

✅ Automate Treasury Workflows – Use tools like Round to reduce manual finance work by 85%.

✅ Optimise Reserve & Investment Allocations – Diversify funds across high-yield accounts and money market funds.

With Round Treasury, startups can increase liquidity, protect deposits, and automate treasury functions seamlessly.

Related posts

• Real-Time Cash Management: A Guide for Modern Startups