Cash management is how a business makes sure money comes in on time, goes out on the right day and never sits where it earns nothing. Done well, it means fewer overdraft days, suppliers paid on time and a clear view of how much cash the business can spare, and for how long.
That takes more work in 2026. Intrum's European Payment Report 2026 found that business customers now pay 20 days later than agreed on average, up from 16 days in 2023. ECB data for August 2026 shows euro area companies paid about 3.89% on overdrafts, while their overnight deposits earned 0.61%.
This is where we help. Once your cash forecast shows money the business will not need for months, we connect you with our regulated treasury partner, so it can go into money market funds, Treasury bills and government bonds. We check eligibility and handle the setup with you. Onboarding is digital, the money is invested in 2 to 3 business days and there is no lock-in.
Cash Management With a Plan for Spare Cash
The last step of good cash management is making spare cash earn a return. We set that part up for you.
- Returns on spare cash: Money market funds from 2% p.a., Treasury bills from 2.5% p.a.
- Regulated investing: A CySEC-regulated investment firm holds and runs the investments.
- Cash back when needed: No lock-in, so you sell when the forecast says you need the money.
- Less bank exposure: Hold government debt instead of one large bank deposit.
- Quick start: Digital onboarding, money invested in 2 to 3 business days.
- Setup handled: We check eligibility and run the onboarding with you.
When investing, your capital is at risk. Yields may vary.
Sophic
Treasury management
Yield
2% to 3%+ p.a
Fees
0.3% a year + €10 per order
Eligibility
EU/EEA businesses with an LEI
What Is Cash Management
Cash management is the daily work of collecting what customers owe, paying bills on time, knowing how much cash the business holds and where, forecasting what comes next, and investing money that is not needed yet. It has two goals: never run short of cash, and never leave large balances earning close to nothing.
The basics are the same for a two-person firm and a listed group. Only the tools change: online banking and a spreadsheet in a small company, treasury software connected to dozens of banks in a large one.
Cash Management Definition
For a policy document, the meaning of cash management should fit in one sentence. This cash management definition works well: the planning, monitoring and control of the cash a company collects, pays and holds, so that it meets every obligation at the lowest cost and earns a fair return on the rest. It covers both sides of the job, keeping the business paid up and keeping spare cash productive.
It also helps to agree what counts as cash. Under IAS 7, the accounting standard for cash flow statements, cash equivalents are short-term, highly liquid investments with little risk of a change in value, normally maturing within about three months of the date they are bought.
Cash Management Is the Daily Part of Treasury
Within treasury management, cash management is the operational core. Treasury is wider, because it also sets funding, financial risk and investment policy. Cash management runs every day: moving money between accounts, releasing payments and updating the cash position. We explain how cash management differs from treasury management in a separate guide.
A Profitable Business Can Still Run Out of Cash
Profit is an accounting result. Cash is what pays the salaries on Friday. A company can book a strong quarter and still run short if customers pay late. That gap is why working capital gets so much attention.
Late payment makes it worse. Intrum surveyed 8,385 businesses in 20 European countries for its 2026 report and found that more than 12% of revenues arrive late. Of those businesses, 62% said late receipts lead them to pay their own suppliers late. Good cash management breaks that chain early, because the cash forecast shows a shortfall weeks before it arrives.
Sophic
Treasury management
Yield
2% to 3%+ p.a
Fees
0.3% a year + €10 per order
Eligibility
EU/EEA businesses with an LEI
The Cash Management Process in Six Steps
The cash management process has six steps: collect cash, control payments, know the daily cash position, forecast, organise the bank accounts, and invest what is left. The first five keep the business paid up. The sixth decides whether spare cash earns anything. Each step feeds the next, so a weak step shows up everywhere.
The table shows what each step of cash management covers, how often it runs and what it needs.
