Treasurers must ensure their organization’s cash remains safe and liquid. However, unpredictable financial markets and shifts in the banking environment can make it hard for treasurers to meet these goals.

This article lays out strategies to help treasurers navigate uncertain economic times with confidence.

Key Strategies for Cash Safety and Liquidity

Below are four proven strategies for managing cash, no matter the economic conditions.

1. Choose the Right Solutions Partner
Automation is a top priority of treasurers. Selecting a trusted technology solution that provides a single platform for aggregating, forecasting, transacting, reconciling, and reporting on cash and investments is crucial during uncertain economic times. The right solutions provider also helps ensure that an organization receives comprehensive guidance and innovative solutions tailored to their needs.

Look for a treasury management solution that provides real-time insights into both cash and investments in a single place, facilitating timely, effective, and informed decisions. Prioritize advanced reporting tools that offer configurable, detailed analytics and performance metrics, helping decision-makers track their cash management strategy and identify areas for improvement and to act. It’s important to ensure that prospective solution’s providers have a dedicated team of experts committed to understanding each organization’s goals and providing tailored recommendations to meet them. Technology can be a powerful tool, but sometimes you just need to talk to a human with the right experience.

2. Diversify with Multiple Money Market Funds
Diversification is key to a cash management strategy, especially in unpredictable economic times. Money market funds can be a great option, for many reasons, including their focus on preservation of principal, liquidity and a competitive return. But it’s important to choose wisely as different money market funds offer varying yields based on their investment strategies, market conditions and embedded expenses. Regardless, having another place, outside of their bank, where they have their liquid cash, ensures that treasurers don’t risk having all their eggs in one basket. This flexibility ensures an organization can meet its financial obligations while taking advantage of investment opportunities.

Having all data, for both cash and investments, in one place makes it easier to uncover excess cash. Having the power of automation in a technology platform can then help treasurers take advantage of optimizing that excess cash by investing in something that is managed to outperform a bank deposit. Look for a solution that provides a centralized platform for easily exploring and investing in a variety of money market funds from multiple providers. Having options in one place streamlines the investment process and saves time. Some solutions offer detailed information and analysis on each money market fund, including performance metrics and risk profiles, helping users make informed decisions and select funds that align with their financial goals. Also, prioritize solutions that simplify fund management by providing tools to monitor and adjust your investments in real-time. The best solutions enable treasurers to manage both cash and investments on a single platform, ensuring they have a complete view of everything they need to manage. That enables treasurers to forecast cash flows, reconcile, rebalance their portfolios, and execute transactions with ease, all from one intuitive interface. Also, be sure that prospective solutions enable treasurers to set compliance limits to ensure they stay in compliance rather than tell them they are out of compliance after the fact.

3. Avoid Omnibus Accounts
Many banks offer “automatic sweep accounts,” where the bank takes the excess cash from a customer’s account and automatically sweeps it into a money fund account. One problem is that bank sweeps use an “omnibus” account. This means that all the bank’s sweep clients are in the same omnibus account held at the money fund provider. So, in times of crisis, if a customer cannot get money out of their bank account, they can’t get money out of their money fund account that their bank swept their money to, because the money must go through that bank account. If the customer were to approach the money fund provider directly, the money fund provider cannot identify the customer’s individual account, because it is commingled with all the other customers. Another problem is that sometimes sweep accounts involve fees that can be higher than direct accounts. Best-in-class money fund portals open a “direct” account with money fund providers for each of their clients which includes the client’s name and tax-id. So, if the customer can’t get money out of their bank account, they can access their money fund account directly from their “direct” account from the solution provider.

4. Partner with a Supervised Financial Institution
Working with a supervised financial institution is essential in uncertain economic times. Supervised financial institutions have the expertise and experience necessary to navigate complex financial landscapes. Their knowledge of market trends and regulatory environments enables them to provide valuable insights tailored to an organization’s specific needs. Supervised financial institutions also operate under strict regulatory oversight. This important framework helps ensure that member firms have sufficient liquid assets at all times to protect customers and creditors in the event of the member firm’s failure and that investor funds and securities are properly safeguarded. Supervised financial institutions implement stringent risk management practices, designed to protect funds from potential market volatility and financial instability.

Let Us Help You Build Financial Resilience

Navigating the complexities of treasury during uncertain economic times requires the right approach. Don’t leave your financial future to chance. Treasury Curve’s platform provides real-time insights, comprehensive reporting, and configurable solutions to meet your needs.

Visit www.treasurycurve.com to learn more about how we can support your cash management strategy and position your organization for success. Let’s navigate the financial landscape together.