Treasury Management for Mid-Market Companies: Best Practices

What Is Treasury Management?

Treasury management is the function responsible for managing a company's liquidity, funding, and financial risk. At its core, it answers three questions: Do we have enough cash to meet our obligations today? Will we have enough cash over the next 90 days? And are we earning an appropriate return on idle cash while minimizing unnecessary risk?

For mid-market companies — roughly $25M to $500M in annual revenue — treasury sits in an awkward middle ground. You're large enough that cash positions are material (a $50M revenue company might carry $3M–$8M in operating cash at any given time), but you're typically not large enough to justify a dedicated treasury team. Most mid-market CFOs handle treasury themselves, with support from the controller and accounting team.

It's important to distinguish treasury from accounting. Accounting records what happened to cash — treasury manages what cash does next. Accounting closes the books; treasury decides where the week's cash sweeps, whether to draw on the revolver, how to structure banking relationships, and whether a currency hedge is worth the cost. The two functions share data constantly but have entirely different time horizons: accounting looks backward, treasury looks forward.

The core treasury function owns: daily cash positioning, cash forecasting (13-week and longer), banking relationships and account structure, short-term investments and money market funds, debt management and covenant compliance, FX and interest rate risk, and occasionally insurance and surety bonds. At sub-$100M revenue, these responsibilities typically fall on the CFO or a senior finance manager in addition to other duties. That's fine — but it requires deliberate systems and discipline.

Cash Management and Liquidity

Effective cash management starts with visibility. You cannot optimize what you cannot see. Many mid-market companies operate with 5–15 bank accounts across operating entities, payroll accounts, controlled disbursement accounts, and subsidiary accounts — and the CFO has to manually log in to three different bank portals each morning to understand where the company stands. This is not a treasury function; it is a cash archaeology project.

The first priority is achieving a single daily cash position: a consolidated view of all cash balances, inflows, and outflows as of 8:00am each morning. This can be achieved through bank portals that aggregate across accounts, through your ERP if it has a bank connectivity module, or through a basic treasury spreadsheet connected to bank data exports. Whatever the method, the morning cash position should take no more than 15 minutes to produce.

Concentration accounts are the structural solution. A concentration account (also called a master account or header account) sits at the top of a notional pooling or physical sweeping structure. Operating cash from subsidiary accounts sweeps up automatically overnight, and the concentration account holds the bulk of the company's liquidity. This eliminates fragmented balances and allows you to make investment decisions on a meaningful pool of cash rather than leaving $200K sitting idle in a dozen accounts simultaneously.

Sweep accounts automate the investment of overnight balances. Most commercial banks offer zero-balance accounts (ZBAs) that sweep excess operating balances into a money market fund or interest-bearing account at end of day. For a company carrying $5M in average operating cash, a 4.5% money market rate generates $225K annually — effectively free money that many mid-market companies leave on the table because they never set up the sweep.

For target cash buffers, a useful rule of thumb is to maintain 6–8 weeks of operating expenses in immediately accessible liquid form. For a $50M revenue company spending $4M/month, that's roughly $6M–$8M in liquid reserves. Amounts above the buffer threshold should be invested in short-duration instruments (T-bills, money market funds, commercial paper) that earn a meaningful yield without sacrificing liquidity.

Banking Relationship Strategy

How many banks should you have? The honest answer: as few as operationally necessary, but not just one. Single-bank concentration creates a systemic risk: if your primary bank has a system outage, freezes an account during a compliance review, or pulls back credit during a market stress event, you need a backup. Most mid-market companies operate most effectively with 2–3 primary banking relationships, with one bank serving as the primary depository and credit provider and a second providing backup liquidity and redundancy.

Your primary bank relationship should include: a commercial operating account with sweep or ZBA structure, a revolving line of credit sized at 10–20% of annual revenue, a controlled disbursement account for AP payments, and treasury management services (lockbox, ACH origination, positive pay for check fraud protection). Negotiate treasury management fees as part of your overall banking relationship — banks will often waive or reduce TM fees for companies that maintain higher deposit balances or have credit facilities in place.

Virtual accounts are an underused tool at mid-market. A virtual account structure lets you maintain one physical account while routing payments through unique virtual account numbers for different business units, geographies, or purposes. This simplifies reconciliation dramatically and is increasingly offered by mid-market-focused banks like SVB (now First Citizens), East West Bank, and the commercial arms of larger banks.

Annual treasury relationship reviews are best practice. Every 12 months, review your banking fees, interest rates, and service levels against at least one competing proposal. Even if you don't switch, the competitive process typically results in better pricing. Companies that last renegotiated their banking terms more than three years ago are almost certainly overpaying on fees and leaving rate on the table for deposits.

When evaluating your revolving credit facility, key terms to track beyond the interest rate include: the borrowing base formula (if asset-based), financial covenants (typically leverage ratio and fixed charge coverage), clean-up provisions (requirement to have $0 drawn for 30–60 days per year), and availability block (a reserve the bank holds against the line). For mid-market companies with seasonal cash flow, availability and clean-up terms often matter more than the spread over SOFR.

Treasury Technology Stack

The technology conversation in treasury often jumps straight to Treasury Management Systems (TMS), but for most mid-market companies, a TMS is not the right first investment. The trajectory looks like this: spreadsheets → ERP treasury module → bank portal aggregation → standalone TMS. Most companies under $200M in revenue are best served by the middle two tiers before graduating to a dedicated TMS.