Step | What it covers | How often | What it needs |
|---|---|---|---|
1. Collect | Invoicing, payment terms, reminders, direct debits | Daily or weekly | Clear terms and a fixed chasing routine |
2. Pay | Supplier runs, payroll, tax, approvals | Weekly or twice a week | Approval rules and a payment calendar |
3. Position | Balances across every account and currency | Every working morning | Bank feeds or online banking for each account |
4. Forecast | Expected receipts and payments by date | Weekly, with a monthly long view | A forecast model someone owns and updates |
5. Structure | Which accounts exist and how cash moves between them | Set once, reviewed yearly | Sweeps, pooling or planned transfers |
6. Invest | Where spare cash sits until it is needed | Monthly, or when the forecast changes | A short investment policy and an LEI |
Most trouble starts at steps 1 and 4: customers who pay late and forecasts nobody updates. Fix those two and step 6 becomes possible. Together, the six steps are your cash management system, on a spreadsheet or on software. In the EACT Treasury Survey 2025, around 275 group treasurers of large European companies put cash-flow forecasting at the top of their priorities.
Read more: managing cash flow in a growing business.
How to Collect Cash Faster
Collecting cash faster comes down to clear payment terms, invoices sent on time, a fixed chasing routine and payment methods that put the money in your account on the due date. It is the step with the biggest effect on the cash position, because every day a customer waits is a day you fund that customer.
Set Payment Terms and Enforce Them
In the EU, the Late Payment Directive 2011/7/EU sets the frame. Between businesses, payment terms should not go beyond 60 calendar days unless the contract expressly says so and the term is not grossly unfair to the supplier. Public authorities must normally pay within 30 days. Invoices sent the day the work is done and a reminder before the due date bring cash in sooner.
Charge Interest When Customers Pay Late
The directive also gives suppliers statutory interest of at least 8 percentage points above the reference rate, plus at least €40 per late invoice for recovery costs. In Germany the rate between businesses is 9 points above the base rate, so 10.52% a year with the Bundesbank base rate at 1.52% from 1 July 2026. Put it in your terms and on your invoices, so customers know late payment has a price.
Use Direct Debit for Regular Customers
For recurring invoices, a SEPA direct debit collects on the due date. The B2B scheme suits business customers. According to the European Payments Council, the payer cannot get a refund for an authorised B2B collection, while the Core scheme allows a refund request for eight weeks with no reason needed.
Count Money Held by Payment Providers
Card acquirers, payment platforms and marketplaces often hold your money for days before paying it out, and some keep a reserve against refunds. Count it as cash in transit and include balances on EMI accounts in your daily view. Online stores feel this most.
Read more: how to manage working capital.
Add the Last Step to Your Cash Management Process
Most finance teams collect, pay and forecast well. The step they skip is investing the balance that is left over. We set that up with you.
- Short government bills: Treasury bills from the EU, Germany, France and more.
- Funds in three currencies: Money market funds in EUR, GBP and USD.
- Dates that fit your forecast: Choose maturities that land before tax or payroll dates.
- Your limits, your call: You decide how much goes in and when it comes out.
- Client cash kept apart: Held in segregated accounts at J.P. Morgan.
- Independent custodian: Your investments are safeguarded by SIX Group, apart from the firm.
When investing, your capital is at risk. Yields may vary.
Managing Cash Going Out of the Business
Managing cash going out means paying every bill on its due date, not earlier and not later, in planned batches, with approvals that stop errors and fraud before money leaves. Paying on time protects your supplier relationships. Paying on the due date, rather than early, keeps the cash in the business for longer at no cost.
Pay on the Due Date in Planned Runs
Paying a 30-day invoice on day 5 hands the supplier 25 days of your cash for nothing. Pay on the due date, in a weekly or twice-weekly run, so the forecast knows when money leaves. The exception is an early payment discount. A 2% discount for paying 20 days early works out at about 37% a year, so take it when the cash is there.
Check the Payee Before Money Leaves
The joint EBA and ECB 2025 report on payment fraud counted €4.2 billion of payment fraud in the EEA in 2024, €2.5 billion of it through credit transfers. More than half of that credit transfer fraud by value came from manipulating the payer, for example with a fake invoice or changed bank details, and payment users carried about 85% of all credit transfer fraud losses themselves. Use verification of payee, which euro area banks have had to offer since 9 October 2025, and require a second approver and a call-back for any new or changed supplier bank details. Our guide to treasury risk management covers more controls.
