The Reserve Account Nobody Touches
At one company, $300K sat in a checking account earning 0.1% for fourteen months. Nobody moved it, because moving it meant a decision nobody wanted to own.
At one company, three hundred thousand dollars sat in a checking account earning 0.1% for fourteen months. Nobody moved it, because moving it meant a decision: which account, what maturity, whose signature. The finance chief had been busy. The treasury task had lived on the list since the prior spring. Our inflation over those fourteen months ran near 4%, so the cash quietly lost close to thirteen thousand dollars of purchasing power while earning almost nothing back.
The same balance in a money market fund near four percent would have earned about fourteen thousand dollars over the same stretch. Put together, the checking account cost the company roughly twenty-seven thousand against a safe alternative. The work to move it was one day of finance time.
Small companies leave money sitting this way because treasury is unglamorous and every step needs a decision. The default action on cash is to leave it alone. Moving it means opening an account, getting board sign-off if the sum is material, wiring a test transfer, choosing a maturity profile. Each step is small. Each step needs a call nobody gets graded on making.
The asymmetry does the damage. Doing nothing is invisible: the balance hasn't dropped in nominal terms, the statement looks fine. Doing something is visible: a new account, a transfer, a note to the board. Choosing the visible work over the invisible work is the wrong call that feels like the safe one. The same instinct hides in how working capital drifts and in the interest you quietly extend to customers.
A treasury policy takes an hour to write. Cash above the operating floor, usually three months of payroll, goes into a money market fund or a T-bill ladder. Review the floor monthly. Report the yield in the board update. Once set up, it runs itself.
Most companies never write the hour-long policy, because writing it surfaces an awkward question: why has the cash been idle since spring? The question is uncomfortable. The cost of dodging it compounds every month the cash sits.