10 Ways to Maximize the Benefit of Surplus Cash in Your Business

10 Ways to Maximize the Benefit of Surplus Cash in Your Business

When business is booming and the bank account is overflowing with cash, what do you do with the surplus money? Do you pay yourself a big bonus and book that world cruise that you so sorely deserve? Well, it’s your money, so you can do with it what you wish. On the other hand, you might want to take a slightly more prudent approach and put your surplus cash to better use. Perhaps booking a two-week vacation will suffice, and then consider these ten ways to maximize the benefit of the remainder of your windfall.

1. Earn Interest on All Surplus Cash

It would be best to avoid leaving your excess business funds in your checking account while making up your mind about how to spend it. Transfer any surplus funds to an interest-bearing bank account immediately. Or, even better, ask your bank to set up an automatic overnight sweep of cash between your accounts. Even when rates are low, some interest is better than no interest at all.

2. Establish a Business Cash Reserve

Reinvesting in your business is a great idea. Still, it would be wise to also set aside some money in a contingency fund as well. Set a target of money to be transferred from your operating account to a business reserve account every month. And use that reserve fund only for emergencies. Business prospects may look great right now, but you never know what is coming around the corner. Contributing to a business reserve account during the good times will help you weather the storm when things get more challenging.

3. Set Aside a Personal Reserve

When your business is doing well, your priority might be to continue expanding your company. However, it would be wise to also think about your personal financial security when you have surplus funds in your business. As well as taking the vacation mentioned above, you might want to consider putting some of the spare cash into a personal reserve account. Things might look vastly different five or ten years from now. You and your family might be relieved that you had the foresight to create a personal reserve. Even with a business cash reserve, the business’s money can soon disappear if it goes through a rough patch. And don’t forget to make provisions for your retirement, too, while planning for your future.

4. Invest in Technology and Equipment

Consider investing in new technology and equipment that will make your business even more profitable. But be sure to cost-justify any purchase you make and avoid making any vanity purchases. Investment in technology should bring quantifiable benefits to the business. Those benefits might include improved efficiency, reduced labor costs, or better customer service. The crucial point is that there should be a return on investment on any reinvestment you make in the business.

5. Invest in People

Machinery and software are not your only business assets. Your employees are also a crucial factor in the success of your business. So, perhaps it will be worth investing some of your surplus cash in the people who have helped to generate it. Investing in staff training could give your team new skills and knowledge that would benefit the business. Providing training will also boost employee morale and increase loyalty and engagement. Investing in your people is a strategy that will pay for itself in the long run.

6. Develop New Products

Develop New Products

If you want to capitalize on your success to date, you could invest some of your excess cash in developing new products. If you manufacture products, this will probably involve undertaking research and development projects. If you resell products, you might need to travel overseas to visit suppliers and trade shows to identify products to add to your existing range. Either way, finding new products takes time and money. And a new product launch will require additional marketing spend and possibly staff training. The best time to expand your product range is when your existing products are selling so well that they generate surplus cash.

7. Develop New Markets

Expansion does not have to mean introducing new products. You could continue to grow the business by entering new markets. Depending on the type of business, you might want to consider opening branch offices in other cities or states. Or you could consider selling to overseas markets. If your excess cash does not stretch to such grand expansion schemes, a small investment might allow you to sell to a different sector of your current market.

8. Buy Another Business

If your cash surplus is sufficient, you could explore the possibility of buying another business. You could purchase a business like your own or buy out a competitor. Or, you could expand by acquiring a company that sells complementary products to your own. Of course, taking on a new company will involve a lot more than merely investing capital. You will also probably need to invest time in your new venture, and you may need to be prepared to make ongoing cash injections. You must complete a thorough due diligence exercise before buying another company. And you must be sure that you are not taking on more than you can handle.

9. Make Long-Term Investments

If you are confident the current good fortunes of your business are sustainable, you could make some long-term investments. You could invest in property, for example, or stock, or transfer your spare cash to a long-term interest-bearing account. If you decide to take this route, it would be best to get advice from a professional financial advisor. Of course, it would also be wise not to tie up company capital that might be needed at short notice in the future.

10. Diversify

A higher risk alternative to reinvesting in your existing company would be to branch out in another, entirely different sector. Once again, if you chose this approach, you would need to make sure that you don’t take your eye off the ball with your already profitable company. However, many entrepreneurs have successfully transformed one successful enterprise into a diverse group. Elon Musk, for example, began with PayPal and is now on his way to the Moon and beyond!


There are many ways that you could make use of surplus business funds. The crucial point to take away from the above is that it would be best to consider the potential risks and return on investment before making any decisions. And of course, you need to consider the ongoing needs of your business too. If you are unsure what would be the best use of excess funds, it would be advisable to consult with your accountant before making any decisions.