Instant Payments Change the Timing
Under Regulation (EU) 2024/886, euro area banks and payment providers had to be able to receive instant euro transfers from 9 January 2025 and send them from 9 October 2025, at no more than the price of a standard transfer. Your own payments now leave in seconds and are hard to reverse, so approve them before anyone presses send.
Cash Position and Cash Forecasting
The cash position is how much cash the business holds today, across every account and currency. Cash forecasting projects that number forward, day by day for the next few weeks and month by month after that. Together they tell you whether you can pay what is due and how much cash you can spare.
Build the Cash Position Each Morning
Start with the opening balance of every account and add the receipts and payments already known for the day. Compare the result with a minimum balance for each account, set to cover a normal week. Below the minimum, move cash in. Well above it, move the extra to where it earns more. Our guide on how much cash a business should keep in reserve helps set that minimum.
Direct and Indirect Cash Forecasting
A direct forecast lists the receipts and payments you expect, by date: customer invoices due, payroll, rent, tax and loan repayments. It is the most accurate method for the next few weeks. An indirect forecast starts from planned profit and adjusts for non-cash items and changes in stock, receivables and payables. It works better 6 to 18 months ahead.
Use Three Time Horizons
A daily view for the next 10 working days decides today's transfers. A weekly view for the next quarter shows tax, payroll and supplier peaks early enough to act. A monthly view for the next 12 to 18 months shows whether you will need funding or have enough liquidity to commit spare cash for longer. Keep all three in one cash forecast rather than three spreadsheets.
Check the Forecast Against What Happened
Each week, compare the forecast with what actually happened and note why they differ: a late customer, a payment run that moved, a sale that slipped. After a few months the forecast becomes something you can invest against.
Sophic
Treasury management
Yield
2% to 3%+ p.a
Fees
0.3% a year + €10 per order
Eligibility
EU/EEA businesses with an LEI
Cash Management Across Several Bank Accounts
With more than one bank account, cash management becomes a question of structure: which account does which job, and how cash moves between them. Sweeps move balances automatically within one bank. Cash pooling combines the balances of several group companies. Both cut borrowing costs and stop cash collecting in the wrong place.
Give Every Account One Job
A clean structure has few accounts, each with one purpose: collections, payments and payroll, tax set aside, and spare cash. Fewer accounts mean fewer fees, a faster cash position and less room for error. Close the accounts nobody uses.
Sweeps and Cash Pooling Move Money for You
A sweep is a standing instruction to the bank to move money between your accounts each day. Groups can also pool their cash. The OECD's 2020 transfer pricing guidance describes cash pooling as a way of achieving "more efficient cash management by bringing together, either physically or notionally, the balances on a number of separate bank accounts." Pooling creates loans between group companies that need arm's length interest, so take tax advice first. See our guide to corporate treasury management.
Method | How it works | Best for | Watch for |
|---|---|---|---|
Planned transfers | Someone moves cash when the position says so | One company with two or three accounts | Depends on someone checking every day |
Zero balance sweep | Sub-accounts emptied into a main account each night | Collection and payment accounts at one bank | Accounts usually have to sit at the same bank |
Target balance sweep | Each account keeps a set amount and the rest moves | Shops or branches that need a float | Targets need a review as the business grows |
Physical cash pool | Group balances move daily to a master account | Groups with several companies and one main bank | Creates loans between group companies |
Notional cash pool | Balances combined for interest, no money moves | Groups with many companies and currencies | Cross-guarantees, and not offered in every country |
Most smaller businesses only need the first three. Pooling pays once some group companies hold cash while others borrow. Either way, the aim is one place where spare cash collects, so it can be measured and put to work.
Spread Large Balances Beyond One Bank
Under the Deposit Guarantee Schemes Directive 2014/49/EU, deposits are covered up to €100,000 per depositor at each bank, with all your accounts at that bank added together. A cash management policy should say how much the business may hold at any one bank and where money above that limit goes. The rules are in our guide to deposit guarantee schemes for business accounts.
