Episode 1: What to do with surplus company cash

Introduction

This tutorial provides essential guidance for business owners on how to effectively manage surplus company cash. Drawing insights from the first episode of the series by Permanent Wealth Partners, we will explore the best strategies for utilizing excess cash based on your financial goals—whether they are short-term savings or long-term investments.

Step 1: Assess Your Financial Goals

Identify whether your cash needs are short-term or long-term to determine the best course of action.

• Short-term Needs: Consider what your company requires in the near future (within the next 1-3 years).

  • Use surplus cash for immediate operational expenses.
  • Build a cash reserve for unexpected expenses.

• Long-term Goals: Define your broader financial aspirations (3 years and beyond).

  • Invest in growth opportunities.
  • Consider strategies that enhance your company's financial health and stability.

Step 2: Explore Short-term Cash Strategies

If your focus is on short-term financial stability, consider the following strategies:

• Company Savings Account:

  • Open a high-yield savings account to earn interest while keeping funds accessible.
  • Ensure that the savings account is separate from your operational funds to prevent overspending.

• Emergency Fund:

  • Set aside a portion of surplus cash to cover at least 3-6 months of operational costs.
  • This fund acts as a safety net for unforeseen circumstances.

Step 3: Consider Long-term Investment Options

For those looking to build wealth over the long term, consider these investment strategies:

• Reinvestment in the Business:

  • Allocate funds towards areas that can generate additional revenue (e.g., new product development, technology upgrades).
  • Assess the potential return on investment (ROI) for each opportunity.

• Diversified Investments:

  • Explore options like stocks, bonds, or mutual funds to grow your surplus cash.
  • Consult with a financial advisor to create a diversified portfolio that aligns with your risk tolerance.

Step 4: Consult a Financial Advisor

Engaging with a professional can provide tailored advice for your unique business situation.

• Schedule a consultation to discuss your options in detail.
• Use resources like the contact links provided by Permanent Wealth Partners for personalized support.

Conclusion

Effectively managing surplus company cash is crucial for both short-term stability and long-term growth. By assessing your financial goals, exploring appropriate savings and investment strategies, and consulting with a financial advisor, you can make informed decisions that will benefit your business. Consider taking the next step by reaching out for professional guidance tailored to your specific needs.