Common Treasury Management Questions Answered

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82% of businesses fail due to poor cash management^[1]. Startups face unique challenges like cash flow issues, lack of reserves, and growth pressures. Treasury management is the key to solving these problems. Here’s what you’ll learn:

• Cash Management: How to allocate funds across operating accounts, savings, and investments.
• Risk Mitigation: Diversifying banking relationships and protecting funds from fraud.
• Growth Support: Using tools for real-time cash monitoring, automated forecasting, and smarter AP/AR management.

Quick Tips:

• Use a 13-week rolling forecast for better accuracy.
• Automate invoicing and payments to save time and speed up collections.
• Consider low-risk options such as money market funds or short-term government securities.

Modern treasury tools like Round Treasury make managing cash easier, cutting manual work and improving accuracy. Ready to take control of your startup’s finances? Let’s dive in.

Cash Flow Management for Early Stage Companies

Core Treasury Management Basics

Startups face tough cash management challenges, but with the right strategies, they can balance the need for accessible funds with opportunities for growth.

Managing Cash: Access vs. Returns

Treasury management involves strategically dividing funds between operational needs and long-term investments. As a startup grows, this allocation evolves:

This approach ensures startups avoid running out of reserves while still pursuing growth.

Cash Flow Planning

Effective forecasting prevents cash flow shortfalls. The key elements of strong cash flow planning include:

• 13-Week Rolling Forecast: This model provides greater visibility into short-term cash needs and helps avoid surprises.
• Scenario Planning: Be prepared for:
  • Late payments – maintain a 30-60 day cash buffer.
  • Unexpected costs – build contingency reserves.
  • Seasonal fluctuations – adjust forecasts accordingly.
• Automated Monitoring: Set up alerts to flag low balances—ideally, when funds fall below 1.5x monthly burn rate. ^[1].

Treasury Software Features

The right software can help improve cash management and key features to look out for are:

Round Treasury simplifies financial operations with a unified dashboard that connects thousands of accounts and provides optimised yield options via BlackRock money market funds.

How to Improve Cash Flow

Setting Up Cash Flow Systems

Automation is crucial for efficient cash flow management. Treasury platforms help streamline transactions, cutting manual processing time.

Managing Multiple Bank Accounts

Separating funds across multiple accounts improves cash management and protects reserves. A structured approach includes:

• Primary Operating Account: Covers daily transactions with a sufficient buffer.
• Reserve Accounts: Separate emergency and operational reserves.
• Investment Accounts: Allocates surplus funds for long-term growth.

Round Treasury simplifies this by automatically spreading funds across multiple banks, tracking FSCS insurance limits, and ensuring full protection up to £85,000 per institution.

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Protecting Company Funds

Bank Risk Management

Fraud and financial risk are major concerns. A multi-bank strategy helps mitigate these risks by distributing funds across 3-4 institutions.

Market Safety Measures

• FSCS Protection: Insures up to £85,000 per bank.
• Sweep Accounts: Automatically distribute funds across insured institutions.
• Short-Term Government Securities: Provide a risk-free alternative to bank deposits.

Internal Controls

Strong financial controls reduce fraud risk and unauthorised transactions. Key safeguards include:

• Dual Authorisation for large payments.
• Automated Monitoring to flag unusual transaction patterns.
• Role-Based Access with department-specific budgets.

How Treasury Software Helps

Treasury software reduces manual effort and enhances financial oversight with automation. Businesses using these tools report:

Cash Flow Forecasting Tools

AI-driven forecasting tools improve cash flow prediction accuracy, integrating historical data with real-time insights.

Key features include:

• Predictive Analytics – Identifies trends and potential cash gaps.
• Scenario Planning – Simulates the financial impact of different events.

Conclusion: Next Steps for Better Treasury Management

Key Takeaways

Effective treasury management balances liquidity, risk protection, and financial growth. With 38% of startups failing due to poor cash management ^[1], having a clear strategy and the right tools is essential.

How to Begin

• Set Up Automated Forecasting – Use real-time treasury tools to gain cash flow visibility.
• Leverage Essential Tools – Automate accounts payable and receivable processes.
• Expand Thoughtfully – Adopt solutions that scale with business growth.

Round Treasury provides a unified dashboard, automated cash allocation, and multi-bank protection, ensuring that startups maximise returns while maintaining liquidity.

FAQs

What are the key objectives of treasury management?

Treasury management focuses on:

1. Liquidity Management – Ensuring sufficient cash flow for operations.
2. Risk Mitigation – Protecting against fraud and financial losses.
3. Cash Optimisation – Investing surplus cash to maximise returns.

How can automation improve treasury management?

Automated treasury systems reduce manual effort by up to 85%, improving efficiency in reconciliation, forecasting, and payments.

What’s the best way to allocate startup cash reserves?

A balanced approach ensures liquidity while generating returns:

• Operating Account
• High-Yield Savings
• Investments

Related Blog Posts

• 7 Treasury Management Best Practices for Growing Startups
• Essential Treasury Management Checklist for Founders