What are the best short-term investments for corporate cash flow?

Why invest your company's cash in the short term?

Investing your company's cash in the short term allows you to do 3 things:

• Avoiding currency erosion . With inflation averaging 2 % per year on average, an inactive cash position loses value over time. For example, €100,000 left in a non-interest-bearing current account will lose around €2,000 in value in one year.

• Optimize returns while maintaining rapid liquidity . By investing cash on a short-term basis, a company can generate a return while retaining the ability to access funds quickly if necessary.

• Securing surplus cash . When temporary surpluses are generated, it is preferable to invest them rather than let them "sleep", while minimizing risk.

Comparison of short-term cash investments

Here's a summary of the rates, risks and conditions for each option.

The best short-term investment solutions for corporate cash management

Here are the different short-term investment options for your cash, each with its advantages and disadvantages depending on your needs in terms of liquidity, yield and security.

Short-term term account

Le term account In the short term, this means the deposit of funds for a specified period usually between 3 months and 1 year, with a guaranteed interest rate.

• Current rates for 3, 6 and 12 months vary between 1.5% and 2.5%. depending on the bank.

• The term account offers safety because it is guaranteed by the bank. It also offers a more attractive return than a non-interest-bearing current account.

• The main limitation of the term account is unavailability of funds prior to maturity . This investment is therefore best suited to companies with limited short-term liquidity needs.

Professional surplus account

The professional surplus account is a flexible solution for companies needing immediate availability of funds.

• Rates vary from 0.5% to 1.5 depending on bank and market conditions.

• The major advantage of this product is immediate liquidity . Funds can be accessed at any time, which is ideal. for companies with frequent liquidity needs.

• Although accessibility is a strong point, the rate of return is often lower than that of term accounts. This makes this option less advantageous for companies seeking higher returns .

Money market funds

Money market funds invest in very low-risk instruments, such as government bonds or short-term debt securities.

• In terms of performance, money market funds offer between 0.8% and 1.5%.

• These funds offer excellent liquidity and are professionally managed . So they're a safe option for companies looking to protect their capital while generating a moderate return.

• Although highly secure, returns on money market funds are relatively low compared with other investments.

Business passbook accounts

Similar to Livret A passbook accounts for individuals, business passbook accounts are a highly liquid, risk-free investment.

• Current rates for these products vary between 0.5% and 1.0 . However, these accounts are subject to specific deposit limits, depending on the bank.

• They enable immediate access to funds and are guaranteed by the bank This makes them very safe for companies looking for a simple, secure solution.

• Yields are generally low, often well below those of other products such as term accounts or money-market funds.

Short-term bonds

Short-term bonds (less than 2 years) generally offer higher yields than passbook accounts or money-market funds.

• Short-term bond rates vary between 1.2% and 3 depending on the issuer (government or corporate).

• These investments can offer more attractive returns than other low-risk options. What's more, they are relatively safe for short investment periods.

• The main limitation is market volatility . The value of bonds may fluctuate prior to maturity, which can lead to risks of capital loss, especially in times of economic turbulence.

Short-term structured products

Structured products are investments that combine several financial assets to offer optimized returns, but with varying degrees of risk.

• These products can be based on stock market indices, exchange rates or commodities.

• Returns can be higher than those of traditional investments, and some products offer partial capital protection.

• The complexity of these products and the uncertainty can represent a high risk for companies unfamiliar with this type of investment.

What are the criteria for choosing a short-term cash investment?

The choice of a short-term investment depends on a number of key criteria that will help you tailor the solution to your financial objectives.

Here are the elements to consider:

Liquidity

Before choosing an investment, consider check product liquidity . How long does it take to recover the funds?

For immediate needs, solutions such as professional surplus accounts or money market funds are ideal.

If the company can afford to lock in its funds for a few months, term accounts will be a better option.

The expected return

Yield is a key criterion when choosing an investment.

For example, a term account can offer a return of 2.5% over 12 months, while money market funds generally offer a more modest return.

Compare options based on current yields.

The level of risk

Investments such as term accounts and money market funds are considered very safe, with a low level of risk.

On the other hand, products such as bonds or structured products can offer higher returns, but also carry greater risk.

What is the tax treatment of short-term cash investments?

Interest on short-term investments (term accounts, money-market funds, company savings accounts) is subject to the following taxes Corporate income tax (IS) at the standard rate of 25 % .

Capital gains from bonds or structured products are also taxed under the IS regime.

Financial income is also taxed in the same way.

However, certain investments can benefit from tax exemptions or advantageous tax regimes, such as investments in specific zones or in SRI products.

Safety or profitability?

The choice between security and profitability depends on the company's specific needs.

Here are some case studies to help you understand:

• For companies with regular cash requirements → A professional surplus account or a professional logbook offer a high liquidity . It allows you to withdraw funds quickly without losing interest.

• For a company with temporary surplus → In this case, a term account or a monetary fund is more suitable. They offer superior performance while maintaining moderate liquidity .

• For companies seeking higher returns → Les structured products or the obligations are a better option for maximizing yield, but with a higher risk . They are appropriate if the company can afford to block part of its cash flow for a longer period.

Discover the Hero pro account for secure, profitable cash flow

The Hero pro account is a flexible, cost-effective solution for managing your company's cash flow. It combines attractive remuneration, rapid access to funds and no hidden costs.

This account offers competitive rates (up to 3%) that rival the best investments, while allowing you to immediate withdrawals with no time limit.

Unlike term accounts or other long-term products, it allows you to access your funds quickly if necessary . Ideal for SMEs, auto-entrepreneurs and self-employed professionals The Hero pro account optimizes cash management by offering safety and profitability.