Excess cash placement: How to increase returns and minimize risks
Excess cash placement: How to increase returns and minimize risks
Good working capital management nets companies surplus cash. But only smart cashflow forecasting and monitoring of excess cash investments allow for increased returns. Learn more from our treasury experts.
Why excess cash placement is a strategic necessity
Minimize risks
Assess your cash flow
Reach for growth
Minimize risks
Excess cash placement involves strategically investing idle cash in short-term, low-risk financial instruments to generate returns while maintaining easy access to funds when needed.
Watch our Marteclass presented by Simon Jones about Excess Cash Managment
Before you start placing your excess cash, read our playbook
by assessing your company’s cash position
and plan for short-term and long-term placements
with all risk and growth potentials
Watch our excess cash panel with leading treasury experts
Learn how to leverage Agicap for your excess cash investments
Based on current and forecast cash flows,Agicap provides you with the best possible allocation of your investment pockets for 12, 9, 6, 3 and 1 months, while respecting the defined safety mattress.
Agicap lets you easily position and model your investments in dedicated scenarios and automates the calculation of interest and capital recovery
Agicap gives you visibility over your current and forecast cash position, while adjusting it by the amount of your investments if you wish to consider them as liquid assets
Educate yourself more on the topic of excess cash :
Frequently asked questions
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.