Sophic
Treasury management
Yield
2% to 3%+ p.a
Fees
0.3% a year + €10 per order
Eligibility
EU/EEA businesses with an LEI
A Cash Management Strategy for Spare Cash
A good cash management strategy gives every euro a job and a date. Cash needed in the next few weeks stays in the current account. Cash for known bills further out can sit in instruments that mature just before the bill is due. Cash with no date at all is a buffer, kept where you can reach it within days.
Most cash management guides leave this part out. Start from the cash forecast, not the product: list the large payments due in the next 12 to 18 months and match each to an instrument that pays back in time.
Cash need | Example | Where it can sit | When you get it back |
|---|---|---|---|
Next 4 weeks of payments | Payroll, rent, the weekly supplier run | Current account | Same day |
Buffer for surprises | A large customer paying a month late | Money market fund or an easy access account | Usually within days |
Bill due in about 3 months | Quarterly VAT, an annual insurance premium | 13-week Treasury bill | At maturity, just before the payment |
Bill due in about 6 months | A corporate tax instalment, a dividend | 26-week Treasury bill | At maturity |
Bill due in about 12 months | Annual bonuses, a planned machine purchase | 12-month Treasury bill | At maturity, or sold earlier at market price |
Project 2 or more years out | A new building, money set aside for an acquisition | Short-dated government bonds | At maturity, with interest along the way |
A bill that matures the week before the VAT payment never needs to be sold early, so price moves matter less, and the main remaining risk is the credit of the government that issued it. At the time of writing, in October 2026, France's auctions on 5 October sold 13-week bills at an average yield of 2.786% and 26-week bills at 2.997%, and Germany sold bills maturing in July 2027 at 2.872%. When investing, your capital is at risk. Yields may vary.
Funds, Bills and Bonds Are Not Bank Deposits
A bank account keeps the €100,000 deposit guarantee but pays little unless the money is locked in a fixed deposit. Money market funds, Treasury bills and government bonds pay closer to market rates, but they are investments, so no deposit guarantee covers them and their value can move. With our regulated treasury partner, money market funds start from 2% p.a., Treasury bills from 2.5% p.a. and government bonds from 3% p.a. When investing, your capital is at risk. Yields may vary.
Get an LEI Before the First Investment
Under Commission Delegated Regulation (EU) 2017/590, an EU investment firm cannot trade a fund, a bill or a bond for your company until it has the company's Legal Entity Identifier. A bank deposit does not need one, so it is easy to miss. The code is renewed every year. See what an LEI number is and how to get an LEI number.
Read more: short-term investments for business cash and what idle cash costs a business.
Invest Spare Cash in Line With Your Cash Forecast
When the forecast shows cash you will not need for months, we help you put it where it earns a market rate.
- Treasury bills: From 2.5% p.a., a fixed return held to maturity.
- Government bonds: From 3% p.a., with interest paid on a set schedule.
- Money market funds: From 2% p.a., a variable return with easy access.
- Beyond one bank: Less of your cash depends on a single bank's balance sheet.
- Maturities you choose: Line bills up with the payments in your forecast.
- Costs set out first: You see the fees before you place an order.
When investing, your capital is at risk. Yields may vary.
Cash Management in Different Businesses
The cash management process is the same everywhere, but the pressure points differ. A contractor waits on stage payments, a tour operator holds customer money months before it pays hotels, and a recruitment agency pays its workers before clients pay it. The table shows nine very different examples.
