For this third installment of our Treasury Management Strategy Series, we will be focusing on establishing a Liquidity and Investment strategy. Throughout this series we have discussed strategies surrounding commercial account structures, and the role technology plays in streamlining the cash flow cycle.  Today’s installment will be discussing the importance of establishing a liquidity and investment strategy to effectively manage Accounts Receivable and Accounts Payable activities, as well as thinking about goals for excess cash.

The most important aspect of a liquidity management strategy is to ensure that your company is able to meet its short-term and long-term payment obligations.  It is a delicate balance between maintaining liquidity to cover short-term obligations and putting excess liquidity to work.  This process starts by identifying your near-term payment obligations and then defining the priorities at a company level for your excess cash. Are you carrying a balance on your loan or line of credit? If you’re not paying down debt, do you want to earn interest by putting some of your money into an interest-bearing vehicle? Do you have an investment portfolio that needs to be taken into consideration? These are a few questions to consider when developing a Liquidity & Investment strategy, and the Treasury Management team at Central Bank & Trust is here to help put this plan in place.

At Central Bank & Trust we talk about all aspects of your business before we outline what the best treasury management strategy might be – this includes liquidity and investment management. Our job is to maximize your cash flow to help meet and satisfy your priorities.  When developing this strategy, some topics to consider include:

  • Amount of working capital required for daily/monthly operations
  • Outstanding debt
  • Is a sweep vehicle required for cash consolidation?
  • Amount of excess cash and the duration funds will be held

As with all aspects of Treasury Management, your needs are as unique as your business, and may change over time. Setting up your investment strategy can absolutely have a long runway and should be an ever-evolving process. Our treasury management team is here to help with that by introducing new products and keeping your priorities in check.

To learn more about our Treasury Management process, contact our team today. Our VP of Treasury Management, Greg Guidici would be happy to set up a discovery conversation.

Be sure to check back next month for the newest installment of our Treasury Management Strategy Series.