In 2018, Moody’s reported that U.S. corporate cash holdings had reached a record high of nearly $2 trillion. While the number has decreased slightly since then, it’s clear many organizations have historically large amounts of cash on their books.Although a robust cash balance is likely a sign that your company is doing well, having too much excess cash might signal ineffective cash management.
As interest rates continue to rise, Weckwerth stresses the importance of managing cash wisely to enhance your return: Unlike other investment vehicles, MMDAs have no acquired fund fees and expenses . This is an attractive feature, Weckwerth explains, as it means MMDA investments won’t affect your company’s expense ratio.
Johnson emphasizes another point to keep in mind with respect to corporate trust account management of excess cash: Some corporate trust indentures might not allow for investment in non-FDIC insured options such as money market funds, so make sure you’re in compliance with your organization’s rules before considering this option.If you’re looking to invest cash conservatively for a slightly longer tenor, you may want to consider Treasury bills.
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