Why Every PE-Backed Platform Needs a Treasury Policy

A treasury policy is one page that answers seven questions before they get asked. How much cash do we keep in operating reserve? Where does excess sit? Who can sign? When do we review? What is the FDIC strategy? How are sweeps configured? Who reports to whom?

If your platform does not have those answers documented, your audit committee, your sponsor, and your lenders will ask. Each one will ask in a slightly different format. A clean policy answers all of them with one document.

Reserve Sizing

The reserve covers the gap between billed AR and outgoing operating expenses. Size it as a function of DSO, not monthly burn.

For a healthcare platform with 60-day DSO and 30-day operating burn, the reserve target is 2 months of operating expense. For 90-day DSO (oncology, complex surgical), the target is 3 months. For shorter cycles (cash-pay specialties), 1-1.5 months is sufficient.

Document the calculation. Review quarterly. Adjust when DSO moves more than 15 days from baseline.

Where Excess Sits

Cash above the reserve target should earn yield, not sit at 0.01% APY.

The policy should specify: target APY (1.75% minimum at current rates), FDIC coverage approach (IntraFi sweep to $10M per entity), maximum balance at any single bank (typically $5M), and the trigger that moves cash from operating reserve to yield-bearing reserve (usually a daily threshold sweep).

Signer Matrix

Every approval threshold needs a documented authorizer. The matrix typically reads:

• Wires up to $25K: any practice administrator or controller

• Wires $25K-$250K: CFO or designated treasury officer

• Wires $250K-$2M: CFO plus CEO (dual signature)

• Wires over $2M: CFO plus CEO plus board chair approval

• Account openings or closings: CFO only

• Signer additions: CFO plus CEO

The exact thresholds vary by platform size. The principle is consistent: every dollar that moves above a defined amount requires a documented approval.

Sweep Configuration

Sweeps move excess balances automatically. The policy should define: trigger threshold (e.g., $500K), destination (yield-bearing reserve), frequency (end of day), and exception handling (what happens if the sweep destination is full or unreachable).

Sweeps live in the banking platform configuration, not in a finance team's calendar. If your team has to remember to move cash on Fridays, your sweeps are not configured.

FDIC Strategy

For multi-entity platforms, FDIC coverage is per entity, not per platform. With IntraFi sweep networks, each entity can extend coverage to $10M.

The policy should specify: which entities are enrolled in IntraFi, the maximum balance allowed before triggering additional coverage, and the review cadence for adjusting as balances grow.

Review Cadence

Treasury policy should be reviewed at three cadences. Weekly: a cash committee reviews balances, sweep activity, and any exceptions. Monthly: treasury team produces a board-ready summary for the CFO. Quarterly: the audit committee reviews the policy itself and approves any changes.

If your review cadence is "whenever something goes wrong," your policy is not working.

Reporting to Sponsor and Board

PE sponsors expect quarterly treasury reporting at minimum. The standard package: cash balance by entity, yield earned year-to-date, FDIC coverage status, signer matrix changes, and any policy exceptions.

This report should take one query, not a week of preparation. The banking platform should produce 80 percent of it automatically.

The Template, Compressed

One page. Eight sections. Every active platform should have this:

1. Reserve target as percentage of trailing 12-month opex, adjusted for DSO.

2. Yield target on excess (1.75% minimum).

3. FDIC coverage approach per entity.

4. Maximum balance per bank.

5. Signer matrix by amount.

6. Sweep configuration by account.

7. Review cadence (weekly cash committee, monthly board package, quarterly audit committee).

8. Policy owner (typically the CFO, with the treasury team executing).

If your current policy fits on more than one page, it has been overcomplicated. If it lives only in your CFO's head, write it down. Your audit committee will thank you.