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Funding a Cash Need, Investing Excess Cash


Cash, or daily liquidity, is the amount of money you have in your one or multiple bank accounts. Never take Cash for granted. Cash is like oxygen for your company; it keeps your business alive. Even if you have a great product, growing revenue, and a steady pipeline, your company is dead if you run out of cash. As a CEO, you should know how much daily liquidity you'll have in your bank account. Cash forecast is key. riskrate's cash forecast tells your daily cash position in the future. Cash forecast counts your data from banks and finance tools: bills to be paid, customer’s receivables, sales and purchase orders, salaries, debt, and more.


As a CEO, you have cash sources and uses from operating: payments from your customers, payments to your suppliers, salary payments to your employees, tax payments, and so on. You may also have financing cash flow, like loan withdrawals and repayments.

Your company’s cash-out needs to be financed by some combination of cash-in generated by the business. The most critical cash-out payments with strict deadlines are salaries, social security, value-added taxes, and loan repayments.

Managing this cash flow in and out is cash flow management.

In daily cash, timing matters. Cash that you have not received is not cash. In real life, customers pay you late, and some will not pay you at all. Open sales invoices (or accounts receivable, i.e., the money your customers owe you) is not actually cash because it’s not in your bank account yet. Until you receive the cash payment, it is not cash. With riskrate, you know the daily liquidity, the amount of money you have in your multiple bank accounts, and the daily cash forecast (or daily liquidity forecast) without a second of manual work. As a result, there is no need to keep extra cash buffers in a bank account.


How to Fund a Cash or Liquidity Need?


If, for some reason, you end up in a situation without enough liquidity, don’t panic. You have many options for digging yourself out. Funding from your customer payments

Funding from customer payments can be done in two ways: minimizing late payments and shortening payment terms. Let riskrate help you identify opportunities to get better cash. Before a deal with the Customer, quickly check the payment terms and delays using riskrate


Build strict cash flow management on advance payments or short payment terms. Make sure you are invoicing promptly. On the cost side, keep your burn rate in control. Don't spend upfront revenue, and pay only behind income. The longer the payment terms you can negotiate with your supplier, the better.


Bank's cash limit is a buffer for daily changes.


The cash limit from your bank is a buffer for daily changes. Your total funding costs are a sign-up fee and a credit provision added by a margin for those days with a negative cash balance.

Investing Excess Cash Requires Board Approval


Once you sense your forecasted cash needs, you can determine where to leave the cash according to the required liquidity timing. Remember that when it comes to investing your cash, your first goal is preserving capital, and the second is liquidity. You must ensure you can cover your near-term operating expenses, even in your worst-case scenario, and any one-time payments before you look for yield.


Operating cash can be put into bank deposits you can pull from whenever you need it. Since you don’t need strategic cash in the short term, you can consider investing in a yielding account like a money market fund. These accounts can be less liquid. So if you know you’ll need cash to make short-term payments, for example, do not tie it up in something long-term.

In today’s rate environment, you can earn 2 - 3% in highly liquid low-risk money market instruments. It may also make sense to explore slightly longer-duration instruments (i.e., 6-12 months), including bond or corporate bond funds. It's important that you have your Board approve it before you make investments. So before getting started, you should draft a simple investment policy for your board's approval.

Tips on effective Cash Flow Management

  • Cash is like oxygen for your company. Get confidence about your Cash flow today, next weeks, and months by consolidating data from banks and finance tools into a live cash forecast. No manual work is needed.

  • If, for some reason, you end up in a situation without enough liquidity, don’t panic. Customer payment times, Cash limits, and strict cash flow management are the first options for digging yourself out.

  • Remember that when it comes to investing your cash, your first goal is preserving capital, and the second is liquidity. It's important that you have your Board approve it before you implement a broader investment strategy.


The environment is changing rapidly right now. If you need to make better decisions faster, we'd love to serve you - quickly.








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