Why your business should invest its excess liquidity
Create growth
Having a surplus in your business capital means that you have more money available than is needed to cover ongoing operating costs and is simply because your business is doing well. There is an opportunity to invest and create growth on these.
Put the capital to work
It is important that you don't just leave the money in a low-interest account, but that you put the capital to work. Good returns on excess liquidity create greater opportunities in the future for survival, repayment to shareholders and investment, for example. The problem for many people in their business capital savings is that inflation eats up the return from a low interest rate.
Inflation eats up interest returns
An inflation rate of, say, 2% means that every million kronor of capital decreases in value by SEK 20 000 per year. The interest on the savings account is generally eaten up by inflation and there is no increase in value. Failure to invest surplus liquidity therefore has a longer-term impact. It is important to have a buffer against unexpected expenses. However, make sure you keep the money in an account that gives you savings interest back on the capital.
Optimize finances and increase profits
Capital that exceeds the buffer requirement is suitable for investment and yields a return. It will generate income outside the company's operations and by making the best use of your surplus, you can optimize the economy and thus increase profits.The risk of the investment should not compromise the overall objective of preserving the purchasing power of the capital. In this respect, it is advisable to choose an investment which, first and foremost, can offer stability on the downside, but at the same time provide a good return in both the short and long term.