Business banking solutions for optimal cash management

Avatar Photo of Immad Akhund
Immad Akhund

Immad Akhund is the cofounder and CEO of Mercury and an angel investor with more than 300 investments.

  1. Introduction
  2. Strategic cash management is critical for startups
    1. Get a bird’s-eye view of your startup’s financials
    2. Navigate a changing financial landscape smoothly
    3. Preserve and maximize your cash
    4. Build and maintain investor confidence
  3. Three considerations for cash management at any stage
    1. 1. Liquidity
    2. 2. Risk
    3. 3. Yield
  4. Step 1: Set up your business account for smart cash management
    1. Build a strong foundation with multiple accounts
    2. Accounts to set up for better cash management
    3. Savings or treasury account
  5. Step 2: Get wise about your startup’s spend
    1. Save money and find more time with automated payments
    2. Do more than pay bills, with the right credit card
  6. Step 3: Stay focused on your runway
  7. Step 4: Zoom out to extend your runway
    1. Forecast before taking on risk
    2. Put your idle cash to work, while managing your risk
    3. Find a treasury account you can trust with your business
    4. Toggle your investments based on your liquidity needs
    5. Think twice before doubling down on risk
  8. Find a business bank that stacks success in your favor
    1. Notes

As founders and CEOs, we’re often fixated on growth—and for good reason. The “grow-or-die” ethos is so ingrained that we live it each day, fall asleep thinking about it, and likely dream about it, too. Because of this growth mindset and your focus on the 30,000-foot view of your startup’s vision, you might think that hands-on cash management is beyond your purview.

I believe that your broader vision and the day-to-day tactics required to realize it are impossible to separate when it comes to smart cash management. As the cofounder and CEO of Mercury and a three-time founder before that, I know that a founder must have visibility into cash flow, unit economics, and the runway ahead. In fact, in the early stages, it’s better to sit in the cockpit and pilot your startup’s cash management strategy to ensure you make the best use of your limited runway from Day 1.

This was especially true when I founded Mercury. Designing a banking service1 focused on the needs of startups, building trust, and navigating the US financial system were not feats that we could accomplish in a matter of months. Our mission involved taking on legacy institutions—some with centuries of banking history and a wealth of capital and resources at their disposal. So to compete, we needed to be tactical about how and when to deploy capital.

At Mercury, we built a banking dashboard to help startup founders easily and effectively manage their capital—the same utilities I wish were available when I founded my previous companies. We wanted a solution for founders like us, with a feature set that put them in total control of their cash management strategy, without any of the usual toil involved in managing, moving, and growing their startup’s cash. Because, ultimately, founders want to get back to building.

This guide will share the cash management lessons I learned throughout my founder journey. I’ll cover the importance of a strong cash management strategy and walk through the key elements to consider when assembling yours. Your plan will depend on your startup’s maturity and priorities, so this guide will take you through it in a staged approach.

Strategic cash management is critical for startups

Cash circulates through your startup every day. For example, it might flow into the business from revenue, financing or debt raises, and investments, and it could flow out in the form of operating expenses, payroll, or marketing spend. Managing this cash flow (how cash comes in, and how it goes out)—along with your cash balance at any given stage—is called cash management.

Strong cash management requires a careful financial strategy that scales alongside your company and strikes a careful balance between earning, spending, and investing for continued growth. Here are some of the ways your strategy can better position your startup for success.

Get a bird’s-eye view of your startup’s financials

In order to be in the driver’s seat of your business, you’ll need to understand where you are relative to your financial plan. Staying on top of your cash flow each day will help you decide whether to stay on course or recalibrate to hit your targets, by enabling you to calculate your revenue, burn, and unit economics. Taking frequent snapshots of these metrics will help you decide where to allocate capital or dial things back.

A sound cash management strategy can give a startup sure footing in most environments, but it is especially important during periods of macroeconomic uncertainty, when funding rounds are more scarce or harder to secure. When interest rates are low, you can monitor cash flow trends and optimize how working capital is used, so that you require less cash to operate your business. When interest rates are high, you can make sure your cash is working harder for you and earning meaningful yield.

Preserve and maximize your cash

It takes time and hard work to get money flowing into your business—whether you’re working on raising your latest round or driving up sales. In either case, you can use your cash management strategy to preserve your capital and ensure you have the runway required to reach your business objectives. Depending on your goals and the maturity of your startup, you might be monitoring and managing expenses, growing revenue, or making strategic investments.

