Earlier this year, fintech Jiko conducted a survey of US-based corporate treasurers and finance leaders to determine their attitudes to liquidity and 24/7 markets.

When asked about the most important considerations for managing corporate cash, 60% selected ‘access to cash when needed’, making it the leading priority across the survey. The result reflects the emphasis on maintaining sufficient liquidity for day-to-day obligations while retaining confidence that cash will be available through the institutions and payment channels on which an organisation relies.

John Lomoro, CFO at Angiocrine Bioscience, says his company’s strategy for ensuring the availability of cash – and the security of the instruments and structures supporting it – is to prioritise secure investment platforms that provide access to liquid cash within 24 hours.

“Our business typically does not require immediate access to cash for transactions,” he explains. “Also, our board has required that our investments are secure and free from risk. Therefore, it is preferred to have availability to treasuries in the company’s name, as opposed to other types of investments.”

Resilient strategy

After access to cash, risk mitigation and principal protection was the next highest priority among survey respondents.

The survey authors note that while the two priorities are closely connected, readily available cash is only one part of a resilient strategy. Investment vehicles and instruments can introduce another layer of counterparty, structural or liquidity risk, making their underlying risk profiles an important consideration for respondents.

Together, the findings show that treasury teams are focused on both the availability of cash and the security of the instruments and structures supporting it.

Yield ranked lowest among the considerations listed, even though it remains an important component of cash strategy, particularly as lower rates compared to the year before have reduced the returns available on short-term balances.

“We generally use short-term investments and cash management solutions to minimise idle cash, earn a return on excess funds and maintain sufficient liquidity to meet payment of operating expenses,” says Lomoro.

However, nearly half of respondents surveyed indicated that over 10% of their organisation’s cash is uninvested at any given time and 23% indicated that a quarter or more of their cash remains idle at any given time.

Closing the structural gap

At the centre of these priorities is a structural gap: cash that is operational is often separate from cash allocated to low-risk investment vehicles for yield generation.

The survey results indicate that treasury teams see value in closing that gap. When asked how valuable it would be for their organisation to hold cash directly in US treasury bills while maintaining immediate liquidity for payments, 89% of respondents found the concept valuable.

“We plan disbursements in advance and coordinate timely withdrawals from investment platforms to ensure funds are available when needed,” says Lomoro when asked what steps he has taken to minimise uninvested cash.

Three-quarters of survey respondents said 24/7 settlement was important to their organisation, but fewer than one-in-five said they were currently able to move cash or settle transactions in real-time.

This indicates that although real-time payment capabilities have expanded, traditional banking cut-offs and the complexity of moving funds across existing systems remain a constraint for many organisations.

Integration challenges with existing treasury and payment systems were the most frequently cited obstacle, followed by counterparty or settlement risk concerns and fees or costs associated with real-time payment solutions.

This is less of a concern for Lomoro, who observes that instant settlement is generally not essential for his business. “We schedule transactions in advance and coordinate with our investment platform to ensure funds are available for scheduled payments/settlements,” he adds.