Finance automation and corporate credit card startup Ramp has unveiled a treasury product that enables clients to store cash in a business account while earning interest.
Ramp highlights that businesses often face a difficult decision in cash management: maximizing earnings or ensuring quick access, but not both. This dilemma leads many finance teams to keep cash in accounts with little or no interest for immediate availability, or to invest in higher-yield options that are less accessible.
As a result, over 80% of businesses’ operating cash is held in accounts that do not generate interest. Additionally, companies lose three days of working capital and potential earnings while waiting for transferred funds to settle with vendors.
The new Ramp Treasury product aims to address this issue, allowing firms to store cash in a business account earning 2.5% interest or in an investment account with potential for higher returns.
Ramp claims that this product not only enables clients to earn more on their operating cash but also provides three additional days of working capital. Companies can use this feature to pay bills on the due date, optimizing their cash flow.
The launch aligns with Ramp’s vision to automate various aspects of the financial tech landscape, venturing further into the banking sector. However, the company clarifies that it is not a bank and the accounts offered are not deposit accounts.
Eric Glyman, CEO of Ramp, states, “The old treasury playbook meant either constant micromanaging of cash positions and payment dates or just accepting you’ll lose out on interest. The new playbook is refreshingly simple: let technology do the heavy lifting, so you don’t have to.”