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.

The best return you can have on investments is on very short term range, like one month. You need to focus more than ever on daily investment optimizations, but also we invested in very long term investment products with fixed rates in order to lock the rates in the future, in case the reference interest rates could go down.
Quentin Millet,
VP Tax and Accountant

Watch our Marteclass presented by Simon Jones about Excess Cash Managment

In this class I will be talking to you about the why and how of excess cash placement. Companies tend to underrate the value of their surplus cash. But with smart cash flow forecasts and investment policy, you will increase your returns / you can set up strong added revenue
Simon Jones
Independant Treasury Expert

Before you start placing your excess cash, read our playbook

Identify excess cash

by assessing your company’s cash position

Diversify your investment opportunities

and plan for short-term and long-term placements

Develop an excess cash placement strategy

with all risk and growth potentials

EN - Illustration - Playbook Simon Jones
EN - Illustration - Playbook Simon Jones

Watch our excess cash panel with leading treasury experts

It’s an incredibly important time to be focusing on this topic, particularly, as we’ve seen high inflation and interest rates that have jumped very significantly in the last 18 months.
Simon Jones
Independant Treasury Expert

Learn how to leverage Agicap for your excess cash investments

Identify opportunities

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.

Model opportunities

Agicap lets you easily position and model your investments in dedicated scenarios and automates the calculation of interest and capital recovery

Monitor ongoing investments

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 :

Digital conference on Cash Management with CEOs, CFOs and finance experts
Improve Your Cash Flow in 6 Easy Steps
Resource - Masterclass - Nicholas Boucher
Masterclass: Cash Action Plan with Nicolas Boucher

Frequently asked questions

What is cash excess / cash surplus ?collapse

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.

How do you calculate cash excess ?expand

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.

How to manage cash surplus in your company ?expand

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.

How much excess cash do I need to reinvest?expand

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.

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