3 cash management lessons SMBs can learn from Fortune 100 companies

Financial Planners

In early March, the collapse of San Francisco’s Silicon Valley Bank (SVBVB), known for its focus on technology startups, along with the collapse of New York-based Signature Bank and California-based Silvergate Capital SI, led to the collapse of the national bank. The system was shaken.

SVB’s failure certainly affected many tech and venture capital-backed companies, with investors losing $72 billion in market capitalization, but also a wide range of small businesses heavily affected by the economic disaster. there was.

According to NPR, more than 800 startup business leaders and entrepreneurs are working tirelessly to bounce back from the biggest U.S. financial collapse since 2008, grappling with the need for payroll and day-to-day support. is. In hopes of preventing layoffs and keeping businesses running, SMB leaders should look to large companies that have proven their ability to survive in these economically turbulent times.

In addition to looking for business loans and other financial assistance as interest rates rise, small businesses can look to Fortune 100 companies for ways to implement financial responsibility activities that aid long-term financial management. Here, we highlight his three cash management lessons SMBs can learn from Fortune 100 companies. In particular, it relates to risk management, the use of SEC-registered third parties, and diversification.

Execution of risk management strategy

As Fortune reported just three days after the SVB collapse, one of the major oversights that led to the SVB collapse was the absence of a Chief Risk Officer in the last eight months, resulting in nightmare and a loss of $1.8 billion in the quarter. .

In addition to losing customer confidence in SVB’s parent company, SVB Financial Group, SIVB, the numerous risks have prompted clients to move their major balances to other FDIC-insured financial institutions, and venture capital investors to invest in startups. withdrew the funds.

However, learning from previous recessions, Fortune 100 companies have since made significant changes to their risk management functions, including making enterprise compliance and risk management groups central to their corporate governance structures.

By devising more effective systems and processes and increasing control and visibility into risk management, businesses of all forms can maintain corporate accountability and address governance challenges head-on.

Use an SEC-registered third party

As a business leader, you not only raise capital and protect yourself in the event of financial hardship, but also your business and its money managers, investment consultants, financial planners, and other third parties.

According to Treasure, a cash management platform that helps businesses convert idle cash into earnings, finding the right financial management partner is a trusted SEC-registered entity that can help maximize earnings. That means finding fiduciaries. It means finding a financial investment team with a track record of asking the right questions, protecting business resources and working effectively with leadership teams.

The Comptroller’s Office has an SEC-registered third party to liaise with senior management and the board of directors to ensure compliance with applicable laws and regulations, as well as to manage risk in relationships with third parties. I’m pointing out additional guidance on how to approach it. This allows for more effective oversight of critical activities, clear lines of responsibility, full documentation and reporting, independent review, and contingency planning when required.

Diversification of investment and financial portfolios

Insights from Rocket Dollar CEO and Forbes Finance Council member Henry Yoshida tell us how diversifying investments is important for both Fortune companies and SMBs. As an important part of an investment strategy, spreading investments across multiple asset classes allows for a beneficial balance of both preparing for potential risks and protecting the company’s assets.

As a small business owner, the ability to create a financial cushion may seem impossible or difficult given the listed securities that large companies can invest in. Investments that drive portfolio growth.

This begins with examining the current risk profile of your business and investments to determine your risk tolerance and capacity when economic and market conditions are unfavorable. Once you’ve determined your current asset allocation, make sure you have a 401(k), IRA, or tax-advantaged retirement plan with appropriate annual contributions.

Combining these two factors will give us a better understanding of the various types of investments that are best suited for inclusion in personal and SMB financial portfolios. This includes investments in bonds and stocks across various industries, as well as reinvestments in the business by enhancing products and services, technology, recruitment processes or talent development.

Maximizing your return requires an optimal money management strategy

For SMBs to implement more efficient and secure cash management activities, it is not just about securing high-interest credit and business loans to support the company and its employees during difficult economic times. Instead, Fortune 100 companies need to assess potential future risks, select reliable financial management partners, and diversify their investment portfolios to maximize returns.

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