Being diligent about your cash management strategy will also help with tax reporting, make it easier to update investors, and keep you fundraise-ready when it’s time to raise another round. It also helps ensure that you are using your cash on hand as effectively as possible, whether that means investing in your team and business operations or putting idle cash to work through a treasury product that earns you yield.

Build and maintain investor confidence

Investors and lenders are banking on your ability to translate your vision into action—messy books and the lack of a financial game plan don’t exactly paint a promising picture. On the other hand, having a strong handle on your numbers and being able to back them up demonstrates to your backers that they’ve made a good bet. The metrics you can glean from clean books will help you easily prepare for board meetings, future fundraising rounds, and regular investor updates where you demonstrate how your company is performing.

Overall, these healthy habits will better position you for growth. Regardless of how much your investors believe in the value of your product or offering, what they’re really buying into is the opportunity to make more money.

Three considerations for cash management at any stage

As you consider which cash management approach is best suited to your startup at any given stage, keep in mind the following three factors:

1. Liquidity

Liquidity refers to your company’s access to cash—either cash on hand or cash that can be easily converted from assets—in order to cover short-term obligations and liabilities. Where you store money and how readily you can access it is especially important for startups, since funding growth is your number-one priority. Design your cash management strategy with these short-term cash needs in mind to minimize liquidity risk, which could stall growth.

Forecast your company’s financials and calculate your capital needs over various periods to get a clear view of your runway. You’ll also want to think about how you can best organize your cash—for example, using banking automations that bucket cash flow according to your budget. This will minimize manual work and help you stick to your cash flow plan month after month.

2. Risk

Founders can begin to add investments to their cash management plan once they’ve successfully addressed their mission-critical goal: ensuring their cash flow supports the business’s operational costs and growth plan. Surplus cash can earn returns, rather than sit idle in a checking account. Because your venture carries its own risks, and will likely also expose your investors or board, it’s important to weigh the risk-reward of additional investments and to consider the runway necessary to budget for them.

3. Yield

Alongside risk comes yield—the reward side of the coin. Yield refers to the earnings generated on an investment over a period of time. Yields are typically higher for longer-term investments, and higher-yield offerings usually entail accepting higher risk. The key for startup founders is striking a balance to maximize their available cash without taking on too much additional risk, as this could compromise the business’s ability to use that cash in the future.

Step 1: Set up your business account for smart cash management

In the early stages of your startup’s journey, it can feel overwhelming to handle the responsibility of the financials and a robust cash management strategy—but you don’t need to dive right into the deep end. Before you even start thinking about cash management, set up a bank account that’s poised to grow with you—and support your cash management strategy as you scale.

At Mercury, we worked hard to make the decision of where to bank super simple for founders, by building a banking experience that checks all the necessary boxes (FDIC insurance, fee-free ACH and international USD wires, best-in-class security, etc.). Mercury also offers enhanced features like read/write API access for customizable permissions, instantly available virtual debit and credit cards, and more control over spend through tiered user permissions. This functionality enables founders to set up their accounts for smart cash management.

Build a strong foundation with multiple accounts

When your business is young, there’s no need to overcomplicate things. But as you grow, you might find that having a single bank account that acts as the destination for all “cash in” and source for all “cash out” simply isn’t cutting it.

As a company grows, so do the number of functions it executes. With higher transaction volumes and an expanding team, incoming and outgoing payments begin multiplying into a bevy of transactions that make up your operations, payroll, accounts receivable, and accounts payable. It might make more sense to separate these activities into different buckets rather than try to manage them from a single checking account.

This separation can give you a more complete picture of your overall spending and ensure that you don’t overspend in any one area. It can also give you the visibility necessary to make accurate cash flow projections, which is important for planning around liquidity needs.

To separate your cash flows, you can either open sub-accounts under your existing checking account or—if your bank or banking partner offers the option, like in the case of Mercury accounts—you can open multiple checking accounts with easy auto-transfer rules to move money between accounts without a ton of manual work. It could be as simple as separating your incoming and outgoing payments, or as sophisticated as creating designated accounts for specific functions. You can even set up joint accounts to co-manage with your business partners.

