What can businesses do with surplus cash?

There are many different options available to businesses for what to do with surplus cash. We’ll explore some of these below.

Clearly there are a lot of factors to take into account such as tax, how much needs to be retained in cash, what the company’s profits are, when you will need the cash etc. Once all this has been ascertained and you find you have cash available for a set period of time here are some options below to look at.

1. Firstly, the default position and probably what is happening now is to do nothing. Leaving the money in the company account.
2. A slightly more involved step than “do nothing” above is looking at high interest accounts/bonds. This means speaking to your bank and seeing if you can lock money away for a fixed period of time and receive higher interest. This is usually good if you need the money in the short term <1 year. 
3. Government Bonds. If you’re looking at over 1 year then Gilts can give you an alternative to the high interest accounts above. You’ll need an investment account to do this and work out which bond is best for your timeframe. 
4. Invest in Stocks and Shares. This route will offer you the opportunity to earn additional income for the business and grow your assets. It is only advisable if the money is not required for the business in the short term. Money that can be put away to grow whilst you concentrate on growing your company. As with all investments in the stock market it carries risk of loss and may come with tax implications that should be talked through with your accountant.

Assuming all the above has been checked and you’re happy with it then Cube Capital can advise on a strategy for your business in order to try and mitigate some of the effects of inflation and grow your cash over the medium to long term.