If your business has excess, or surplus, cash at its disposal, knowing what to do with it can be a pleasant problem, but a problem nonetheless. The opportunities are vast and you don’t want to put the money to waste.

In this article, Quality Company Formations, the premier company formation service in the UK, looks at how you can put your business’s excess cash to good use. Let’s get started.

Set it aside

When you run a business, you simply never know what’s on the horizon. We have an obvious example from only four years ago, when the pandemic hit and had catastrophic consequences for businesses (and of course people) across the globe.

With any form of expenditure, there is an element of risk. A purchase won’t always go as you plan, and the money spent is essentially thrown away. So, perhaps the safest thing you can do with any excess money you have is do nothing at all with it. Set it aside and provide yourself with some financial security if something unexpected does happen.

Invest in stocks and shares

Let’s jump from the safest thing that you can do with your business’s extra money to probably the riskiest, investing it into stocks and shares. With some expert guidance – and good advice will cost money in itself – and a fair dose of luck, putting your surplus money into stocks and shares can prove remarkably rewarding.

But we can’t stress this enough- it is financially dangerous. Because of this, you should only invest what you can afford to lose, and you should get out when you reach a target value.

If this risk is too much, you should consider putting the money into bonds instead. Bonds are generally a safer option and whilst they are less profitable than stocks and shares, they can yield financial rewards.

Reward your shareholders with dividends

Dividends are the method by which a company’s shareholders (the owners) are financially rewarded for their investment in the business. Provided that your business is operating as a limited company – and you sit on your company’s board of directors – you can choose to issue dividend payments to your shareholders. As the business owner, this will include you.

You can issue dividends regularly, for example quarterly or annually, or you can choose to give them out on an ad-hoc basis – whichever you’d prefer. However, dividends can’t be issued if the company has accumulated losses.

It’s also worth knowing that once the dividend tax allowance (£1,000 for 23/24) has been exceeded, shareholders must pay tax on the dividends payments they are rewarded. See here for the current dividend tax rates.

Fix a problem

What are those nagging issues within your business that are holding you back? We’re talking big and small. Perhaps your website hasn’t changed for seven years, your van is due for an upgrade or your office is no longer big enough. Or maybe the printer is past its best, the team uniform is looking a bit shabby, or your phone system is barely functioning.

Whatever it is, having some extra cash to hand provides you with the perfect opportunity to fix the problems that you’ve been ignoring. Whether you spend it all on one drastic upgrade (office relocation?) or lots of little things, is up to you. After all, if not now, when?

Take on new employees

Are you and your staff spread a little too thin? Having some extra cash available is the ideal time to build your team by taking on a new employee (or multiple employees if the budget allows), and free up some of your time to focus on other elements of the business. So, now you need to ask yourself, what does your business need?

You could give a particularly busy employee a helping hand by hiring an assistant. If a specific piece of work is being outsourced, you could relinquish those costs and bring it in-house by taking on a specialist. Or maybe you want to create a brand-new team dedicated to a new service that you’re interested in providing. Which brings us nicely to…

Branch out with a new service

Successful business owners are always on the lookout for new opportunities. If you have an idea for a new product or service associated with your business, this could be your chance to turn the idea into a reality – and take your business to the next level.

The cash you have at your disposal could be used for carrying out the necessary market research (is there a need for the product or service you want to provide?), developing the concept and building a minimum viable product, providing the necessary training to your team, marketing the new product or service, and ultimately, start delivering it.

Use freelance services to help your business

If your business is struggling in a particular area, but it doesn’t warrant a full-time employee dedicated to the role, you should consider taking on a freelancer who delivers what you need, as and when you need it.

You and your team should be focusing on the areas in which you excel. Rather than waste time and effort in doing a so-so job, use the money that you now have available and pay a professional to do it properly. We’re talking accounting, data, programming, copywriting, graphic design, video, and social media – if you don’t have (and don’t want) an in-house expert committed to these areas, outsource the work.

Thank your employees

Having excess cash in the bank account is a sign that things are going well for your business. So, why not use the money to treat the employees who have helped you achieve success?

Host fantastic Summer and Christmas parties (and ad-hoc parties when you see fit). Organise corporate hospitality days for sporting events and concerts. Take your employee of the month/year awards to the next level by making the prize genuinely brilliant (an all-expenses paid trip to New York?). Dish out generous bonuses. Boost pay packets with salary increases. These are just a few ways you can reward your hard-working employees.

This is a good idea on several fronts; it will help motivate existing team members as they see tangible evidence that they are rewarded for their hard work, it’s a handy recruitment tool as you can demonstrate your thriving company culture to the people you’re trying to lure to the company, and… it’s fun.

And thank yourself

Let’s not forget the person who started the whole thing. Building a successful business takes hard work, dedication, and often, hours that go beyond the normal 9-5 and 7-day working weeks. Simply put, you probably deserve a treat.

Don’t feel bad about spending the extra money that you have amassed, or at least some of it, on yourself. You deserve it (just ensure that the money is correctly taken from the business, for example – if operating as a limited company, you can’t just pop down to the cash machine and make a withdrawal)

Build your business empire

If the amount of cash that you have available is significant and you have business aspirations beyond your current operation, now could be the right time to expand your business portfolio.

How? Invest in other businesses that you are passionate about. Help a friend, family member or employee get that long-gestating business idea off the ground (for a stake, of course). Go for it and put an offer in on that troublesome competitor. When money is available, options will often appear.

This route won’t be right for everyone, but if you do sense that you’re ‘in business’ for the long haul – and let’s be honest – big money, this extra money represents your chance to make a go of it.

Donate it to charity

If you can afford to, the most noble thing that you can do with any surplus money is give it to charity or donate it to another worthy cause that you are passionate about.

If your business doesn’t currently have a charity partner, having extra money available provides an opportune moment to reach out to local and global charities, to find suitable organisations that you could work with.

What’s more, this is a great way to build employee engagement, as you can involve your team in selecting charity partners and then, further down the line, organising team-building fundraising events.

So, there you have it

Those are some options for what your business can do with its excess cash. Having surplus money at your disposal is a fantastic opportunity. Make sure you and your business make the absolute most of it. We hope you have found this post useful. Thanks for reading.

Quality Company Formations are the perfect starting point for individuals who want to make their business official and start a limited company. Whether you’re looking to start a side hustle or full-time endeavour, they can help you get started quickly and simply – and from only £11.99.

Take a look at their company formation packages now

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