Essential Treasury Management Checklist for Founders

In the UK, approximately 20% of small businesses fail in their first year, often due to poor cash flow management. Effective treasury management can help prevent this and support your business's growth. 1

Here's a guide to get started:​

• Cash Flow Management: Forecast short-term, medium-term, and long-term cash needs. Automate tracking and improve receivables/payables management.​
• Bank Accounts Setup: Use dedicated accounts for operations, expenses, and investments. Choose banks with digital tools and startup-friendly features.​
• Invest Idle Cash: Divide funds into operating (6–8 months) and strategic (8+ months) reserves. Focus on safe, liquid options like money market funds.​
• Risk Management: Diversify revenue, hedge currency risks, and safeguard funds with dual authorisation and fraud detection.​
• Leverage Tech Tools: Automate treasury tasks and integrate systems for real-time insights and efficiency.​

Treasury management involves safeguarding cash, ensuring liquidity, and making every pound work harder for your startup.​ Let's explore how to implement these steps effectively…

1. Set Up Cash Flow Management

Managing cash flow is fundamental to treasury operations. With 57% of UK small businesses experiencing cash flow issues, staying on top of it is crucial for startups to thrive. ​2

Create Cash Flow Forecasts

"Cash flow planning is essential: you need cash in the bank to pay your bills. Staying on top of your cash flow will help you see if you're going to run out of money—and when—so you can prepare ahead of time." 3

Creating detailed cash flow forecasts helps anticipate future financial positions and make informed decisions.​

Manage Working Capital

Efficient working capital management supports your cash flow forecasts. Focus on these areas to keep operations running smoothly:​

Receivables Management:

• Implement clear payment terms in invoicing systems.​
• Offer early payment discounts.​
• Automate collection reminders.​

Payables Optimisation:

• Negotiate extended payment terms with suppliers.​
• Take advantage of early payment discounts when beneficial.​
• Build strong relationships with key vendors.​

Real-time insights into working capital help refine your cash flow strategy further.​

Track Cash in Real Time

Utilising tools that provide real-time cash insights can enhance your ability to manage finances effectively.​

Key actions to take:

• Monitor daily cash positions.​
• Set up automated alerts for significant transactions.​
• Review cash flow metrics weekly.​
• Keep rolling forecasts up-to-date.​

2. Set Up Bank Account Structure

After organising your cash flow, structure your bank accounts for better control and transparency. A solid bank account setup is essential for managing your finances effectively.​

Select Bank Partners

Choose banks that cater to startups and offer modern digital solutions. Evaluate the following factors:​

• Digital Infrastructure: Reliable online platforms, API integrations, and mobile banking options.​
• Startup Focus: Programs tailored for startups and partnerships with venture capital firms.​
• Security Features: Multi-factor authentication and tools for real-time fraud detection.​
• Cost Structure: Transparent fee structures, reasonable minimum balances, and competitive foreign exchange rates.​
• Service Level: 24/7 customer support and access to a relationship manager.​

Once you've chosen the right banking partners, set up your accounts to manage funds more effectively.​

Organise Bank Accounts

A clear account structure simplifies cash flow management and ensures funds are allocated appropriately. Consider establishing:​

• Primary Operating Account: The main account for collecting revenue and covering everyday expenses.​
• Dedicated Expense Accounts: Separate accounts for payroll, taxes, operating costs, and emergency reserves to maintain organisation.​
• Investment Account: An account designated for investing surplus cash in instruments like money market funds.

If your business operates internationally, managing multiple currencies is also important.​

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3. Invest Unused Cash

Once you've organised your accounts, it's time to make your idle cash work harder. By investing strategically, you can align your cash flow and account setup to ensure every dollar contributes to your startup's success.

Create an Investment Plan

Consider dividing your cash into two categories: operating funds (needed within 6–8 months) and strategic reserves.

Keep these principles in mind and ensure you seek expert financial advice beforehand:

• Capital Preservation: Focus on protecting your funds rather than chasing high returns.
• Liquidity: Ensure you can access your cash when needed.
• Risk Management: Prioritise options with a reliable track record.
• Yield Optimisation: Aim for returns while staying within safe boundaries.

"Given the rate environment today most (pretty close to all) of our clients keep their excess investable funds in our bank money account which is an interest bearing savings account. It's fully liquid and provides a small yield... Most startups don't want to tie up cash for more than 6-months and their board approved investment policies are very focused on capital preservation as opposed to yield." John Benetti, Comerica Bank 4

Choose Investment Tools

• Money Market Funds
  Professionally managed funds that invest in short-term securities. They provide daily liquidity and competitive yields. As with all investments your capital is at risk and the value of your return can vary.
• FSCS-Protected Accounts
  Bank accounts protected by government insurance (up to £85,000 per bank in the UK). Look for tools that automate diversification across multiple banks such as Round Treasury.

