Published on : 19 May 20203 min reading time

Good management of surplus cash is important for the optimization of financial gains. The purpose of a corporate treasury investment is to place cash in an investment vehicle. A healthy company should have surplus cash that is occasionally unused. It can choose from a number of cash investment vehicles.

Criteria to consider before investing your cash

A company should consider the amount of the investment when considering how to invest its cash. Duration is a criterion to be taken into consideration. A company may choose to invest for the long term if it is thinking of earning a return on its cash flow. Then, it must take some precautions before the operation. Taxation applied, availability of funds and level of risk are to be considered. You must select a formula according to your expectations, your availability and your needs.

The different solutions for investing cash

A term deposit, a passbook account or a term account are monetary solutions that can be adopted. A company can subscribe to these with its banking institution. The remuneration may vary according to the duration of the immobilization and the policy of the latter. These solutions make it possible to benefit from the availability of funds, although the returns appear very low. With a withdrawal in the near future, this allows a significant liquidity of the funds. If you opt for investment diversification, you can choose the securities account. This solution can guarantee the optimization of the investment. It allows you to choose from several different media.

The various media for investing surplus cash

Medium-term notes, commercial paper, capitalisation contracts, term deposits and money market funds are among the main media used to invest company cash.  Commercial paper is a form of borrowing by the company. They mature between one day and one year. When a company helps a structure in need of financing, it makes a cash investment. As for the cash voucher, it refers to a debt contracted by a company. When you lend money to a company in need of liquidity, you invest the excess cash. As for the capitalization contract, it is very flexible and more profitable than mutual funds and term accounts. The money market SICAV is a cash investment most used by companies. Nevertheless, it offers a very low return. However, it gives the possibility to benefit from the availability of funds.