Mid-market companies rarely have a treasury department. They have a CFO, a finance manager, and a collection of bank accounts that grew organically with the business. That works — until the company operates in three currencies, carries floating-rate debt, and keeps its entire cash balance with one bank. Then treasury stops being an administrative afterthought and becomes a source of real risk. Here is the playbook we install with mid-market clients.
Visibility first: one view of cash
You cannot manage what you cannot see, and most mid-market companies cannot answer "how much cash do we have, where, and in which currencies?" without an afternoon of spreadsheet work. The first practice is a daily cash position: every account, every entity, consolidated into one view, ideally by noon. Modern banking APIs and treasury-lite tools make this cheap; even a disciplined manual process beats not knowing.
Once positions are visible, concentrate them. Cash pooling — physical or notional — reduces idle balances in one entity while another borrows. Surplus cash should sweep automatically toward where it earns or saves the most.
Segment your liquidity
Not all cash is equal, and treating it as one pool leads to two classic errors: investing operating cash too aggressively, or leaving strategic cash in a current account earning nothing. We recommend three buckets:
- Operating liquidity — the next 30 to 90 days of outflows. Held in same-day-access accounts. Return is irrelevant; availability is everything.
- Reserve liquidity — a buffer of three to six months of fixed costs against a revenue shock. Money market funds or short-dated, high-quality instruments.
- Strategic cash — earmarked for acquisitions, capex, or distributions with a known horizon. Can accept term structure to pick up yield.
Each bucket gets its own instruments, its own risk limits, and its own review cadence. This single structural decision eliminates most treasury mistakes.
Manage currency risk deliberately
Mid-market FX policy usually defaults to one of two failure modes: converting everything immediately at spot (expensive, rigid) or doing nothing (a quiet speculative position). A sensible policy sits between:
- Identify net exposure by currency over a rolling 12-month horizon — revenues minus costs in each currency.
- Hedge in layers. Cover 70 to 90 percent of exposure for the next quarter, 40 to 60 percent for the following two quarters, less beyond that. Layered hedging smooths the average rate and avoids betting the year's margin on one fixing.
- Use simple instruments. Forwards for committed flows, options only where the flow is genuinely uncertain. If you cannot explain the instrument's payoff in one sentence, do not trade it.
- Never hedge beyond your exposure. A hedge without an underlying flow is a speculation with extra documentation.
Counterparty risk applies to your banks too
Companies that would never extend unsecured credit to a single customer will leave $15 million with a single bank. Spread operating and deposit relationships across at least two institutions, set exposure limits per bank, and review their credit standing annually. The operational benefit is real as well: payments fail, systems go down, and a second banking relationship is the difference between an incident and a crisis.
Debt, rates, and covenant headroom
Treasury owns the liability side too. Maintain a debt maturity ladder so no single year carries a refinancing wall. On floating-rate exposure, decide your fixed-to-floating mix as policy — say 50 to 80 percent fixed — rather than re-litigating it after every rate decision. Track covenant headroom monthly, and open conversations with lenders early when headroom narrows; banks forgive forecasts, they do not forgive surprises.
Governance: policy, limits, segregation
Even a two-person treasury needs a written policy — approved instruments, counterparty limits, hedge ratios, who may authorize what — and basic segregation of duties: the person who initiates a payment should not be the person who approves it. Most mid-market fraud and error events trace back to exactly that gap.
The payoff
Good treasury is anticlimactic. Cash is where it needs to be, currency moves become a managed cost rather than a quarterly drama, and the debt book refinances itself in calm markets. None of this requires a dealing floor — it requires visibility, buckets, a written policy, and the discipline to follow them. That is well within reach of any mid-market finance team, and it is usually the highest-return project a CFO can sponsor in a given year.