Back-to-back interest rate increases, a challenging fundraising environment, and a slew of bank failures have sent corporate treasury managers scrambling to diversify their cash holdings.
In this blog, we discuss Rho Treasury more in-depth: what it is and how it helps companies manage their cash better.
Post-SVB: A New Cash Management Reality
In March, we witnessed several high-profile bank failures, beginning with Silicon Valley Bank. I will spare you a deep dive into the underlying factors that contributed to this taking place as it has been covered extensively by the press.
However, what matters for CFOs and founders is that this episode, and the continued reverberations the banking sector felt in its wake, changed how companies think about corporate cash management. In short, leaving all of your corporate cash in a basic checking account that offers minimal protection is not a viable strategy; you should protect every dollar of your business's funds and diversify wisely.
How Rho supports corporate cash managers
At Rho, we offer a comprehensive set of solutions built into our platform that make it easy for companies to achieve this:
1. Rho Checking Accounts provided by Webster Bank, a division of Santander Bank, N.A., Member FDIC, that are FDIC-insured up to $250,000 per entity.
2. Rho Business Savings Accounts that are built on a network of over 400 FDIC-insured banks, allowing companies holding funds above $250K to access up to $75M in FDIC deposit insurance per entity.
3. Rho Treasury, our treasury management service, invests your excess cash in short-dated government securities held directly in your name. Starting with the fundamentals, opening a Rho Checking Account, gives customers the standard of up to $250,000 FDIC insurance per entity. We have also discussed how Rho Business Savings Accounts offer companies the ability to access additional FDIC deposit insurance on their cash reserves in excess of $250,000. In concert with the aforementioned cash storage offerings, how does Rho Treasury help finance leaders further elevate a well-rounded cash management strategy? Let's start with an overview of the offering.
What is Rho Treasury?
Rho Treasury is our corporate treasury management service that invests your excess cash in short-dated government securities that are held in your name. Once onboarded to Rho, clients select a custom investment policy tailored to their business's unique liquidity and security needs, supported by Rho's in-house investment team. Rho's platform then actively adjusts customers' portfolios to earn market rates while monitoring operating account balances and automatically transferring money as needed.
And all of this is fully integrated into the Rho platform so customers can seamlessly manage their Rho Treasury account in the same place they manage employee expenses, pay vendor bills, and more.
In short, you don't need to be an expert on T-Bill ladders to put your cash to work and earn yield that can extend your runway.
FAQs: Rho Treasury
You can find a more comprehensive set of FAQs about Rho Treasury in this Knowledge Base article, but we have curated the five most common questions we receive from customers.
Is Rho Treasury right for my business?
Rho Treasury is perfect for clients who want to have more control over the assets their excess cash is invested in.
With Rho Treasury, we make it easy for your business to invest in short-duration, investment-grade securities that are held in your business's name, and our platform actively adjusts your portfolio on your behalf to earn market rates and monitors operating account balances, automatically transferring money as needed.
If you prefer to invest significant time hands-on managing your corporate cash, then Rho Treasury is likely not a fit. For those interested, I recently wrote why it's in founders' and busy finance leaders' best interests to automate this function.
How easy is it to sign up and onboard?
Signing up for Rho Treasury can be done in two steps. First, sign up for a Rho account. If you are approved as a customer, we will then connect you with an SEC-registered investment advisor representative who will then work with you to set up your account. Applications can be completed in under 15 minutes, and the time to approval for investment is typically 3-5 business days.
To support an efficient onboarding process, it's important to have the following documentation prepared:
Articles or certificate of incorporation or LLC Formation Certificate;
Business License;
Certificate of Good Standing from the Jurisdiction of Incorporation;
Bylaws, if applicable;
Operating Agreement, Partnership Agreement, or LLC Agreement, if applicable;
Two documents provided to your company during onboarding that will require wet signatures: Certified Beneficial Owners Form & Authorization Form.
What assets does Rho Treasury invest in?
Rho Treasury invests across four instruments: 13-week U.S. Treasury Bills, a money market fund sweep, and two short-duration, investment-grade mutual funds. Treasury Bills are non-fractional and 13-week only. You set the mix yourself in 5% increments, allocations must total 100%, and the result is a blended net yield. Your allocation is guided by your company's investment policy, built with Rho's in-house investment team.
Why not just buy T-Bills or a money market fund myself?
As we have covered in a previous guide, T-Bills can be a strong tool in your cash management strategy. However, as I have written about for TechCrunch, effective cash management requires more than a set-it-and-forget-it approach. With Rho Treasury, we handle this heavy lifting for you: our platform blends T-Bills, a money market fund sweep, and short-duration mutual funds into one allocation, held in your business's name, and actively manages it against your investment policy rather than leaving you to buy and roll individual instruments yourself.
How do yield returns compare to other offerings?
It's important to note that your actual returns, if any, will vary based on a variety of factors and circumstances, including, without limitation, your unique assets and investment policy selection. Net returns are based on 90-day T-Bill rates, which you can find at rho.co/treasury.
However, as discussed earlier in this post, yield requirements should be balanced with the diversification needs of your business. With our comprehensive services, we make it easy for companies to diversify and put to work every dollar of their business funds amid market volatility, and generate market-competitive yields in the process.
How to Get Started
Have questions or are interested in getting started with your Rho Treasury account today? Sign up with your business email at rho.co/treasury today to begin a conversation with our experts today!