Your ERP's treasury module is the underappreciated starting point. NetSuite, Sage Intacct, and Microsoft Dynamics 365 all include cash management capabilities that, when properly configured, handle bank reconciliation, cash positioning, and basic forecasting. The limitation is bank connectivity: ERP-native bank feeds are often one-day delayed and require manual import for many institutions. Most mid-market companies configure their ERP for accounting-side cash management and then supplement with direct bank portal access for real-time positioning.

When does a standalone TMS make sense? Typically when three or more of the following are true: (1) you have more than 10 bank accounts across multiple banks, (2) you operate in more than 2 currencies, (3) your revolving credit draws and repayments are frequent and complex, (4) your cash forecasting needs exceed what a spreadsheet can reliably support, or (5) you have a dedicated treasury analyst who will actually use the system.

Among dedicated TMS vendors, Kyriba is the most widely adopted at the upper mid-market, offering strong bank connectivity and FX modules. GTreasury (formerly Hedge Trackers) has gained share with mid-market companies due to its more accessible implementation and pricing. Coupa Treasury (formerly Bellin) integrates natively with the Coupa spend management platform, making it attractive for companies already on Coupa. All three are cloud-native and implement in 3–6 months, which is considerably faster than legacy on-premise TMS platforms.

FX and Interest Rate Risk Management

Many mid-market CFOs treat FX risk as something large companies worry about. In practice, any company with more than 10% of revenue or costs denominated in a foreign currency has material FX exposure that warrants a formal hedging policy — even if "policy" simply means documenting the decision not to hedge and why.

Natural hedges should be the first tool evaluated. If you have EUR-denominated revenue and EUR-denominated costs (European office, European suppliers), the exposures offset. Maximizing natural hedges before using financial instruments is almost always the right approach — financial hedges have basis risk, counterparty risk, and accounting complexity that natural hedges avoid entirely.

When natural hedges are insufficient, forward contracts are the most common instrument for mid-market companies. A forward allows you to lock in a specific exchange rate for a future transaction, eliminating rate uncertainty on known cash flows. For a $30M company with $5M in USD-denominated revenue collected from Canadian customers, a rolling 6-month forward program on the CAD/USD exchange rate converts what would be variable USD inflows into predictable ones.

Interest rate exposure at mid-market typically comes from variable-rate revolving credit facilities and term loans. If you have significant variable-rate debt (>$10M), an interest rate swap converts the floating rate to a fixed rate, providing budget certainty. The decision to swap depends on your view of rate direction, your debt paydown timeline, and the swap market's current implied forward rates. Most mid-market companies work through their commercial bank's derivatives desk for basic interest rate hedges rather than using a standalone broker.

Document your hedging policy formally: which exposures you hedge, which you don't, the instruments permitted, the counterparty credit limits, and who has authority to execute. Even a one-page policy provides protection during audits and gives the board confidence that FX and rate risk are being managed deliberately rather than ignored.

Building a Treasury Function Without a Treasury Team

The reality at most mid-market companies is that treasury is a hat worn by the CFO, often in addition to FP&A, financial reporting, investor relations, and everything else on the finance agenda. This is not a failure of organizational design — it's the appropriate structure for a company that doesn't yet have sufficient complexity to justify a dedicated treasury hire. The key is being intentional about it.

The responsibilities that must be owned — even if informally — include: daily cash review (15 minutes), weekly 13-week forecast update (1–2 hours), monthly bank relationship check-in, quarterly covenant compliance review, and annual banking fee negotiation. Putting these on the calendar and building simple, reliable processes around each ensures treasury gets the attention it needs without requiring a dedicated headcount.

The first treasury hire for most mid-market companies is not a Treasurer — it's a Senior Financial Analyst or Finance Manager with treasury responsibilities included in their scope. This person handles the daily cash routine, maintains the forecast model, manages bank account administration, and supports covenant reporting. This hire typically makes sense between $75M and $150M in revenue, or earlier if the company has complex banking structures, active M&A, or material FX exposure.

Outsourced treasury is an emerging option worth evaluating. Several advisory firms and fractional CFO providers offer part-time treasury support: they manage the daily cash position, maintain the forecast, handle bank relationship management, and advise on hedging — typically for $3,000–$8,000 per month. For companies between $30M and $100M revenue that lack the volume to justify a full-time hire, this is often the most cost-effective path to professional treasury management. See our guide on outsourced accounting vs. in-house for a related cost comparison framework.

A final note on technology as a force multiplier: the right tools allow one person to manage treasury operations that would otherwise require a small team. Bank API connectivity, automated sweep structures, and a reliable 13-week model in a well-structured spreadsheet can handle 90% of mid-market treasury needs with 5–10 hours of attention per week. Invest in the process and the data infrastructure before investing in headcount.

Key Takeaways

• Treasury is distinct from accounting. Accounting records the past; treasury manages the future. Even without a dedicated team, the CFO must own cash positioning, forecasting, and banking relationships deliberately.
• Cash visibility is the foundation. Before optimizing anything else, establish a daily consolidated cash position across all bank accounts. If this takes more than 30 minutes, the account structure or process needs to be fixed first.
• Sweep accounts are the easiest win. If your operating cash is sitting in non-interest-bearing accounts, setting up automated sweeps into money market funds could generate $100K–$300K+ annually with no operational cost.
• 2–3 banking relationships is the target. One primary bank for deposits and credit, one backup for redundancy. More than five creates management overhead with diminishing returns; one creates dangerous single-point-of-failure risk.
• A standalone TMS is rarely necessary below $200M in revenue. ERP treasury modules and structured bank portals handle most mid-market needs at a fraction of the cost.