Balance Access and Returns

To strike the right balance between liquidity and yield, consider the following:

• Establish Cash Tiers
  Keep enough operating cash in easily accessible accounts while investing surplus funds in higher-yield options. On average, startups maintain about 11 months of runway 4.
• Monitor and Adjust
  Regularly review your investment allocations to adapt to market changes and evolving business needs.

4. Reduce Financial Risk

Once your cash flow and investment strategies are in place, the next step is managing financial risk. This is critical for startups aiming to preserve capital while scaling 5.

Identify Key Risks

Here are some common treasury risks and how to address them:

Risk Category	Description	Potential Mitigation Steps
Bank Concentration	Over-reliance on a single bank	Spread funds across multiple institutions with FSCS protection
Cash Flow	Insufficient operational funds	Keep emergency reserves and set up credit lines
Currency	Exchange rate fluctuations	Hedge international transactions
Fraud	Internal or external theft attempts	Use dual controls and multi-factor authentication

"You need to have a good strategy for your capital journey to ensure you have enough cash to reach the milestones necessary to attract new investors", says Håvard Lindtvedt, Head of Nordea's Startup & Growth unit in Norway 5.

Once risks are identified, the next step is putting effective controls in place.

Set Up Controls

Here’s how to safeguard your funds:

• Establish Dual Authorisation: Use a "4 eyes principle" where two senior employees must approve payments over a set amount 6.
• Implement Access Controls: Restrict system access based on roles and log all user activities.
• Automate Key Processes: Leverage treasury software to reduce errors. As Will Spinney points out, strong controls protect both your finances and your reputation 7.

Meet Regulations

Regulatory compliance can be demanding for smaller businesses. Stay ahead by:

• Documenting all financial transactions
• Scheduling quarterly compliance reviews
• Keeping track of regulatory updates in your region
• Using treasury software with compliance features

The risks of neglecting these measures are real. For example, Mattel lost $3 million to scammers in China after falling for a fraudulent invoice 6.

"If you don't already have the internal systems in place for financial reporting and forecasting, it can be very difficult and expensive to start doing it when you're already in the growth phase", warns Riku Tiainen from Nordea, Startup & Growth 5.

5. Use Tech Tools

Modern treasury software can help smooth financial operations by automating workflows and providing real-time insights.

Pick Treasury Software

When choosing treasury management software, look for features that align with your business needs. Here are some key areas to focus on:

Feature Category	Key Capabilities	Business Impact
Cash Management	Real-time visibility, automated pooling	Instant access to cash positions across accounts
Forecasting	AI-based predictions, trend analysis	Accurate cash flow forecasts up to 12 months ahead
Integration	API connectivity, multi-bank support	Smooth connection with banks and ERPs
Risk Management	FX exposure tracking, fraud detection	Automated risk monitoring and alerts

Once you've selected the right software, the next step is to automate routine treasury processes.

Automate Daily Tasks

Automating treasury tasks can significantly cut down on manual work. For instance, a company managing 10,000 annual user requests saved 625 person-days by adopting automated workflows 8. Focus on automating these critical areas:

• Bank Account Management: Link multiple accounts to gain unified visibility.
• Payment Processing: Simplify approvals and reconciliation processes.
• User Access Control: Automate permissions and maintain audit trails.
• Cash Forecasting: Leverage AI for precise cash position predictions.

Take Round Treasury as an example - it automates cash flow processes, connects with over 2,000 bank accounts, and delivers real-time insights alongside financial recommendations.

Connect Financial Systems

For smooth operations, your treasury platform must integrate seamlessly with other financial systems. Key integration points include:

• Bank Connectivity: Ensure real-time API and SFTP connections with banking partners.
• Accounting Software: Direct integration with tools like Xero enables automated reconciliation.
• Payment Systems: Link payment processors for tracking transactions automatically.
• Investment Platforms: Connect investment accounts for full portfolio management.

Test all integrations thoroughly to confirm that data flows smoothly across your existing systems 9.

Conclusion: Put Your Treasury Plan in Action

Key Steps Review

Managing your treasury effectively is all about mastering the basics. Here’s a breakdown of the essential areas to focus on:

Focus	Key Actions	Expected Impact
Cash Flow Strategy	Define strategic vs. operating cash, forecast monthly needs	Gain a clear view of funds available for operations and growth
Bank Structure	Set up accounts with institutional banks, maintain operating cash	Improve security and streamline cash management
Investment Approach	Build an investment ladder, focus on short-duration assets	Achieve better returns while keeping liquidity intact
Risk Management	Diversify client base, monitor market trends	Lower exposure to financial risks

Review your treasury setup quarterly, update your forecasts regularly, and document all decisions for audit and regulatory purposes. Doing this should provide a solid foundation to optimise your treasury right away. Good luck!

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• 7 Treasury Management Best Practices for Growing Startups