How to use surplus cash to earn money
A solid cash management strategy will allow you to use surplus revenue to achieve your goals faster.
A solid cash management strategy will allow you to use surplus revenue to achieve your goals faster and provide a cushion in case of a sudden bottleneck in cash flow.
Figuring out what you’ll do with extra money now makes it easier to manage the funds when they arrive.
Has your business generated a surplus this year and you need to decide what to do with it?
It’s a problem business owners love to have – but it’s also one that requires some planning to get the most mileage out of your extra cash.
If your business has an investment strategy, that’ll probably dictate how you use your additional capital to help your business reach its short- and medium-term financial goals sooner.
However, if you don’t have an investment plan then you’ll want to find a place to park your surplus that will balance two competing interests – the desire to use your extra money to generate a return, and the need to keep your cash within reach in case of a rainy day.
A high-interest savings account that doesn’t require you to lock in your funds for a long period of time may be the best bet for your business.
Accounts like the Scotia Power Saving for business are excellent companions to your daily operating bank account as they provide higher interest rates – allowing you to earn more than you would from a checking account – but can be easily accessed should you experience cash flow issues.
Another consideration is whether to dedicate extra cash to personal or business savings. Stashing funds in a Scotia Power Saving for business account allows you to defer making the decision while keeping the capital liquid should an unexpected need arise in either your business or personal life.
Don’t let your cash surplus be handcuffed by fees or restrictions on transactions.
When looking for a savings account, take note of any monthly account fees or transaction costs, as they can eat into the interest you’ll earn. Also pay attention to whether there are any minimum account balances or limitations on transferring funds to or from the account.
Ideally, these plans should be in place before your first surplus occurs so that you can put your extra money to work as soon as you receive it.