It's all about liquidity. With it you have a fighting chance. Without it you are on course to ruin. In this post we are going to speak about liquidity from the perspective of an investor and a business. The stories will give you a clear idea of when and why liquidity matters.
In the last few months companies that are household names (Tesla, Square) have bought Bitcoin(BTC) with their treasury capital. Another company, MicroStrategy, has made headlines by putting over 90% of their treasury assets into Bitcoin. What may seem like a smart move for them may not translate into a good one for your company. In this post we explore the motivations behind these BTC buys and why it makes sense for them. Hint: They are not speculating, and have been quite targeted in their decision-making.
What flavor of bonds do you like? The answer to that question depends on your goals. Are you focused on owning specific types of bonds like corporates? Are you more focused on safety and look to governments? The key is always to know what your goal(s) are and which bonds may accomplish them. In this post we are going to talk about short term bond funds. Highlighting key things for you to know when exploring them.
Trust is critical within organizations and should be table stakes amongst leadership teams. Everyone is motivated and incentivized to drive the company towards the same common goal. Despite the trust and confidence we have in one another, we have a fiduciary responsibility to the companies we serve.
Aaron Spool at Eventus Advisory Group wrote an article titled “The Hidden Costs of Equity” discussing these costs. We are going to expand on his article in this post. The hope is to help founders better prepare for the long and often costly business journey.
In this post we will define "risk", review how to estimate & define the level of risk that you are comfortable with and then show you how to track & manage it. Risk has long been "scary", but once you understand it you will be able to use it to your advantage.
Today we have Gary Hewamadduma, the CEO of CFO Plans who shares with us his insight on how to evaluate your banking relationships and what to look for when picking a new one. He highlights the key areas on which to focus and how to optimize your setup so that you are able to get the best service, have maximum control on your funds and have the critical financial support when you need it most.
For small and growing businesses, the ability to find, retain and afford the required skills to navigate a paradigm shift can be out of reach. Leveraging a fractional or part-time CFO is a viable and sustainable solution. In many cases it can be the optimal solution for managing and growing a business in a challenging or dynamic environment. Tina Gregory from Early Growth highlights the benefits of a Outsourced CFO with operational expertise, shares the job description of the CFO you want and gives tips on how to go about selecting a CFO to suit your business.
We have had a flurry of market activity this month along with the announcement of the most anticipated IPOs of year - Airbnb & DoorDash. We wanted to take this opportunity to analyze the corporate cash portfolios of these iconic companies while the news was fresh off the press! Zoom, Airbnb & DoorDash are very different companies, but you will see that a lot of the strategies they use to manage their corporate cash & keep it safe, liquid and earning a reasonable rate of return are quite similar.
Snowflake IPO'd as the hottest new company to come public in 2020. Let’s dig into Snowflake’s S-1 to see how they manage their corporate cash. If you are a founder, CFO, or manage your company’s corporate cash, take note. The lessons here are applicable to companies of all sizes. Before IPO Snowflake had $886.8mm in “cash” on their balance sheet. Did they keep all that in a Bank of America checking account? Of course not. They know once you have more than $250k in a single bank account, you lose FDIC insurance protection. Instead, they focussed on maximizing the safety & security of their cash by investing it and earning a reasonable rate of return on their capital.
In this post, we are going to do a deep dive into prime money market funds, since there has been an increase in news about them recently. A prime fund has the same mutual fund operating structure as all other money market funds, but the assets they are permitted to invest in are slightly different.Like many other funds, Prime funds largely hold US Treasuries and US Government debt, but they also have the unique ability to invest in corporate credit instruments. These include Bank CD’s, commercial paper, corporate bonds, and USD-denominated foreign debt issued by governments and corporations.The ability to invest in these additional assets allows them to offer investors higher yields.
Looking at how banks manage their money and balance sheets as well as their investment policy statements provides insights on what to do with all that cash you just raised. Before starting TSG and providing interim CFO services to early growth companies, I served as CFO of a $12.5 billion bank. The experience is valuable because one of the first issues I often address in advising early stage companies is what to do with the cash from the most recent funding round considering the projected burn rate and liquidity needs.
After managing money for startups of all sizes over the last few years at InterPrime, we have developed a keen understanding of their cash management needs. We’ve distilled that knowledge into a standardized set of rules and guidelines, the Standard Investment Policy for Startups (SIPS), which we’re open-sourcing today. You can implement SIPS immediately to start investing your business’s money safely and responsibly.
Many businesses don’t have a plan for managing their corporate cash beyond putting their money in the bank and checking the balance once in a while. But all businesses, no matter how much money they have or what stage they are at, could benefit greatly from a solid and well-defined corporate cash management strategy. Effective cash management means greater security, liquidity and returns on your cash, which will help your business succeed. In this post, we’ll break down what cash management is and show you how to develop an effective cash management strategy for your business.
A question we often hear is “Is my corporate banking & treasury strategy set up correctly, and if not, what do you suggest we change?” In this post, we’ll show you how to answer that question for yourself and go over a few recommended banking and treasury management setups for different types of businesses that you can use as a starting point
In this post we are going to review the Corporate Bond Market, one of the largest and most structurally important markets in our modern financial world. This is where corporations from all over the world go to “Borrow Money” in order to finance their capital needs and operations. As of May 2020, the Corporate Bond market was over $9.5 Trillion having doubled in size in the last 5 years (Sifma.org).
Since the prestiti in Venice started it all, governments have continued to use bonds more and more aggressively over the years in order to fund all sorts of endeavors. These bonds are typically backed by capital raised by taxing their citizens.
In this post, we will delve into the history of fixed income and discover how modern day fixed income markets came to be. Then, we will give an overview of the basic mechanics and terminology of bonds and other fixed income instruments
In this series of posts, we will cover bonds and debt securities from the ground up. We’ll discuss the history, the basic mechanics of bonds, and go into detail on specific types of assets. We hope to leave you with a better understanding of how bonds and fixed income work and how you can leverage...
Everyone’s #1 goal is to keep their corporate cash safe, but in 2020 you get little to no yield on those assets. Your bank is likely showing you a rate hovering around 1%, but is that truly the return you will receive? Corporate asset managers...
Know what you are buying before you commit your capital Financial markets can resemble a turbulent ocean, especially so right now! Having a safe harbor, and knowing when to use it, is critical to maintaining financial health. There are many such tools available to you for managing your short term cash. In this post, we...