Counterparty concentration: what the 2023 bank failures taught mid-market treasury

In March 2023, finance teams at thousands of companies spent a weekend wondering whether they could make Monday's payroll. Most could, eventually. But the episode exposed how many mid-market companies kept nearly all of their operating cash at one institution, often because their lender required it.

Know your exposure every day

You cannot manage concentration you cannot see. A daily view of balances by bank, not just by account, is the starting point. Many of our customers were surprised to find that 80% or more of their cash sat at a single counterparty once subsidiary accounts were included.

Write a simple policy

A workable policy for a mid-market company fits on one page: keep no more than a set share of cash at any one bank, hold at least two weeks of payroll at a second institution, and review the split monthly. Pair it with a minimum liquidty buffer that you can access on a day's notice.

If your credit agreement requires you to bank with the lender, negotiate a carve-out for a second operating account. Lenders have become far more willing to grant one since 2023.

Automate the sweep

The reason concentration creeps back is that moving money takes effort. Set target balances per bank and let a scheduled transfer, approved by two people, rebalance them weekly. The policy then holds itself.