Treasury teams are building greater flexibility into their liquidity strategies. They’re diversifying cash holdings, reassessing investment-policy guardrails, matching investment vehicles more closely to cash needs and preparing for emerging tools they may not yet be ready to adopt. They’re also increasing their cash holdings.

According to findings from the 2026 AFP Liquidity Survey, underwritten by Invesco, 46% of organizations increased their U.S. cash holdings over the past 12 months, up from 38% in 2025. Another 40% reported no significant change, while only 14% reduced cash holdings.

Reasons for the increases are mixed. Improved operating cash flow is a major contributor, but organizations are also responding to domestic political and regulatory risk, geopolitical risk, financing activity and tariffs.

Given these shifting risks, industry experts emphasized during AFP’s companion webinar to the survey that the key question for treasury teams is how to position cash so their organizations can respond as conditions change.

Key Takeaways

• Stablecoins are on the radar but not actively in use. Only 1% of treasury teams are using stablecoins or tokenized products, but 86% would consider real-time money market funds. Treasury teams are watching the space carefully, waiting for regulation and governance to catch up.
• Most companies review their short-term investment policies, but not often enough. A full 17% of organizations don't review their short-term investment policies at all, and another 19% review them only every two to four years.
• Bank deposits are losing share of short-term investments. Holding 42% of short-term allocations, bank deposits hit their lowest share since 2011 — not because they’re risky, but because organizations are finally comfortable enough to diversify into Treasury securities.
• Flexibility doesn't mean risk appetite. Even as companies diversify their holdings, 83% of short-term investments remain in deposits, money markets and Treasuries — the trifecta that has weathered every storm.

Matching short-term investments to cash needs

Treasury teams’ long-held priorities for short-term investments remain firmly intact. An average of 83% of organizations’ short-term investment balances are held in bank deposits, money market funds (MMFs) and Treasury securities. But the allocation is shifting.

Bank deposits currently account for an average of 42% of short-term investments — the lowest share since 2011 — while allocation to Treasury securities has increased.

The webinar discussion suggested that these allocation decisions are influenced not only by market conditions but also by operational factors, including the predictability of an organization's cash needs.

Mark Kirsch, CTP, Regional Head of Treasury in North America for Flix, explained that banks generally value stable deposit balances, so other short-term investment options are likely better suited to those with highly variable cash flows. “If those balances are going to fluctuate widely over time, you need to consider what is the right kind of vehicle for me?” he said.

“There are a lot of decisions that go into a separately managed account,” said Laurie Brignac, CIO, Invesco. “You have to be comfortable with the credits, the duration.”

AFP’s survey found that safety, liquidity and yield continue to guide short-term investment decisions, with safety consistently taking priority. “Treasury is focused first on return of principal, not necessarily the return on principal,” said Tom Hunt, CTP, Director of Treasury Practice at AFP.

Short-term investment policies can’t be static

Even though organizations are seeking greater flexibility in response to the shifting economic environment, they are not reducing their controls. In fact, AFP’s survey suggests governance remains central to liquidity management.

Seventy-five percent of organizations maintain a written investment policy governing their short-term investment strategy. And among the organizations with policies, 83% review them regularly, 52% review or update their policies annually, and another 13% do so quarterly or every six months. And then there are those who are significantly overdue, reviewing their policies every 2 – 4 years (19%) or “not on a regular basis” (17%).

The experts on the webinar panel emphasized that simply having a policy isn’t enough. “You have to ask yourself, ‘Who was the CFO when the policy was written?’” said Kirsch. “And if that individual is not the current CFO, how well are you taking their temperature? Do you know what his or her risk profile is? It’s not something that you can just set and forget. It's a living, breathing document that practitioners need to focus on on a regular basis.”

“When something happens, everybody wants to look at it and do it,” said Pete Crane, President and Publisher, Crane Data. “And then over time people get complacent. It gets pushed to the back burner.”

AFP’s survey noted that organizations review investment policies in response to shifts in financial condition, risk tolerance, market conditions and the preferences of C-suite executives and boards. That governance becomes even more important as treasury teams expand the range of investment vehicles they consider.

The panelists stressed the importance of looking beyond the name of an investment vehicle to understand what sits beneath it. Kirsch encouraged treasury practitioners using money market funds to review the securities held by those funds and determine whether the underlying investments are consistent with their corporate investment guidelines.

“In treasury, there’s a mantra of no surprises,” said Hunt.

Liquidity management innovation without abandoning the guardrails

Stablecoins and tokenized products remain on the periphery for most organizations today. Just 1% of survey respondents reported conducting pilots or using stablecoins or tokenized funds on a limited basis, while 9% are actively exploring or evaluating use cases, and 55% are aware of the technologies but not exploring them.

Those figures shouldn’t necessarily be read as a rejection of innovation, however. The survey also found growing expectations around real-time liquidity: 41% of respondents expect the money market industry to provide 24/7 liquidity as real-time payments expand, up from 38% in 2025. And if those vehicles comply with their investment policies, 86% of organizations would select real-time money market funds, while 68% would choose real-time investment sweeps.

The gap between today’s limited adoption and the actual interest in emerging products suggests treasury teams may be waiting for technology, regulation and internal governance to catch up before changing how they invest.

Kirsch urged practitioners not to confuse the current limited adoption with irrelevance. “I think as more and more developments occur in that space, we're going to be approached by those institutions that we rely upon to consider these kinds of transactions, these kinds of instruments and leveraging the channels that are being built,” he said.

The role of treasury isn’t necessarily to be an early adopter. It’s to understand emerging tools well enough to determine if and when they belong within the organization’s liquidity strategy. And those questions may arrive from senior leadership before treasury has any intention of implementing a new product.

“The CFO is going to ask a question, ‘Hey, is this something we should use?’” said Hunt. “Or I met with our investment banker and they're talking about this. That's how that dialogue starts for a lot of people.”

Preparing for more than one outcome

The 2026 AFP Liquidity Survey paints a picture of a liquidity environment in which certainty remains elusive. Organizations are holding more cash, but they’re also diversifying how they invest it. Formal policies exist, but those policies increasingly need to accommodate changing conditions. And while adoption of emerging technologies remains limited, treasury teams are already thinking about a future in which liquidity may operate very differently.

Which makes flexibility itself an important element of liquidity strategy. Rather than trying to predict a single outcome for interest rates, geopolitical conditions, regulation or technology, treasury teams can position themselves to respond to multiple possibilities — maintaining sufficient liquidity, understanding the risks inside their investments, periodically reassessing their guardrails and developing expertise in tools they may need later.

The fundamentals of treasury haven’t changed. Safety and liquidity still come first. What is changing is the methods practitioners may need to use to preserve them.