Investment of Company Cash

Many businesses accumulate cash on their balance sheet and rather than extract the money to pay to shareholders and potentially pay tax they choose to leave this in the company bank account.

Although this has a potential tax saving the value of the cash balance gains very little interest as rate on bank deposit are generally less favourable for companies than for individuals.’

The down side to this is that the cash will stagnate and ultimately the real value of the cash is potentially eroded by inflation.

An alternative to this is for the business to invest the cash with a view to generating better returns. Of course there are many considerations to take in to account before taking this approach and this is something one of our advisers would be happy to discuss with you.