Writing your first startup treasury policy

You raised money. Or landed a major customer. Or suddenly found yourself staring at a balance that’s bigger than anything your company has ever held before.

Any of these moments is exciting. It’s also when cash management quietly becomes one of your most important jobs. Not because you need to maximize yield or start acting like a hedge fund, but because money without a plan creates friction. Every decision starts to feel heavier. Every Slack message about spending take on extra weight. And every week you delay deciding what to do with your cash is another week you’re operating on instinct instead of intention.

That’s where a treasury policy comes in.

A startup treasury policy isn’t corporate bureaucracy. It’s a simple document that answers one question: How do we manage our company’s cash?

For early-stage founders, the value is clarity, alignment, and peace of mind.

At its core, a treasury policy is a short, written set of rules for how your company manages cash.

It spells out the practical guardrails: how much cash stays liquid, where it’s held, how much risk you’re comfortable taking, who can move money, and how often those decisions get revisited.

For early-stage startups, this doesn’t need to be complicated. In fact, the most effective first treasury policies are often one or two pages long.

The key is to think of your treasury policy less as a financial strategy and more as a decision framework. When questions come up — Should we move excess cash? Is it okay to park this somewhere else? Who needs to approve this transfer? — the policy gives you an answer before opinions start flying.

Just as importantly, it creates a shared understanding between founders, advisors, and future finance hires about how capital is treated.

Many founders assume treasury policies are something to think about later down the road—when there’s a full finance team or CFO to focus on it.

In reality, the earlier you write one, the more useful it is. Here’s why:

It prevents panic decisions

Without a plan, founders tend to swing between extremes. Either everything stays untouched out of fear, or money moves reactively based on headlines, Twitter threads, or half-remembered advice. A treasury policy replaces emotional decisions by grounding it in logic that you’ve already established makes sense for your company.

It creates alignment

When multiple founders or stakeholders are involved, money decisions can become surprisingly personal. A written policy keeps discussions grounded in agreed-upon principles rather than individual risk tolerance levels or what feels right to one of you but not the other.

It documents intent

Even a lightweight policy creates a record of why decisions were made. That context is valuable for investor conversations, during audits or diligence, or when it’s time to make your first finance hires, who will need to understand rationale behind past decisions, not just account balances.

It frees up mental space

Founders shouldn’t be re-litigating cash decisions every week. A policy lets you stop thinking about the basics and focus on building the business.

You don’t need to solve everything at once. A strong early-stage treasury policy usually covers just a handful of decisions:

1. Your target cash buffer

Start with a simple question: How many months of burn do you want immediately available?

Many early-stage teams choose a range, often something like 6–12 months of operating expenses. This is the money you don’t tie up, don’t invest aggressively, and don’t second-guess. It exists to be accessible when you need it, without delays or hidden costs to pull it out. 

Your policy should state this clearly, even if it’s approximate.

2. Where your funds live

Next, define where different types of cash are held.

This might include:

• An operating account for payroll, vendors, and day-to-day expenses
• A separate account for excess cash or runway

That separation reduces operational risk, makes cash planning clearer, and prevents short-term spending needs from bleeding into longer-term reserves.

This is also where FDIC coverage considerations come into play. FDIC insures up to $250,000 per depositor, per bank, per account type. Leaving all funds in a single account or institution can expose the company to unnecessary risk, if you exceed that limit. 

It’s important to distinguish that funds held in investment accounts are not FDIC-insured. While investment products can play a valuable role in a treasury strategy, they carry different risk profiles and protections than insured deposit accounts.

Some startups address this by using financial institutions that participate in the use of sweep networks or similar tools, which distribute deposits across multiple FDIC-insured institutions behind the scenes. A treasury policy doesn’t need to prescribe a specific provider—but it should make clear how you think about safety, concentration risk, and diversification from the start.

3. Your risk tolerance

Early-stage treasury policies are usually conservative by design.

It’s common to explicitly state what you will not do. For example:

• No speculative investments
• No crypto exposure
• No long-term lockups that restrict liquidity

You can also define what you are open to, such as low-risk yield on idle cash, as long as it doesn’t compromise access or safety. Writing this down helps remove ambiguity later.

4. Authority and approvals

One of the most overlooked parts of cash management is access control.

Your policy should answer:

• Who can initiate transfers?
• Who needs to approve them?
• When is dual approval needed?
• Are there different rules above certain dollar thresholds?

This helps reduce risk and create clean internal controls before they’re urgently needed.

5. Review cadence

Finally, define when the policy gets revisited.

Many startups choose a simple trigger, such as:

• After a new fundraising round
• When the company’s burn rate meaningfully changes
• On a regular cadence like quarterly or biannually

A treasury policy is a living document. Start by putting one in writing, then you can refine it as your cash position, risk tolerance, and operating needs evolve.

Founders tend to make the same few mistakes when managing cash early on, but a good treasury policy helps avoid them. These are the main ones to be aware of:

Mistake: Leaving everything in one place.
This is often driven by convenience, but it ignores FDIC limits and concentrates risk unnecessarily.

Mistake: Using personal or legacy accounts.
Early accounts opened quickly can linger far longer than intended. Over time, they create visibility, access, and compliance issues.

Mistake: Letting cash sit idle without intention.
Idle cash isn’t always bad, but unexamined idle cash is a missed opportunity to align safety, yield, and access.

Best practices tend to look like:

• Clear separation between operating cash and runway
• Modern tools that make visibility and permissions easy
• Systems that enforce discipline without manual work

A treasury policy only works if your tools support it.

Modern banking platforms make it significantly easier to turn intent into behavior. For example, using accounts and sweep networks that automatically distribute funds across multiple partner banks can help address FDIC coverage concerns without adding operational overhead.

Real-time visibility into balances and cash movement also helps founders stay informed without micromanaging. Granular permissions make it easier to add or remove signers as the team evolves, without rethinking your entire setup.

The goal isn’t to build a complex treasury stack. It’s to choose tools that quietly support good decisions and reduce risk by default.

A first treasury policy doesn’t need many sections. It might include:

• Purpose: Why this policy exists
• Liquidity target: How much cash remains readily available
• Cash allocation: Where funds are held and why
• Risk guidelines: What is and isn’t permitted
• Authorization: Who can move money and how
• Review schedule: When (and how often) the policy is revisited

If you can answer those questions in writing, you’re already ahead of most early-stage teams.

Writing a treasury policy isn’t about being overly cautious or adding unnecessary complexity too early.

It’s about control.

When cash decisions are intentional, founders spend less time worrying about money and more time using it effectively. The policy doesn’t have to be perfect. It just has to exist.

Start simple, document your thinking, and choose tools that make good behavior easy. Your future self and your investors will thank you.

As with your checking and savings deposits, Mercury approaches protecting your Treasury funds with the same level of prudence. If you’re interested in a safer way to start earning yield on your idle cash, learn more about Mercury Treasury.