Business | Where the cash pressure comes from | What good cash management looks like |
|---|---|---|
Construction contractor | Stage payments certified monthly, retentions held back until the job is finished, materials paid upfront | A forecast for each project, quick certification, retentions tracked with their release dates |
Restaurant group | Card takings arrive daily, suppliers are paid weekly, rent quarterly, and January is quiet | Takings swept to one account, rent and quiet months planned well ahead |
Recruitment agency | Temporary workers paid weekly, clients paying monthly on 30 to 60 day terms | A weekly forecast, firm chasing and a funding line sized to the gap |
Tour operator | Customers pay deposits months before travel, hotels and airlines are paid closer to departure | Customer money kept apart and matched to supplier payment dates |
Importer and wholesaler | Overseas suppliers paid before shipping, customers buying on credit | Payment dates agreed with suppliers, currency bought on a plan |
Exporter selling outside the euro area | Sales arrive in dollars or pounds, costs are paid in euros | Accounts in each currency, conversions planned against the forecast |
Event organiser | Tickets sell months before the event, most costs fall in the final weeks | Presale money held until costs fall due, in bills that mature in time |
Winery or farm | Income arrives after the harvest, costs run all year | A 12-month forecast, a credit line for the lean months, surplus set aside after sales |
Property manager | Rent and service charges collected for owners, fees earned monthly | Owners' money in separate accounts, the firm's own cash run apart |
Two patterns run through the table. Some businesses are paid before they spend, and their job is to put that money to work until it is needed. Others spend before they are paid, and their job is to shorten the gap and fund it cheaply. Many face both at different times of the year. So cash management for a given business starts with one question: which way does the cash run, and when? We cover funded startups, SaaS companies and law firms in their own guides.
Sophic
Treasury management
Yield
2% to 3%+ p.a
Fees
0.3% a year + €10 per order
Eligibility
EU/EEA businesses with an LEI
What Cash Management Costs
Cash management costs show up in three places: bank and payment fees, interest on borrowing when cash runs short, and the return lost on balances that sit in accounts paying close to nothing. Investing spare cash adds its own small costs. The cheapest setup is usually the one that borrows least and leaves the least cash earning nothing.
Bank Fees, Borrowing and Lost Interest Add Up
Cost | Where it comes from | How to reduce it |
|---|---|---|
Account fees | Monthly fees per account and per currency | Close the accounts that have no job |
Payment fees | Charges per transfer, card fees, currency margins on cross-border payments | Batch payments and use SEPA transfers, including instant ones priced like standard transfers |
Overdraft interest | Borrowing when an account runs short | Forecast the shortfall and move cash in first |
Late payment costs | Interest and fees when you pay suppliers late | Pay on the due date from a planned run |
Lost return | Cash left in accounts paying close to nothing | Move spare cash to where it earns a market rate |
Investment costs | Service fees, order fees, fund charges and price spreads | Ask for every cost in writing before you invest |
The first four show up on bank statements. The last two do not, so they are easy to ignore, and for a large balance the lost return is often the biggest cost on the list.
Borrowing and Holding Cash at the Same Time Is Expensive
Take a business with €300,000 in a savings account at one bank while its operating account at another bank runs a €150,000 overdraft for three months. At the ECB's August 2026 averages, the overdraft costs about €1,460 in interest at 3.89% a year, while the same €150,000 earns about €230 on overnight deposit at 0.61%. Moving the money would have saved around €1,230 in one quarter, or more than €4,900 a year if it happens every quarter.
Fees Matter Less Than What the Cash Earns
Now take €400,000 the forecast says will not be needed for six months. At 0.61% overnight it earns about €1,220. In a 26-week Treasury bill at an assumed 2.5% a year, it earns about €5,000 before costs. Assume total costs of 0.3% a year plus two small order fees, and about €4,380 is left. When investing, your capital is at risk. Yields may vary. Our partner's fees are on its listing card, so you can redo this sum with real figures.
Read more: treasury management for businesses and interest-bearing business accounts.
Sophic
Treasury management
Yield
2% to 3%+ p.a
Fees
0.3% a year + €10 per order
Eligibility
EU/EEA businesses with an LEI
Common Cash Management Mistakes
Most cash management mistakes are habits, not single bad decisions, and most come from seeing cash management too narrowly. Each one costs a little every month. These four come up again and again in companies without a treasury team, and each has a simple fix.
Treating the Bank Balance as Spare Cash
A high balance on Monday says nothing about Friday. If the VAT payment, payroll and a large supplier run fall in the same week, a balance that looked comfortable can turn into an overdraft. Spending from the balance instead of the forecast is how businesses end up borrowing at close to 4%. Decide what is spare only after the forecast has taken out everything that is due.
Letting Customers Set the Payment Terms
Accepting a large customer's 90-day terms without discussion means funding that customer for a quarter. On €100,000 of invoices a month, moving from 30 to 90 days ties up about €200,000 more of your cash for as long as the contract runs. Negotiate terms before you sign, remember that EU law limits terms between businesses to 60 days unless expressly agreed, and claim late payment interest when terms are broken.