Accounts to set up for better cash management

If you go the route of creating designated accounts for different buckets of cash flow, here’s an idea of what those different accounts might look like:

Primary checking account

Think of your primary checking account as the “main” account where you collect all of the cash flowing into your business. This is where you should be receiving all direct deposits, wires, and invoices. From there, this cash can be allocated into expense-specific accounts or designated savings accounts.

OpEx account

You can use an OpEx (“operational expense”) account to cover your business expenses. These expenses might be recurring, such as your rent, utilities, or software subscriptions, or nonrecurring, such as a one-off marketing campaign or third-party vendor payment. Depending on the scale and nature of your business, you can choose to break this account down even further, such as creating different OpEx accounts for different brick-and-mortar business locations, or setting up an individual account dedicated to marketing spend.

Payroll account

As your startup grows, your team will likely grow, too—which can make payroll a bit more complex to manage each month. Luckily, payroll is a predictable expense, both in terms of value and cadence. Creating a dedicated account for payroll and funding it before payroll is pulled from the account helps to ensure the business can always meet its payroll obligations.

Tax account

A dedicated tax account will provide peace of mind (and prevent any surprises) come tax season. Setting aside a portion of your revenues equal to your business’s tax rate can make tax reporting and remittance much smoother when the time comes.

Emergency account

While some expenses are predictable, others can arise unexpectedly. For example, an agency invoice could be higher than anticipated, or a piece of essential equipment could break down. Having an account dedicated to unforeseen expenses makes emergency situations much easier to navigate. An emergency fund can mean the difference between a business’s ability to carry on or hit the brakes. Setting up even a small recurring deposit can prove invaluable, giving you a cash cushion to lean on when you need it.

Dedicated AR accounts

If your startup has multiple revenue streams, it may make sense to separate them out into dedicated accounts for accounts receivable—not unlike allocating separate accounts for OpEx. This can provide additional insight into the business’s revenue drivers and help you compare their performance.

Savings or treasury account

A savings account, separate from your primary checking account and from your emergency fund account, can be a smart tool for setting aside cash for significant future expenses. Some savings accounts will be interest-bearing, so you can keep your cash working for you while it’s within arm’s reach.

In some cases—particularly for more mature startups—you might opt to skip the savings account and place a portion of your cash into a money market account that earns competitive yield and allows your cash to work a bit harder for you. For example, Mercury Treasury is a great tool for founders of high-growth startups to earn higher yield on their cash with low-risk mutual funds—and they can manage it all in their Mercury dashboard.

Founders using Mercury Treasury can also rest assured knowing that they can easily access their money within two to three days, thus reaping the rewards of a high-yield investment without running the risk of compromising liquidity. (More on this a bit later.)

Armed with the right approach to your accounts, you’ll be able to match your various sources of funding to your capital flows. This allows you to monitor your cash flow in real time, maintain a healthier bottom line, and even get a head start on setting aside money for taxes.

We designed Mercury to make multi-account budgeting easy with zero additional cost. That way, startups could do more than just open multiple checking accounts to organize their cash—they could automate that process more through auto-transfer rules, easy integrations, and a treasury product that’s built right into the banking dashboard.

Step 2: Get wise about your startup’s spend

It’s important to preserve capital when building a company—but of course, scaling requires spending. A business bank account that gives you easy access to spend tracking, facilitates easy reporting, and saves time and fees when initiating payments can be a valuable piece of the puzzle. It also helps to have a UI that clearly shows where your cash goes each day and allows you to quickly generate reports without feeling like you’re pulling teeth.

Save money and find more time with automated payments

How you move money matters. With ACH payments, wires, and even card payments, you could be leaking cash due to fees and wasting valuable time with manual processes. These fees could seem insignificant early on, but will compound as your business scales. Audit your current banking fees and find a partner that offers low fees and the ability to easily schedule and alter recurring payments.

Do more than pay bills, with the right credit card

When piecing together a cash management plan, founders might overlook choosing a corporate credit card—but the right card can be a powerful tool for extending payment terms, building credit, and even supplementing cash flow with perks and rewards.

At Mercury, we designed our corporate IO card2 to be accessible for growing businesses and to automatically reward startups with 1.5% cash back on all spend—no matter when or where the spend occurs. We wanted our card to be simple and powerful, because we know founders have enough to think about without adding confusing point systems or manual reward redemption to the daily to-do list. IO also gives you more control over company spending by issuing cards to the whole team with specified limits and merchant locks.

