How To Choose A Treasury Management Partner

Cash-Management-Partner
Treasury
Treasure Investment Team
|
January 11, 2023

Cash Is The Lifeblood Of All Startups

Congratulations! You recently raised a round of funding. Now you have idle cash sitting in a bank, earning nothing. Being focused on efficiency you know this cash should be generating revenue for you. You know that managing this precious resource in-house will not earn as much as partnering with an expert, so you decide to use a treasury manager.

But, not all treasury management partners are built the same! The following guide gives you the right questions to help choose a partner you can trust who will maximize your earnings.

Are You A Registered Fiduciary?

A fiduciary is someone who manages assets for someone else. This means a fiduciary has an obligation to manage those assets for the benefit of the owner not themselves. Don’t just take their word for it. Ask them to prove it. Here are some questions to ask:

  • Are you a Registered Investment Advisor (RIA)?
  • Are you regulated by the Securities and Exchange Commission?
  • Who is your Chief Compliance Officer and are they in house? How many years of experience do they have?
  • Do you custody my assets with a reputable custodian?
  • Is your custodian or any other business partner exposed to crypto?
  • Are you SOC2 compliant, and can you show me the audit?

Do You Have The Experience Required?

Don’t trust your capital with someone who doesn't have the necessary experience or skill set. Good partners will demonstrate their expertise. Again, you should ask them to prove it:

  • Do you have an investment team?
  • How many years and what type of hands-on experience do they have?
  • Have they managed assets at scale? What was the $ amount of the AUM?
  • Do they have any professional certifications?

Do You Actively Manage My Cash?

Treasury management is not blindly putting your idle cash in a Money Market fund. It is being able to manage cash according to the client’s needs, as well as dynamically changing their allocation based on current market conditions. Not all investment products are appropriate for treasury management. For the most part, the product offering should include low risk, fixed-income products. Ask prospective partners the following questions:

  • Do you offer a complete set of fixed-income products?
  • Do I need to choose the allocation or do you do that for me?
  • Are you actively managing my cash to make sure I am getting the best possible risk adjusted return? 
  • How do you adjust my allocation based on current interest rates?
  • Do you or any of your partners invest in crypto?

Are Your Fees Fair and Transparent?

While it is true that you get what you pay for, the price should be fair and transparent. Some companies charge up to 80 basis points to manage your cash. Start with these questions:

  • What are your fees?
  • What is my expected return net of your fee?
  • Do the fees change at any point for any reason?
  • I’m having a hard time understanding your fee schedule. Can you explain it to me simply?

Is Your Service Seamless?

The treasury manager you’re considering seems qualified, has great products, and charges reasonable fees. However, none of that matters if their solution is not seamless in terms of implementation and use. Here are a few question to ask:

  • How long will it take to onboard?
  • How easy is it to move money in and out?
  • How does your reporting work?
  • How is your customer support?

Conclusion

Cash is the lifeblood of all startups. You can have the best product, engineering team, or sales force in the world, but without cash to run the business it doesn’t matter. Who you choose to safeguard and grow this precious resource is one of the most important decisions facing any leadership team.

Companies like Apple and AirBnB have world class treasury management departments. Shouldn’t you?

Treasure Financial Investment Team

Our seasoned team has nearly 60 years combined experience, has managed billions in assets, and has worked at some of the most recognized names in finance.

Ben Verschuere, Co-Founder/CIO

15 years in financial markets

10 years as portfolio manager for Peter Thiel hedge fund & family office

Pablo Mitchell, Head of Quantitative Investment

20 years in financial markets

16 years as quantitative portfolio manager at TIAA

Luca Rassenti, Director Quantitative Investment

10 years in financial markets

Investment Officer at Iowa & New Mexico state pension funds

Scott Williams, Chief Compliance Officer

13 years in Fintech regulation and compliance

Head of compliance at SoFi & Figure

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