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Corporate treasury management

Corporate treasury management for Indian businesses

A practical way for SMEs to decide how much cash to keep ready, how much may be surplus, and which short-term options deserve a closer look.

Last updated . General information only.

Short answer

Corporate treasury management means planning when cash is needed, keeping enough available for operations, and choosing suitable places for any surplus that remains. For most growing businesses it starts with a 30- to 90-day view of cash, a clear operating reserve and a written review process, before any decision about investing.

What treasury covers for an SME

  • Cash position: the total available across every account the business uses.
  • Known payments: payroll, GST and other tax payments, supplier invoices, loan EMIs and rent, with their dates.
  • Operating reserve: the amount kept available so the business can pay on time even if receipts slow down.
  • Surplus evaluation: what remains, how long it may be needed, and how liquidity, risk and tax differ between options.
  • Governance: who approves a decision, how often the position is reviewed, and where it is recorded.

A four-step process

  1. Map the cash position

    Add up balances across current, sweep and deposit accounts on the same date. Note any balance that is restricted or already committed.

  2. Schedule the known obligations

    List the payments due in your planning window with their dates. Payroll and tax dates usually matter most, because missing them has consequences that cost more than any return.

  3. Set the operating reserve

    Choose how many months of operating expenses to keep available. The right number depends on how volatile your receipts are, how quickly you can raise funds, and your lenders’ terms. There is no universal figure.

  4. Evaluate what remains

    Decide the period the surplus could stay out of the bank, then compare options on liquidity, risk, cost and tax over that period. Record the decision and the assumptions behind it.

Worked example

A company holds ₹50,00,000 in its operating accounts. Its figures are:

  • Monthly operating expenses: ₹8,00,000. A reserve of 2 months gives ₹16,00,000.
  • Payments due in the next 30 days: payroll ₹10,00,000, GST ₹3,00,000 and vendors ₹5,00,000, a total of ₹18,00,000.
  • Cash needed for operations: ₹18,00,000 + ₹16,00,000 = ₹34,00,000.
  • Potential surplus: ₹50,00,000 − ₹34,00,000 = ₹16,00,000.

Suppose the finance team models half of the surplus, ₹8,00,000, for 3 months at an illustrative 6.5% a year before tax. The simple interest is ₹8,00,000 × 6.5% × 3 ÷ 12 = ₹13,000. That figure is an illustration of one option, not a plan to invest. The remaining ₹8,00,000 stays available by design.

Run your own numbers in the idle cash calculator.

Common mistakes

  • Treating the whole bank balance as surplus, before payroll, tax and suppliers are counted.
  • Comparing headline rates without checking liquidity, exit terms, minimum amounts and tax.
  • Assuming a quoted rate is fixed. Market-linked returns change, and bank rates are reset over time.
  • Holding a reserve that is either far too small for the business or so large that nothing is put to work.
  • Making decisions without a documented approval step or a regular review.

Comparing the main short-term options

Two comparisons are most often asked about when a business has cash it may not need for a while. Each guide explains its assumptions and the risks in detail.

What EasyToInvest offers today

The EasyToInvest website currently provides planning tools, general guides and a route to a conversation with our team. Specific investment products, their providers and their availability are described separately, depend on suitability and documentation, and are subject to applicable regulation.

Nothing on this page is personalised investment advice, a recommendation, or a promise of any return. Investment products carry market risk, and returns are not guaranteed.

Sources and verification

  • Scope and definitions. General treasury practice. No external figures are quoted on this page other than the illustrative assumptions shown in the worked example.

Talk to the EasyToInvest team

Share your cash position and what you are weighing up. We will walk through the options and the trade-offs with you.