Step 3: Stay focused on your runway

Part of maintaining healthy liquidity is ensuring you have enough cash available to meet your ongoing obligations. This begins with understanding your revenue outlook and burn rate, and then forecasting your cash flows and capital needs over the next 12–15 months. Because the goal of runway forecasting and burn rate projections is to inform real-world cash management decisions, it pays to be realistic as opposed to aspirational. This can help you avoid being in a tight position if you encounter anything less than the best-case scenario.

To calculate your cash runway (in months), you’ll first need to calculate your cash balance and your net monthly burn, which is your monthly expenses minus your monthly revenues. Then use the following formula:

Runway = Cash balance / Net monthly burn

How many months of operating expenses to keep in your checking and savings accounts depends on your business. Realistically, most early-stage companies should keep a significant amount of operating expenses readily available—ideally 12–16 months’ worth. Then if something unexpected arises, they won’t need to divert focus away from growth to raise more capital every few months. This is especially true for companies that haven’t yet found product-market fit.

As your company matures and becomes cash-flow positive, you can likely rely more on the accuracy of your forecasting and consistency of your performance. At this stage, you might be able to aim for having six months of operating expenses on hand at any given time. This would leave you with enough to cover predictable monthly expenses with a slight buffer, while also allowing you to maximize the rest of your cash by investing it into yield-generating investments.

It’s always important to consider your company’s working capital needs. For example, if you know that successfully delivering a vendor payment on time depends on getting paid by a client on time, you should plan to have more operating funds available to avoid any potential holdups.

Step 4: Zoom out to extend your runway

Now we’ll circle back to the idea of using a treasury account to put your idle cash to work. I mentioned above that some companies might opt for a treasury account in place of a savings account—and that this is especially true for mature companies that have reached a high-growth stage.

Designated checking accounts and short-term cash forecasts keep you moving in the right direction as you grow, but a more sophisticated cash management strategy will start piecing together the three elements mentioned earlier: liquidity, risk, and yield. Once you’ve built a solid banking foundation and have a clear idea of your business’s cash flow and liquidity needs, you’ll be ready to put idle cash to work.

Forecast before taking on risk

It can be enticing to invest the cash sitting in your account, but remember, timing is key. In many cases, investing in a security through a treasury product means locking up your cash, sacrificing liquidity in the interest of yield. Without proper planning, this can put you at risk of not having enough cash to meet your short-term obligations.

To minimize liquidity risk, conduct runway forecasting. It’s imperative that you forecast your company’s financials and calculate how much capital you need over different periods of time, ensuring that you have access to a substantial cash runway. (As I mentioned above, Mercury Treasury alleviates some of this risk by allowing you to liquidate your invested cash in just a few days.3 That said, not every cash management solution allows for this, so it’s important to know what you’re signing up for and plan accordingly.)

Put your idle cash to work, while managing your risk

So you have taken a good look at your cash flow, understand your runway, and are prepared to add low-risk investments to your cash management strategy with yield products. Just as you would when running any other part of your business, it’s important to weigh the risk against the reward before making any decisions. As a founder, this might mean evaluating your own risk appetite as well as that of your investors and board.

As for where to put your cash, you have a variety of options. These include US treasuries, other government securities, and corporate bonds. Each of these differs in their risk level and maturity terms, so not all may be suitable for your business. Corporate bonds, for instance, usually promise higher returns than a government security but carry more incremental risk. That’s because your investment with a corporate bond is contingent on the corporation’s ability to repay its debts—in the event that it can’t, your investment might suffer in return.

To help mitigate risk while yielding a relatively high reward, diversify your company’s investments. Over-indexing in a single industry or sector can amplify risk, so—much as you might do as an individual investor trying to reduce your risk exposure—you’ll want to put your eggs in different baskets.

Adapting to movement in the market may also serve you well. For example, when interest rates are high, this could make money market funds especially attractive. Additionally, mutual funds may allow you to diversify your portfolio, making them a potentially great alternative to investing in several individual securities.

