As our economy improves, so does the cash flow for many of St. Augustine’s small businesses.

If strong sales and profits are adding excess cash to your business checking account, don’t just sit back and enjoy the good times. Take this opportunity to get the best possible return on those funds.

That excess cash—invested right—can be used to grow your cash reserves. And those reserves can be used later to:

  • Strengthen and grow your business
  • Insulate your from economic downturns
  • Take advantage of opportunities when they present themselves
  • Paying bonuses

What is Excess Cash?

According to financial experts, excess cash is what’s left over after you’re done paying salaries, marketing, upgrading and maintaining equipment, paying rent, purchasing supplies, and paying whatever it takes to operate your business day-to-day.

Oh, make sure you understand what it will take to run your business three, six or 12 months; maybe longer depending on your business plan.

So, take a look at your spreadsheet or ask your accountant to determine if you have excess cash.

Ok, There’s Excess Cash. Now, What Do You Do With It?

Since you’re dealing with business cash, you’ll want to balance liquidity with making the highest possible return.

How much liquidity you need can be determined by understanding your cash flow cycle. That’s where understanding your business needs three, six or 12-months in the future really matters.

Once you understand your liquidity needs, you can determine an investment time frame and amount of risk you can take with your excess cash.

At this point, it’s a good practice to speak about investment options with your bank or financial advisor.

Options they will probably discuss with you could include:

  • Business money market deposit accounts
  • Mutual funds
  • Sweep Accounts
  • CDs

Investing your excess cash can help put you and your business in a position of strength. That strength can lead to greater confidence to move your business forward.

If you ever have any questions about whether you have excess cash, give us a call at (904) 429-4588. We’ll see if we can help you out or guide you in the right direction for assistance.