What is treasury?
Treasury is the management of a company’s cash and financial resources to meet the business’ financial needs - while also operating within the business’ risk levels. Unlike large corporations like Goldman Sachs, which have teams to actively manage the business’ financial resources, startups do not have the time or personnel to conduct sophisticated treasury operations.
However, unlike many traditional businesses, VC-backed startups DO often have large amounts of capital that can be put to work generating yield. Startup treasury management services are offered by banks and other financial institutions, and the types of products offered vary from high-yield savings accounts to money market accounts, government bonds, corporate bonds and crypto yield products.
Treasury vs Cash Management
The terms treasury and cash management are often used interchangeably, especially when talking about startups. Treasury refers to the broader financial management function that focuses on managing a company’s liquidity, investments, and financial risk. For startups, this involves liquidity (making sure you have enough cash on hand to make payroll, for example), investment decisions, and risk management. Cash management, on the other hand, is a subset of treasury activities that deals specifically with managing cash flow and ensuring there is enough liquidity to meet the day-to-day operational needs of the company. This includes important items like cash flow forecasting, managing collections and payables, and maintaining banking relationships.
But, for most early-stage founders and their CFOs, the terms are more or less interchangeable.
Strategic Treasury: Beyond Everyday Cash
For startups, understanding treasury means looking beyond daily transactions to focus on long-term stability and growth. While cash management ensures there’s enough liquidity for daily operations, treasury management is the broader discipline that safeguards and optimizes the company’s financial assets. Thoughtful treasury practices help startups responsibly deploy the capital they’ve raised, strike a balance between risk and yield, and set up systems that support both current needs and future ambitions.
