Having money is great for paying bills and covering costs, but too much on-hand capital could mean a business isn't making the most of its financial investment advice. Finding the right balance and the best opportunities to increase growth are crucial to expansion.
Savings surplus
Economic problems in recent years have American businesses wary of investing too much, and Forbes reported recently that now European companies are following suit as more countries seek bailouts or struggle with balancing their own books. Holding on to money that way isn't good for business growth, however, so the best financial advice would have owners spending it on themselves.
The Globe and Mail said that bringing new talent to a company is one good way of investing in a company. By adding talent or training current employees, a business is increasing its assets without taking a risk with a third party. These workers are in charge of customer interactions and internal processes, so return on employee investment is one of the most beneficial strategies to utilize when it comes to building on what you already have.
Business banking management
When looking at your online banking statements, it's important to recognize how much of your money is for expenses and what's just sitting on the books. Having excess money available may result in a false sense of security, seeing as these funds are languishing and doing nothing for you or the company except remaining stagnant in your account.
David Kotok of Cumberland Advisors said in an interview with CNBC that accountants or owners, whoever is handling the business finances, should use a financial calculator to maintain around 10 to 20 percent liquidity at all times. Anything beyond that should be invested, Kotok recommended, though some are ignoring this advice in case the Euro should falter.
In an interview with The Globe and Mail, banking and investment specialist David Wilton told the publication that companies need to use these calculations to determine a one-year projection of liquid asset needs, and most everything else should be put to work for the business. Having some extra help protect the corporation in case of an emergency, but keeping excess funding around isn't helping anyone.