Most companies are leaving 40–80 basis points on the table every single day—not because they're missing exotic instruments, but because their operating account and their "investment" account are the same account. Your bank is not managing your cash; it's managing its own margins. The fix is a three-tier liquidity structure. It takes a few weeks to set up, and the yield pickup is permanent.
Why one account is expensive
The average mid-market company keeps 60–90 days of operating expenses in a single bank account earning near-zero. That isn't conservative—it's a yield leak. At $10M in idle cash, a 50 bps improvement is $50,000 a year. At $50M, that's $250,000—real money currently sitting in a 0.01% DDA doing nothing. When the gap between a near-zero DDA and 4.5%+ short-term rates is this wide, inertia has a very real price.
The three tiers
Tier 1 — Operating reserve (0–30 days)
Keep two to four weeks of operating expenses in your main demand deposit account. Yield isn't the priority here—same-day availability is. Protect this layer; don't optimize it.
Tier 2 — Core liquidity (1–3 months)
Sweep surplus daily into a government money market fund or a high-yield sweep product. With same- or next-day liquidity, this layer commonly earns 150–200+ bps more than idle DDA balances, and automated sweeps handle it with zero manual lift.
Tier 3 — Strategic reserve (3–12+ months)
Anything beyond 90 days of runway belongs in short-duration T-bills, a laddered Treasury portfolio, or a separately managed account. You pick up another 30–60 bps with minimal credit risk—and this is the only tier where you should truly optimize for rate.
Make it stick: set a floor and sweep the rest
Work with your bank to establish a target balance on your operating account. Anything above it auto-sweeps into a higher-yielding vehicle daily. Most banks offer this; few companies activate it. Then review yield monthly, not quarterly—rates move, and a simple one-page cash report (balance by tier, current yield, benchmark) keeps leadership aligned and prevents cash from drifting back into Tier 1 the moment a controller gets nervous.
The real gatekeeper is your investment policy
What stops most teams isn't complexity—it's not having a written investment policy statement (IPS) that gives them permission to act. Define credit-quality floors, duration limits, and liquidity thresholds, then shop accordingly. Without policy guardrails, good intentions quietly revert to the single-account default.
Benchmark and take action
If your blended cash yield is more than 50 bps below the 90-day Treasury rate, you have room to optimize. The goal isn't to chase yield—it's to stop giving it away. Talk to CurvedSpace about building a liquidity tiering policy and automated sweep structure tailored to your cash position.