How to Navigate Treasury Management in 2025
Market volatility and the propensity to sit on extra cash “just in case” are creating some significant opportunities and challenges in the current marketplace.
By Bridget McCrea | Spring 2025
Navigating the current financial landscape demands a proactive, adaptable treasury management approach (and a stomach for ongoing uncertainty and volatility). Both minefields and opportunities are weaved throughout the landscape, but with some careful planning and an eye for optimizing liquidity, corporate finance teams can ensure that their organizations can continue to make smart money moves this year.
Here, three finance experts share a mix of short- and long-term treasury management strategies to consider.
BE STRATEGIC WITH EXTRA CASH
Many organizations are sitting on high cash levels right now, which means 2025 could be the year to allocate some of those reserves to higher-yield investment opportunities.
Mike Heneghan, CFA, CAIA, senior vice president and senior investment strategist at Bernstein Private Wealth Management, says if interest rates trend lower this year, organizations may want to think beyond keeping cash in accounts susceptible to falling rates like money market funds. Instead, he says organizations with extra cash should consider moving some of the funds into bonds: “As you map out your cash needs for the next 9-12 months, moving any leftover cash into a safe, investment-grade bond portfolio will provide better returns over time.”
Heneghan says bonds are a strategic option to consider right now because they’ll offer a “good yield” if and when interest rates are lowered again. On the other hand, interest rates on money market accounts will naturally decline as the Federal Reserve lowers rates.
During this period of volatility and uncertainty, Sepora Makabeh Badower, vice president and wealth advisor at Bernstein Private Wealth Management, says it’s important for corporate finance leaders to watch the exposure they’re taking on. For example, if your organization has ample reserves and cash to invest, think strategically about whether the various investment buckets are sized appropriately. Additionally, she says to pay particular attention to any checking or savings accounts where money may be accumulating but not earning any or not enough interest.
“Take advantage of opportunities where you can earn additional income or interest,” Badower stresses. “There’s definitely an opportunity right now to take a step back, evaluate where you’re at, and consider what the next few years could look like.”
TO CRYPTO OR NOT TO CRYPTO?
While the potential for high returns when investing in cryptocurrency like bitcoin may be alluring, experts say it’s generally not recommended for treasury or short-term investments due to associated volatility and valuation challenges. Instead, companies that want to dip a toe in the crypto waters should keep it limited to a small, diversified allocation.
“We don't recommend crypto in cash management or treasury type allocations,” Heneghan says. “However, if an organization has long-term capital that can withstand some volatility, it may be appropriate for them to use a 1% or 2% weighting of their allocation.” Ultimately, Heneghan says to approach cryptocurrency holdings like you would a venture capital investment, where there’s potential to either lose it all or have an outsized gain.
If you’re looking for some non-crypto, higher-yield investment options, Derek Sasveld, CFA, director of investment strategy and research at Busey Wealth Management, recommends exploring international or emerging market opportunities. He also notes there may be more attractive valuations in small- and mid-cap companies both in and out of the United States right now.
KEEP SOME POWDER DRY
Sasveld says 2025 is shaping up to be a year to “keep some powder dry” (i.e., maintaining some readily available cash or liquid assets) and taking on less risk. He explains that credit spreads are tighter than usual and are “priced for perfection right now.” Put simply, the difference in yield between corporate bonds or other debt, and a risk-free benchmark (e.g., U.S. Treasury bonds) is smaller than usual.
“It’s been quite a while since we’ve seen this low level of spread,” Sasveld says. “With that in mind, we recommend being careful about how much credit risk you take on, knowing that any sign of economic weakness will move the credit spreads out.”
Of course, with the Fed now not expected to move rates within the next few months, Sasveld also urges teams not to “venture too far out in terms of maturity, because you’re not getting a whole lot more payment in exchange for taking on more risk.”
CREATE A ROADMAP TO SUCCESS
Regardless of market conditions, smart treasury management isn’t just a series of reactive decisions—it starts with a roadmap. This approach is especially critical during times of volatility, when erring on the side of caution may return lower yields and jumping into speculative opportunities can dramatically increase risk. With this in mind, Heneghan tells corporate finance teams to plan their treasury strategies with the same rigor they’d use with any other critical business initiative.
First, he suggests organizations start with a clear articulation of objectives by asking these four questions for 2025 and beyond:
- What are our organization’s key financial priorities?
- Do we want to maximize liquidity?
- Is minimizing risk our biggest goal right now?
- Do we want to do a better job of optimizing returns?
“Defining these goals upfront provides a framework for all subsequent planning,” Heneghan stresses.
Next, Heneghan recommends performing a comprehensive assessment of the current financial landscape by focusing on analyzing cash flows, evaluating existing debt structures, and identifying potential risks and opportunities. “Understanding the company’s current financial position provides a baseline for developing effective strategies,” he adds. For example, if cash reserves are ample—and if the company itself won’t need to tap those reserves within the next year—then start looking for some higher-yield, longer-term investments.
On the flip side, Badower says some organizations may need to “resize and rethink their current, shorter-term options, ensuring that they’re properly sized and invested with their broader portfolio goals in mind.”
Overall, Sasveld recommends corporate finance teams carefully evaluate their organization’s treasury management strategies every year, not only when market volatility and uncertainty threaten to upend their portfolios and investment approaches. “There’s nothing wrong with turning this into an annual exercise,” he stresses. “In fact, it should be done on an ongoing basis, depending on what opportunities are available in the markets at any given point.”
Bridget McCrea is a Florida-based freelance writer specializing in business and technology.
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