Using the Annual Budget as a Forecast
A budget is set once and drifts from reality within weeks. Businesses that plan cash from the budget tend to find out about a shortfall when the bank calls. A forecast updated every week catches a late customer or a cost overrun while there is still time to act. Keep the budget for targets and the forecast for cash.
Leaving Cash Where Nobody Looks
Old accounts at a second bank, balances left on payment platforms, a currency account opened for one deal: small pockets of cash add up and rarely earn anything. They also make the morning cash position wrong. Once a quarter, list every account and platform the business uses, close what has no job and sweep what is left to the main account.
Read more: cash management services for companies.
Cash Management Help for EU and EEA Companies
If your company is based in the EU or EEA, starting is usually quick. We go through the details with you before anything is set up.
- LEI sorted first: We tell you if you need one and how to get it.
- One document list: Everything we need, asked for once.
- Early sector check: Excluded industries are flagged in the first conversation.
- Start with part: Move some of the surplus first and add more later.
- Ready in days: Onboarding takes about a day once your documents are in.
When investing, your capital is at risk. Yields may vary.
Bottom Line
So what is cash management? It is the routine that keeps a business paid up and its spare cash productive: collect on time, pay on the due date, know the cash position every morning, forecast honestly, keep the account structure simple and invest what the forecast says you will not need. The first five steps protect the business. The sixth is where the return is, and in 2026 the gap between a current account and short-dated government debt is still wide.
What is cash management in simple terms?
What is cash management and why is it important?
What are the steps in the cash management process?
What is cash management in accounting?
What is a cash management policy?
What does a cash management system do?
How often should a business forecast its cash?
What is cash pooling?
How does a cash sweep work?
How can a business get paid faster?
Can a business charge interest on late payments in the EU?
Where should a business keep cash it does not need yet?
What is cash management with an example?
Sources
- European Central Bank, Euro area bank interest rate statistics, August 2026 (released 1 October 2026)
- ECB Data Portal, Bank interest rates on revolving loans and overdrafts to corporations (MIR.M.U2.B.A2Z.A.R.A.2240.EUR.N)
- European Central Bank, Key ECB interest rates (checked 6 October 2026)
- Intrum, European Payment Report 2026 (published 21 April 2026)
- Directive 2011/7/EU on combating late payment in commercial transactions, EUR-Lex
- German Civil Code (BGB), Section 288, default interest
- Deutsche Bundesbank, Base rate under Section 247 BGB
- European Payments Council, SEPA Direct Debit
- European Central Bank, Instant Payments Regulation
- Regulation (EU) 2024/886 on instant credit transfers in euro, EUR-Lex
- EBA and ECB, 2025 Report on Payment Fraud (December 2025)
- IFRS Foundation, IAS 7 Statement of Cash Flows
- OECD, Transfer Pricing Guidance on Financial Transactions (February 2020)
- EACT, Main results of the 2025 EACT Treasury Survey
- Directive 2014/49/EU on deposit guarantee schemes, EUR-Lex
- Agence France Trésor, Latest auctions
- Deutsche Bundesbank, Bubill auction results, 5 October 2026
- Commission Delegated Regulation (EU) 2017/590 (RTS 22), EUR-Lex
- GLEIF, Introducing the Legal Entity Identifier
Disclaimer
Binderr does not provide investment services or investment advice. We introduce businesses to our regulated treasury partner and help with the setup. Investment services are provided by Athlos Capital Investment Services Ltd, which is regulated by the Cyprus Securities and Exchange Commission (CySEC, licence 348/17). Client cash is held in segregated accounts at J.P. Morgan, and investment assets are safeguarded by SIX Group.
Every investment is made under the partner's own terms and conditions, fees and risk disclosures, which you review and accept directly with the partner before you invest. The decision to invest is yours. Binderr is not responsible for investment performance, for any loss, or for the services the partner provides.
This article is general information, not investment, tax or legal advice. Figures, rates and rules were checked against the sources listed at the time of writing and can change. When investing, your capital is at risk. Yields may vary.
