How can you optimize the investment of your company's surplus cash?

A reminder of what a cash surplus is

A cash surplus corresponds to available cash that your company does not plan to use in the short term .

These may include retained earnings, accumulated reserves or surplus funds from financing or investments.

Rather than leaving these funds idle, investing them effectively so that they continue to work for the company is a matter of good management.

Why invest your company's surplus cash?

Investing surplus cash is not just about returns. Here are the three main objectives to keep in mind:

• Maximize return on available funds . Investing your surplus cash allows you to generate additional earnings, while respecting your company's financial management policy.

• Protecting the value of surplus earnings against inflation . If your funds remain in a non-interest-bearing account, their value falls due to inflation. Leaving them inactive means losing money. Investing these surpluses allows you to protect them against this devaluation.

• Anticipating future needs with tailored solutions . A good investment helps you meet future cash flow requirements (salary payments, purchases, investments), while offering flexible solutions that adapt to your changing needs.

Investment options for surplus cash

There are several investment options for managing a company's surplus cash. The choice will depend on your priorities in terms of return, security and liquidity.

Term account

Un term account is a simple, secure solution for growing surplus cash.

You invest your funds for a specific period ( generally between 1 and 5 years ) and receive a higher interest rate than traditional current accounts. The average interest rate on term accounts is 3,02 %.

The main advantage? Capital security, as it is guaranteed by the bank . However, your funds are frozen for the duration of the contract This limits their flexibility in the event of an urgent need for liquidity.

Click here to read our article on the best corporate term accounts. .

Money market funds

Money market funds are highly liquid investments, ideal for companies that need rapid access to their funds.

These funds invest mainly in short-term debt instruments, such as Treasury bills or certificates of deposit . They offer immediate yield and near-instant liquidity.

However, their profitability is generally low, at around 2,75 % raw. This is the ideal solution for funds you don't intend to tie up for long.

Corporate life insurance

Corporate life insurance is an attractive and flexible option. It allows you to diversify your investments while benefiting from optimized tax treatment .

Unlike other investments, life insurance allows you to invest in a wide range of products (euro funds, equities, bonds, etc.), which offers greater flexibility and higher yield potential .

The Hero pro account

Le Hero pro account offers a specific investment solution for businesses, combining security and performance. This account allows you to manage both your cash and your surplus investments.

Le compte pro Hero offers a yield of 3% per year. Remuneration is calculated per day and paid annually.

Also, as the funds are available at any time, you're guaranteed a return, regardless of the length of your investment.

Comparison of cash surplus investments

There are several criteria to consider when choosing an investment for surplus cash: liquidity, return and risk.

Liquidity: what are the solutions for rapidly available funds?

Some investment options offer a high flexibility and enable quick access to your funds, which is essential in case of urgent cash needs.

Here's a comparison of the most common solutions, with concrete examples to help you choose the best option for your situation.

Interest-bearing accounts :

Visit interest-bearing accounts offer a immediate access to the funds, making them very easy to use for companies with urgent cash needs.

For example, if a IT services needs to pay an unexpected bill or a supplier quickly, she can transfer funds from the interest-bearing account to her current account in just a few clicks, without delay.

Yields, however, remain low, generally between 0.5 % and 1 % The simplicity and availability of funds compensate for this limitation.

Money-market funds

Visit Money-market funds are also very liquids but their management is a little more complex than that of a simple interest-bearing account.

They offer similar yields, around 0,5 % à 1 % but they are ideal for companies that want to manage a large cash surplus on a short-term basis without taking too many risks.

For example, a Retail SMEs can invest its cash surpluses in a money-market mutual fund, then recuperate the funds within a few days if an urgent need arises.

It's an easy-to-use investment, but the company will probably have to go through a broker or bank to manage your investment.

The choice will depend on your liquidity needs, the simplicity you're looking for and the amount you want to invest.

Returns: the most profitable investments for your surplus

For higher returns, but with a little more risk or lock-in, here are some interesting investments:

• Government bonds : The obligations can offer yields of 2% to 4%, depending on duration and issuer quality, while remaining relatively safe.

• Term accounts These products offer higher returns than current accounts, generally between 1% and 3%, but the funds are locked in for a set period.

• Structured investments These products can generate substantial returns, but are more complex and carry a certain risk of capital loss. Returns can reach 5% or more, depending on the type of product.

Higher returns often come with higher risk or longer lock-up periods. So it's important to assess your liquidity needs and risk tolerance.

Risks: how to choose according to your company's profile

The risks associated with each type of investment vary according to the security of the product. Here is a classification of the different types of investment according to the level of risk to which they are exposed:

• Low risk Interest-bearing accounts, passbooks, euro funds, government bonds.

• Moderate risk Corporate bonds, medium-term investments (term accounts, certain investment funds).

• High risk Equities, structured investments.

Visit guaranteed funds (such as term accounts or euro funds) are low-risk. However, riskier investments such as actions or obligations corporate may offer better returns, but expose the company to fluctuations in the financial markets.

Before choosing, evaluate the risk profile your company: a stable company with a lot of liquidity can afford to take a little more risk, while an SME or start-up should prefer more secure investments.

Criteria for choosing your investment

To choose the right investment for your surplus cash, you need to determine your priorities.

Identify your priorities: return, liquidity or security

Before choosing an investment, ask yourself the right questions: do you want to maximize returns, guarantee the security of your funds or opt for immediate liquidity?

These priorities determine which products are right for you.

Determining the availability of funds

Some investments require you to lock in your funds for several months or years. If you plan to use your surplus funds quickly, opt for solutions such as interest-bearing accounts or the Money-market funds .

If you can leave your funds locked up for longer, options such as term accounts or obligations will be more appropriate.

Common mistakes to avoid

There are a number of common mistakes that can get in the way of optimizing your cash surplus.

Here are the pitfalls to avoid.

Leave the surplus in a non-interest-bearing account

Don't leave your surplus cash in a conventional non-interest-bearing current account. You risk losing value due to inflation and miss out on yield opportunities.

High yield at the expense of safety

High-yield investments are often riskier. It is important to don't sacrifice the security of your capital for a more attractive return.

Choose investments that match your company's profile and liquidity needs.

Examples of suitable investment strategies

Here are some concrete examples to help you choose the right investment product for your company.

SME with short-term needs

SMBs with fluctuating cash flows should favour investments with a longer-term horizon. high liquidity . Solutions such as Money-market funds , interest-bearing accounts or pro booklets provide rapid access to funds, with a higher return than a conventional current account.

For example, an SME in the retail sector can place its monthly surpluses in an interest-bearing account to generate interest while guaranteeing the availability of funds for payroll and supplier payments.

Case of a large company wishing to diversify its surplus earnings

Larger companies, often with substantial cash surpluses, can afford to adopt a more flexible approach. diversified strategy . They can invest in obligations corporate and medium-term term accounts and even investment funds .

This makes it possible to maximize returns while spreading risk.

The case of a start-up seeking to preserve its initial cash position

Startups need to be particularly careful with their surpluses. The main objective is to preserve cash flow to finance the next stages of development.

Investments ultra-liquides like interest-bearing accounts or short-term passbooks are the best choice for maximum safety.

Discover Hero's pro account

With a 3% interest rate The Hero pro account is a simple, flexible and secure way to optimize the investment of your company's surplus cash.

You can access funds at any time et interest is calculated daily and paid monthly .

Optimize investment of cash surpluses of your company is to strike a balance between liquidity, return and risk. To choose the ideal investment, you need to take into account the specific features and needs of your business. The pro Hero account offers optimal cash management, combining security, liquidity and competitive returns.