25 Sep Treasury Management for Businesses: Is Your Idle Business Cash Working for You?
For most businesses, cash does not get utilised the moment it is received. GST collections may be due after a few days, salaries are paid at the end of the month, vendor payments follow a schedule, and funds are often kept aside for annual bonuses or future business expenses. During this period, the money simply lies idle in a current account, earning virtually no return. While this may seem insignificant, businesses handling ₹10 lakh, ₹50 lakh or even several crores of working capital can lose a meaningful opportunity simply because their surplus cash is not managed efficiently. This is where Treasury Management comes in. Treasury Management is the process of deploying temporary surplus business funds into appropriate investment solutions that aim to preserve capital, maintain liquidity and generate reasonable returns until the money is actually required. Depending on the investment horizon, businesses can consider solutions such as Overnight Funds, Liquid Funds, Ultra Short Duration Funds, Debt Funds or Arbitrage Funds. The objective is never to take unnecessary risk—it is to ensure idle money continues to work while remaining available whenever the business needs it.
Case Study 1: Making GST Collections Productive
One of our clients, a payroll and compliance company, receives GST collections from its clients during the first week of every month. The amount typically ranges between ₹15 lakh and ₹20 lakh.
However, the GST liability is payable only after 10–15 days.
Earlier, these funds remained idle in the company’s current account.
After understanding the client’s cash flow, we suggested deploying the temporary surplus into Overnight and Liquid Funds. Just before the GST payment date, the money is redeemed and used to pay the government.
The client continues to meet all statutory obligations on time while generating additional income every month from money that would otherwise remain idle.
Case Study 2: Customer Advance Waiting for Production
One of our clients, a manufacturing company, receives an advance payment of around ₹60 lakh from a customer for machinery that will be delivered after two months.
Since production takes nearly 60 days, the funds are not immediately required.
Instead of leaving the money idle in the bank, we recommended investing the temporary surplus in an appropriate short-duration debt solution based on the expected utilisation period.
When vendor payments and production expenses become due, the investment is redeemed.
The result is better utilisation of working capital without affecting day-to-day business operations.
Case Study 3: Building an Employee Bonus Fund
One of our clients runs an industrial catering business. The company receives payments from its corporate customers around the 10th of every month. Since a portion of these funds is not immediately required for business operations, it previously remained idle in the current account.
Every December, the company announces its annual employee performance bonus.
To build this corpus efficiently, we started a monthly SIP of ₹8 lakh into a Liquid Fund. Instead of allowing the money to remain idle, the business systematically builds its bonus reserve throughout the year. Before the annual bonus is paid in December, the investments are redeemed and the required funds become available.
This simple treasury strategy allows the business to put idle cash to work while ensuring complete liquidity when the bonus needs to be paid.
Looking Beyond Fixed Deposits
Many businesses also maintain large contingency reserves in Fixed Deposits.
While FDs have their place, they may not always be the most efficient option for managing temporary business surplus funds.
For example:
- Interest from Fixed Deposits is taxable every financial year.
- Premature withdrawals may involve penalties or lower interest.
- Liquidity depends on the deposit terms.
Depending on the business’s cash flow requirements and investment horizon, alternatives such as Debt Funds or Arbitrage Funds may offer greater flexibility while helping businesses manage liquidity more efficiently.
The right solution depends on several factors, including the expected holding period, taxation, liquidity requirements and the overall treasury objectives of the business.
Treasury Management Is Not About Taking More Risk
A common misconception is that treasury management means chasing higher returns.
In reality, it is exactly the opposite.
The objective is to ensure that:
- Money required tomorrow remains highly liquid.
- Money required after a few weeks or months is invested according to its time horizon.
- Business cash remains available exactly when it is needed.
- Idle funds generate value instead of lying unproductive in a current account.
Good treasury management is simply an extension of efficient working capital management.
Treasury Management Is Not About Taking More Risk
A common misconception is that treasury management means chasing higher returns.
In reality, it is exactly the opposite.
The objective is to ensure that:
- Money required tomorrow remains highly liquid.
- Money required after a few weeks or months is invested according to its time horizon.
- Business cash remains available exactly when it is needed.
- Idle funds generate value instead of lying unproductive in a current account.
Good treasury management is simply an extension of efficient working capital management.
Why Businesses Choose Wealthsane for Treasury Management
Treasury management is not simply about recommending the right mutual fund—it begins with understanding how a business operates.
Being backed by a Chartered Accountant firm, Wealthsane works closely with business owners throughout the year. We understand their GST payment cycles, payroll schedules, advance tax liabilities, vendor payment timelines, employee bonus provisions and capital expenditure plans.
This gives us a unique advantage in identifying periods when business funds remain temporarily idle and recommending treasury solutions aligned with the company’s liquidity needs, investment horizon and tax efficiency.
Today, Wealthsane manages treasury solutions for several business clients across industries, helping them convert idle balances into productive capital—without compromising liquidity or disrupting day-to-day operations.
The principle is simple: If your business cash isn’t required today, it should be working for you until the day you need it.
Wealthsane is an AMFI-registered Mutual Fund (SIF) distributor and tax advisory firm, based in Thane West and led by an experienced Chartered Accountant, serving clients across Thane and Mumbai.