Key Takeaways
- Businesses and consumers are facing new challenges in 2022.
- A holistic view of your cash needs could help you.
- Companies often consider developing a Treasury Policy.
After the last two years, the only thing we can predict is the unpredictability of the world. With increased uncertainty at a global economic level, energy prices and many other costs rising, businesses and consumers are left wondering how they’re going to handle further increases in inflation.
We finished last year with clear expectations for rates through 2022, yet with these inflationary pressures building, interest rates are on the rise.
Whether your organisation has just raised Series-A funding or it’s a well-established business with stable revenue, many are considering how they might handle these challenges. Your finance team could consider a proactive approach to cash flow and cash management to better maximise return in both short- and long-term periods.
Here are some questions companies often bear in mind when considering an approach to cash management and handling any rise in rates. These do not take into account your company’s individual circumstances.
What is cash management?
Cash management includes the activities to coordinate a company’s cash flows, reconcile activity and manage financial and operational risk.
What is the appetite for risk in your company?
Uncertainties come in all shapes and sizes; the daily change in FX rates, an unexpected pandemic, geopolitical issues - the list goes on. For some organisations, anticipating these possible macroeconomic factors helps them identify their risk appetite and the considerations required to manage it. Although, bear in mind that new risks can arise from potential risk responses.
How proactive does your company wish to be?
As a business principle in any stage of growth, from seed to IPO, ideally, you want to have a holistic view of all your financials. Often, focusing on cash flow and basic cash management is an important factor of healthy business management.
A holistic view and approach can help build up a picture of cash needs and requirements to optimise a company’s financial position. Cash is often the lifeblood of a business so careful and proactive consideration around spending and investing can often prepare for uncertainties down the line.
Does your company want to optimise cash that’s not being used?
As a start-up, keeping a regular burn rate in mind can improve cash flow and cash management. Whilst raising a significant sum following your latest funding round takes the pressure off financially, you could consider how to maximise its value, to grow the business yet offset possible risk.
There are many financial risks you may want to manage including FX risk.
In fact, no matter where you are on your growth journey, start-up, scaleup or corporate, preserving capital whilst maximising returns is an attractive proposition.
Always consider the right solution for your business. To find some generic options on what might suit both your short and long-term objectives, you could start with a Treasury Policy.
Developing a Treasury Policy for your company
A Treasury Policy enables efficient management of financial risk within your company. An official document that formally sets out current treasury activities and establishes a treasury risk management environment in which all objectives, policies, and operating parameters are clearly defined. A Treasury Policy often considers inevitable financial risks and covers all the different activities you undertake.
Benefits include:
Building strong banking relationships
Identifying and building strong relationships with your banking partner(s) is critical to living your Treasury Policy. Whilst unique to each company, a consistent approach across all banking services can help you get the most from your partnerships and capital.
Choose the solutions that are right for you
Whatever your stage of business, SVB has a comprehensive set of banking products and solutions, including cash management, foreign exchange risk solutions and financing solutions that are designed to help support your business scale and grow for success.
Our cash management solutions are designed to work for you and your Treasury Policy. They can support you with a range of payment services and deposit solutions that scale with your policy needs.
Read the guide to your Treasury Policy for pointers to help enhance your risk framework.
We finished last year with clear expectations for rates through 2022, yet with these inflationary pressures building, interest rates are on the rise.
Whether your organisation has just raised Series-A funding or it’s a well-established business with stable revenue, many are considering how they might handle these challenges. Your finance team could consider a proactive approach to cash flow and cash management to better maximise return in both short- and long-term periods.
Here are some questions companies often bear in mind when considering an approach to cash management and handling any rise in rates. These do not take into account your company’s individual circumstances.
What is cash management?
Cash management includes the activities to coordinate a company’s cash flows, reconcile activity and manage financial and operational risk.
What is the appetite for risk in your company?
Uncertainties come in all shapes and sizes; the daily change in FX rates, an unexpected pandemic, geopolitical issues - the list goes on. For some organisations, anticipating these possible macroeconomic factors helps them identify their risk appetite and the considerations required to manage it. Although, bear in mind that new risks can arise from potential risk responses.
How proactive does your company wish to be?
As a business principle in any stage of growth, from seed to IPO, ideally, you want to have a holistic view of all your financials. Often, focusing on cash flow and basic cash management is an important factor of healthy business management.
A holistic view and approach can help build up a picture of cash needs and requirements to optimise a company’s financial position. Cash is often the lifeblood of a business so careful and proactive consideration around spending and investing can often prepare for uncertainties down the line.
Does your company want to optimise cash that’s not being used?
As a start-up, keeping a regular burn rate in mind can improve cash flow and cash management. Whilst raising a significant sum following your latest funding round takes the pressure off financially, you could consider how to maximise its value, to grow the business yet offset possible risk.
There are many financial risks you may want to manage including FX risk.
In fact, no matter where you are on your growth journey, start-up, scaleup or corporate, preserving capital whilst maximising returns is an attractive proposition.
Always consider the right solution for your business. To find some generic options on what might suit both your short and long-term objectives, you could start with a Treasury Policy.
Developing a Treasury Policy for your company
A Treasury Policy enables efficient management of financial risk within your company. An official document that formally sets out current treasury activities and establishes a treasury risk management environment in which all objectives, policies, and operating parameters are clearly defined. A Treasury Policy often considers inevitable financial risks and covers all the different activities you undertake.
Benefits include:
- Supports the operation of your treasury
- Documents clear, unambiguous definitions
- Clearly defines operating parameters and limits for each risk
- Financial decisions can be made in a controlled manner
Building strong banking relationships
Identifying and building strong relationships with your banking partner(s) is critical to living your Treasury Policy. Whilst unique to each company, a consistent approach across all banking services can help you get the most from your partnerships and capital.
Choose the solutions that are right for you
Whatever your stage of business, SVB has a comprehensive set of banking products and solutions, including cash management, foreign exchange risk solutions and financing solutions that are designed to help support your business scale and grow for success.
Our cash management solutions are designed to work for you and your Treasury Policy. They can support you with a range of payment services and deposit solutions that scale with your policy needs.
Read the guide to your Treasury Policy for pointers to help enhance your risk framework.