3 Cash Management Lessons SMBs Can Learn From Fortune 100 Companies


In early March, the national banking system was rocked by the collapse of San Francisco’s Silicon Valley Bank (SVB).
), known for its focus on technology startups, along with the fall of New York-based Signature Bank and California-based Silvergate Capital

While the bankruptcy of the SVB did indeed hit a number of technology and venture capital backed companies, losing investors $72 billion in market capthere was also a diverse range of small and medium-sized businesses that were strongly affected by the economic disaster.

According to NPR, more than 800 startup business leaders and entrepreneurs have worked tirelessly to recover from the largest U.S. financial meltdown since 2008, addressing the need to make payroll and support day-to-day operations. To hopefully avoid layoffs and keep businesses afloat, SMB leaders should look to larger companies that have proven their ability to stay afloat in turbulent economic times.

In addition to seeking business loans and other financial aid with rising interest rates, smaller businesses can do that as well look at Fortune 100 companies on conducting tax responsibility activities that support long-term financial management. Here, we highlight three cash management lessons that SMBs can learn from Fortune 100 companies, specifically related to risk management, using third parties registered with the Securities and Exchange Commission (SEC), and diversification.


Execute a risk management strategy

As reported by Fortune just three days after the collapse of the SVB, one of the main mistakes that led to the institution’s downfall was the absence of a chief risk officer for the previous eight months, resulting in a risk management nightmare and a loss of $1.8 billion for the quarter.

In addition, customers lose confidence in the SVB Financial Group
SVB’s parent company, the multifaceted risk led clients to want to transfer large balances to other FDIC-insured financial institutions and early stage venture capital investors.

However, Fortune 100 companies that had learned from the previous recession had since made major changes to their risk management functions, including making corporate compliance and risk management groups central to their corporate governance structure.

By designing more effective systems and processes that provide greater control and visibility into risk management, companies of all sizes can maintain corporate accountability and better address governance challenges.

Use SEC registered third parties

As a business leader, you not only want to raise capital and protect yourself in the event of financial hardship, but you also want to ensure that all federal security laws are strictly followed by your company and its money managers, investment advisors, financial planners and other third parties.

According to Darling, a cash management platform that helps businesses turn unused cash into revenue, finding the right Treasury Management Partner means finding a fiduciary who is a trusted, SEC-registered entity that will help you maximize your earnings. That means asking the right questions and finding a financial investment team with a history of success securing company assets and collaborating effectively with leadership teams.

The Office of the controller of the currency notes additional guidelines for approaching risk management in relationships with third parties, including ensuring compliance with applicable law by engaging SEC registered third parties with senior managers and the board of directors. This ensures more effective oversight of critical activities, clear areas of responsibility, thorough documentation and reporting, independent assessments and contingency plans where necessary.

Diversify investments and financial portfolio

Insights from Rocket Dollar CEO and gotechbusiness.com Finance Council member Henry Yoshida tell us about the importance of investment diversification for both Fortune companies and SMBs. As a critical part of any investment strategy, expanding your investments across multiple asset classes strikes a favorable balance between both preparing for potential risk and protecting your company’s assets.

As a small business owner, it may seem impossible or daunting to create a financial buffer when considering publicly traded securities that larger companies can invest in. Therefore, business owners should consider it instead invest differently and do their due diligence to make smart investments that will drive portfolio growth.

This starts with reviewing the current risk profile of your business and investments to determine your risk tolerance and capacity if economic and market conditions are not favourable. Once you’ve determined your current asset allocation, make sure you have a 401(k), IRA, or other tax-advantaged retirement plan with sufficient annual contributions.

When these two elements are combined, you can better understand what types of diverse investments are best to include in your personal and SME financial portfolios. This includes not only investing in bonds or stocks in different sectors, but also reinvesting in your company by improving products or services, technologies, recruitment processes or personnel development.

Maximum earnings require optimal cash management strategies

If SMEs want to implement more efficient and secure cash management practices, they need to look beyond obtaining high-yield credit and business loans to support their businesses and employees during tough economic times. Instead, Fortune 100 companies are demonstrating the need to assess the potential of future risk, choose a trusted treasury management partner, and diversify their investment portfolio to maximize their earnings.