Corporate Investments

9th October 2019 | Corporate Investments

If you have excess cash available in your business, you have a number of options.

Most businesses use surplus cash to reinvest in the business or distribute it to the shareholders in the form of dividends. However, there may be situations where you have surplus funds and don’t want to distribute or reinvest them.

In this case, you may want to invest those funds in a way that will generate a higher return than a standard business account.

You have several options to choose from and each has benefits. When choosing what to do with your surplus cash you should consider tax efficiency, as well as security and access. Your financial adviser will be able to help you find the right option for your individual circumstances.

Before you consider investing your surplus funds, you should ensure that you leave enough cash in your business for expenses, cash flow and tax liabilities. If you are planning long term or more high-risk investments, then leave a larger buffer just in case you need access to cash at some time in the future.

Once you have decided how much you have to invest there are several available options.

Firstly, you can, of course, simply keep the money in a bank or building society. This offers a safe way of holding on to your money and guarantees a modest return. It also means your cash is easily available if you should need it.

However, with falling interest rates and rising inflation, holding your money in a bank account doesn’t always make the best financial sense.

For this reason, many companies are looking for other investment opportunities for their spare cash. The choice of investments will depend on tax implications as well as your attitude to risk and how much time you have for administering investments.

Corporate Investment options

Here is a list of the options you have when you have surplus cash available in your business

• Dividends
• Company pension contributions
• High interest accounts or bonds
• Company owned life assurance contracts
• Company owned capital redemption contracts
• Investment in stocks and shares
• Authorised Investment Funds
• Venture Capital Trusts

The area of corporate investments is a complex one with many variables. The way you choose to deal with surplus cash in your business will depend on a variety of factors including your attitude to risk. Before investing, you should be sure you understand all the benefits and risks associated with the type of investment you choose.

Your independent financial adviser will be able to advise you on your options and draw on the full range of products available to you. This will help you make the best use of your money and ensure the future of your company is secure.