Startup Treasury Controls Playbook: Two Person Rule, Weekly Checklist, When To Upgrade Tools

Foundational Understanding: What Are Treasury Controls?

For an early-stage US startup, treasury controls are not about building an enterprise-grade finance department. They are simple, clear rules for how money leaves the company, built on three core actions: payment initiation, approval, and verification. The goal is to ensure no single person can control this entire chain from start to finish, a concept that builds investor confidence and protects your runway.

This is the essence of a core accounting principle: Segregation of Duties (SoD). It is not a rigid policy but a practical guardrail against error and fraud. Think of it as the principle of Initiator vs. Approver. One person prepares and submits a payment for review, and a second, separate person provides the final authorization to release the funds. This simple separation is your first and most powerful defense against both internal mistakes and external attacks.

These practices are the startup-friendly interpretation of abstract compliance frameworks like the Sarbanes-Oxley Act (SOX) and guidance from bodies like the FFIEC. Instead of getting lost in dense regulatory documents, you are translating their intent into actionable, secure payment workflows that demonstrate financial discipline to investors and auditors.

Phase 1: The Two-Person Rule for Lean Teams

One of the most common hurdles for lean teams is setting up robust segregation of duties. How can a team of only two or three people implement effective controls without slowing everything down? The answer is a pragmatic application of the two-person rule for every significant payment.

First, formally designate two distinct roles for your payment process. These roles cannot be held by the same person for a single transaction.

1. The Initiator: This person is responsible for gathering invoices, verifying their accuracy, and entering payment details into your accounting software or bank portal. This might be a founder, an office manager, or your first operations hire. A critical part of this role is vendor verification. Before paying a new vendor or an updated invoice for the first time, the Initiator must independently confirm the bank details, preferably with a quick phone call to a known contact. This single step prevents the vast majority of payment fraud.
2. The Approver: This person, typically a co-founder or CEO, is responsible for the final review and release of funds. They log in separately to the bank portal or payment platform, review the queued payment against the corresponding invoice, and provide the final authorization. They are the last line of defense, ensuring the payment is legitimate, accurate, and expected.

Setting Your Initial Approval Threshold

What founders find actually works is to start with a low initial approval threshold. A pragmatic starting point for this dual-approval workflow is requiring it for any payment greater than $1,000. This threshold keeps the process efficient for small, routine expenses like software subscriptions while ensuring all significant cash outflows receive a second set of eyes. As your business grows and transaction volume increases, you can adjust this number. Starting low builds the right habits from day one, creating a powerful audit trail and making it nearly impossible for a fraudulent payment to be processed without collusion.

Phase 2: Your 15-Minute Weekly Treasury Checklist

Translating abstract compliance rules into practical daily procedures is a major challenge for founders. The solution is not a 50-page policy document but a simple, repeatable weekly checklist. For most US startups, a disciplined weekly bank reconciliation review is sufficient for maintaining banking controls for early-stage companies until they reach over 100 transactions per month.

Set aside 15 minutes every week, ideally on the same day, to run through these four steps in your accounting software, such as QuickBooks.

1. Reconcile Bank Feeds: Open your banking tab and ensure every transaction from your bank feed has been categorized. Look for anything unfamiliar or unexpected. Is there a new recurring software subscription you do not recognize? A payment to a vendor you have not worked with? This is your early warning system for both unauthorized spending and potential account compromise.
2. Verify New Vendors: Review any new vendors added to your system in the past week. Cross-reference this with your records to confirm that the verification process, like a phone call to confirm bank details, was completed by the Initiator before the first payment was made. This is one of the most critical startup payment security best practices for preventing fraud.
3. Check Payment Approvals: Scan the list of payments that went out during the week. Does each one have a clear approval record? At this stage, it could be as simple as a documented Slack message, email chain, or a confirmation within your payment platform. The key is having a traceable confirmation from the designated Approver for every payment above your threshold.
4. Review Accounts Payable Aging: Glance at your list of unpaid bills. Are there any that are overdue or nearing their due date? This step helps you manage cash flow, maintain good relationships with your suppliers, and avoid late fees.

A scenario we repeatedly see is the CEO email phishing scam. A fraudster spoofs the CEO's email and instructs the finance person to urgently pay a new consultant for a confidential project. Without a strict, mandatory vendor verification step, that money is often sent and lost forever.

This 15-minute routine transforms SOX compliance for startups from a distant threat into a manageable weekly habit that builds a strong foundation for future audits.

Phase 3: Choosing Your Tech Stack for Growth

Selecting and integrating financial platforms can feel overwhelming, but the decision should be guided by your operational complexity, not revenue. The key trigger for implementing new controls or technology is a change in complexity, such as making your first non-founder finance hire, crossing 20 vendor payments per month, or preparing for your first financial review or audit, which is common post-Series A.

Here is how to think about treasury management tools for US startups at each stage:

• Pre-Seed and Early Seed (Bank Portal and QuickBooks): At this stage, your bank's online portal and QuickBooks are usually sufficient. Payments are initiated and approved directly through the bank. The primary risk is that this process is entirely manual and relies on human discipline. Your weekly checklist is your main control.
• Late Seed and Series A (AP Automation): Once you hit about 20 vendor payments a month, the manual process becomes a significant time sink and a source of potential error. This is the ideal time to adopt an Accounts Payable (AP) automation platform like Bill.com, Brex, or Ramp. These tools bake the Initiator vs. Approver workflow directly into the software. Bills are uploaded, routed to the correct person for approval, and then paid, creating a seamless, automated audit trail.
• Series B and Beyond (Payment Operations Platforms): As payment volume and complexity grow, such as managing funds across multiple bank accounts or handling international payments, a dedicated payment operations platform like Modern Treasury may become necessary. These platforms provide deeper, API-driven control over your banking infrastructure for more complex secure payment workflows.

How to Choose the Right Tools

When you select these tools, prioritize those that offer secure integrations. Look for platforms that connect to your bank using modern methods like OAuth or direct APIs. An example of an open banking standard in the US that future-proofs payment platforms is the FDX API, which enables secure, direct connections. These methods are vastly more secure than older techniques like screen-scraping, which require you to share your bank login credentials and can be brittle and unreliable.

Practical Takeaways for Founders

Building robust treasury controls is an evolutionary process, not a one-time project. For US startups, the focus should be on pragmatic steps that scale with your business. If you do nothing else, start with these three actions to establish strong banking controls for early-stage companies.

1. Implement the Two-Person Rule Immediately: Separate the duties of payment initiation and approval, even if it is just between two co-founders. Set a low initial approval threshold, like $1,000, to build the habit of dual control over cash outflows.
2. Adopt the 15-Minute Weekly Treasury Checklist: This simple routine of reconciling accounts and verifying payments provides the majority of the protection you need in the early stages. It also builds a foundation for future financial reviews and audits.
3. Let Your Complexity Guide Your Tech Choices: Let your operational complexity, not a sales pitch, determine when you adopt new financial technology. Start with your bank portal and QuickBooks, and only upgrade when specific pain points, like high payment volume or an upcoming audit, make it necessary. When you do upgrade, always choose tools that prioritize secure, API-based bank integrations.

See the hub for more on treasury controls and payment security.