Find a treasury account you can trust with your business

When looking for a treasury account, your wishlist might include: a trustworthy provider that offers competitive yield, high liquidity (no lock-up periods), and low fees. Like I mentioned above, when investing with your startup’s cash, you’ll want to err on the conservative side when it comes to risk profile. A treasury solution that invests in money market funds can be a great option, since these mutual funds include securities that offer high liquidity, short-term maturity, and low risk. Some of these investments, such as US Treasury bills, are backed by the government, in turn providing additional security, even beyond FDIC insurance. With Mercury Vault, your cash is protected with up to $5M in FDIC insurance through Mercury’s partner banks and sweep networks. In addition, Vault actively monitors your accounts and manages risk by prompting movement of any uninsured amounts into a money market fund through Mercury Treasury. Treasury accounts are predominantly composed of low-risk US government-backed securities.

Keep in mind that the goal is to put your idle cash to work for you, not create more work for yourself. For that reason, another important benefit to look for is a treasury solution that offers the option to automate your cash management. Again, Mercury Treasury makes this possible by working directly with your banking dashboard, so that you can set up auto-transfers and create rules to move money between accounts to keep your funds moving in the right direction.

Toggle your investments based on your liquidity needs

You’ll need to understand your runway projections to make smart decisions about your treasury account. Investment types will differ in terms of maturity requirements—and you can be strategic about layering maturities for varying time periods, based on when you’ll need to access that cash.

Let’s say you currently have $5M in cash today. Based on your current expenses, you burn $500K each quarter. You’d want to keep at least $1M in a checking account or a treasury account that can be quickly liquidated. Then you could invest $500K in short-term securities that’ll mature in three months’ time, an additional $500K in securities that’ll mature in six months’ time, and so on. That way, you can earn yield on those amounts you don’t need immediate access to, but they’ll be available when you expect to need them.

Typically you’ll earn more for longer maturities, but that route might not serve your business if you need the capital sooner than those investments will mature. Having to sell before a security matures could expose your investment to fluctuations in the market—even with traditionally stable securities like US treasuries. It’s better to forecast conservatively, and avoid buying and selling frequently, reactively, or out of urgent necessity.

Think twice before doubling down on risk

The high yields promised by nontraditional cash vehicles might turn your head, but don’t let overly risky investments lead you off course. Remember, you and your investors are already making a high-growth-potential investment in your startup. If you plan on taking on even more risk in order to capitalize on higher returns, you need to acknowledge the risk your company and its investors will be making with that decision—and should proceed with caution.

Find a business bank that stacks success in your favor

As a founder, you’re constantly balancing the big picture and the particulars of your startup. Because of this, you’ll need a banking partner with a powerful dashboard that allows you to steer the financials where they need to go—without requiring you to spend too much time meandering through minutiae or sacrificing security.

Your business banking partner should give you a bird’s-eye view of the health and performance of your startup, while allowing you to delve into the day-to-day weeds when you want to, without dreading the task. It should safeguard your capital with best-in-class security, FDIC insurance, and risk management and empower your team to spend with ease—all while putting the tools in your hands to maximize your runway with high-touch investing.

Mercury was built with all of this in mind—designed by founders, for founders, so entrepreneurs could have a better business bank that makes it easier to bank on themselves.

Here’s what you get when you bank with Mercury:

  • $0/month up to $5 FDIC-insured checking and savings accounts (20x the standard per bank limit)
  • Seamless vendor and employee payments through ACH, wires, checks, and foreign exchange
  • Cards for the whole team with custom limits, plus 1.5% cash back on credit
  • Peace of mind that deposits are well protected with Mercury Vault
  • Up to 4.64% yield on idle cash with Mercury Treasury money market funds
  • Access to venture debt to extend your runway

Looking for a business banking stack that will scale with you? Get started with Stripe Atlas and Mercury.


  1. Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.
  2. The IO Card is issued by Patriot Bank, Member FDIC, pursuant to a license from Mastercard.
  3. Mercury Treasury is offered by Mercury Advisory, LLC, an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. SEC registration does not mean the SEC has approved of the services of the investment adviser. This communication does not constitute an offer to sell or the solicitation of any offer to purchase an interest in any of the Mercury Advisory, LLC, investments or accounts described herein. Past performance is not indicative, and is no guarantee, of future results. Mercury Treasury is not insured by the FDIC. Mercury Treasury are not deposits or other obligations of Choice Financial Group or Evolve Bank & Trust, and are not guaranteed by Choice Financial Group or Evolve Bank & Trust. Mercury Treasury products are subject to investment risks, including possible loss of the principal invested. Please see full disclosures at

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