Cash excess or cash surplus refers to the amount of money a company has that exceeds its immediate operational and investment needs. This surplus arises when an organization's cash inflows surpass its outflows, resulting in additional liquidity that isn't required for day-to-day business activities. Managing this surplus efficiently is crucial for maximizing a company's financial performance and can offer opportunities for investment, debt reduction, or business expansion.

To calculate cash excess, you need to assess your company's current financial statements. Begin by determining the cash balance at the end of a given period. Then, subtract the cash amount required for immediate operational costs, upcoming payments, and planned investments. The remainder is your cash excess. This process requires accurate cash flow forecasting and understanding of future financial obligations to ensure the surplus calculated is truly available for use without jeopardizing the company's liquidity.

Managing cash surplus effectively involves a strategic approach that aligns with your company's financial goals. It's essential to maintain an optimal balance between investing the surplus to generate returns and keeping sufficient liquidity for unforeseen expenses. Regular financial reviews, diversifying investments, and using tools to forecast cash flow can improve surplus management. Additionally, setting policies for surplus reinvestment, such as thresholds for investment, can help in automating the decision-making process.

The amount of excess cash needed for reinvestment depends on your company's strategic objectives and financial health. It's important to maintain a balance between having enough cash on hand for operational flexibility and investing to promote growth. Assessing your company's cash flow projections, upcoming liabilities, and potential investment opportunities can guide the determination of an appropriate amount for reinvestment.