T-Bills importance in treasury management As mentioned in chapter two, the goal of a treasury management strategy is to minimize risks and maximize returns. This is accomplished through a variety of actions, which include the allocation of capital. Prior to this year, most startups allocated their funds across primary accounts, which they used for day-day operations, and savings accounts, which they used to store excess cash. With interest rates on the rise, startups transferred their excess cash out of savings accounts with traditional banks to high-yield accounts with Fintechs, which generate infinitely more returns (100x+ in some cases). More recently, with the collapse of SVB, the importance of sweep accounts came to light. Sweep accounts enable startups to distribute their cash across a network of partner banks to maximize their FDIC insurance coverage. Sweep accounts are certainly better than traditional savings accounts, in terms of both coverage and returns, but leave startups wanting more. Enter Treasury bills. Treasury bills generate higher returns than both savings and operating accounts and are backed by the U.S. Department of the Treasury, an institution that has never defaulted on its debt. When structured properly, Treasury bills enable startups to capitalize on the upside of rising rate environments, while effectively covering 100% of their excess cash. The only downside is the limited liquidity (e.g. the date of maturity) and the principal losses that may ensue due to the sale of the T-Bills prior to maturity. Ultimately, startups should consider T-Bills one of the tools in their metaphoric treasury management tool belt. When structured properly, T-Bills can produce consistent predictable returns for startups. When structured improperly, they can be disastrous—causing not only principal losses but also complete cash lock-ups and inaccessibility of reserves. Check out the next chapter for structuring T-Bill ladders to balance returns & liquidity.