Investing the money of your business

There are a number of reasons why your business may be accumulating cash. It may have large inflows at certain periods of the year, it has been building cash for an asset purchase in the future or steadily generates cash that accumulates in its banking accounts. In order to have an idea how much cash your business has been generating over time, just review your cashflow on a regular basis. For every reason, you must think about whether or not it makes sense for your business to invest its cash surplus considering various investment strategies suitable to your business goals.
Consider the source of your cash surplus:
Cash derived from increased sales. Consider whether this surplus relates to increased seasoned sales or it is the result of longer-term business growth.
Cash derived from the sale of an asset or equipment. Consider if you need this money to purchase a replacement asset.
Cash derived from your own cash injection into the business as capital. Based on your business priorities, you can find ways to maximize your return on that cash.
Decide your strategy:
Debt repayment. If you decide to repay long-term debt, consider that you will not be in a position to re-borrow that money unless you repeat the whole loan application procedure required by your bank.
Fixed assets purchases. If you decide to pay fixed assets with cash, be sure that you will not need access to this cash in the future.
Time horizon investment options. Short-term placing provides ongoing liquidity. Medium-term saving provides higher returns while retaining access to your money. Long-term investments  let you maximize your returns.
Do not forget to assess how well your business can afford unexpected external changes (foreign exchange fluctuations, changes in customer demands, etc) and how they would affect your investment strategies.
 
Replay Business © 2011 Costas Stabolas| Designed by Nowmysite.com