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:

Strategy	Benefit
Multi-bank	Automatically distributes deposits to maximise FSCS coverage
Secondary	Provides an operational backup in case of primary bank issues

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.

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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.

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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:

Scenario	Assumptions	Reserve
Base Case	Current growth	20% of operating cash
Stress Test	30% revenue drop	6-month runway
Growth	2x customer acquisition	Additional credit line

💡 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:

Stage	Focus
Early (<£3M)	FSCS-protected deposits
Growth (£3-10M)	High-yield savings
Scale (£10M+)	Blended

✅ 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.

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6. Manage Multiple Currencies

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

Setting Up Currency Accounts

Currency Type	Primary Use	Recommended Buffer
Operating (GBP/USD/EUR)	Daily transactions	2 months of expenses
Trading (Local)	Market-specific payments	1-month projected spend
Settlement	Cross-border collections	5-day average transaction volume

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7. Scale Treasury Controls

As a business grows, scalable treasury controls become essential.

✅ Approval Workflows – Set up tiered approval processes:

Transaction Size	Approval Required
<£10K	Team Lead
£10K-£50K	Finance Director
>£50K	CFO/CEO

✅ 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.

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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