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How to Get the Best Return on Your Spare Corporate Cash
Efficient cash management is crucial for businesses, whether for managing day-to-day expenses or future growth initiatives. While maintaining liquidity is important, leaving large amounts of cash in low-interest accounts could mean missing out on valuable opportunities for growth. Many companies are now exploring flexible investment options that offer higher returns without sacrificing access to funds when needed.
In this post, we’ll explore how businesses can get the best return on their spare corporate cash through peer-to-peer (P2P) lending, diversification strategies, and other investment tools. You’ll also discover how easyMoney’s property-backed loans can help you grow your surplus funds while managing risks effectively.
Why Idle Corporate Cash Reduces Profitability
It’s common for businesses to keep surplus cash in savings or current accounts to ensure liquidity for upcoming expenses or emergency needs. However, holding too much cash in traditional corporate savings accounts, which often provide low interest rates, could result in a loss of potential returns. In some cases, inflation outpaces the interest earned, eroding the purchasing power of your funds over time.
By finding ways to invest that idle corporate cash, businesses can improve profitability and make the most of their resources. But it’s important to choose investments that balance risk, liquidity, and returns – especially when flexibility is needed to respond to changing business conditions.
Using Peer-to-Peer Lending to Grow Corporate Cash
One increasingly popular option for businesses to earn better returns is peer-to-peer lending (P2P lending). This innovative form of lending allows businesses to lend their spare cash directly to property developers through regulated platforms like easyMoney, bypassing traditional banks and potentially earning higher interest rates in the process.
With P2P lending, your business provides capital to carefully vetted borrowers, and in return, you earn monthly interest payments. At easyMoney, these loans are secured against UK property, adding an extra layer of protection for your funds.
Advantages of Peer-to-Peer Lending for Businesses:
1. Higher Interest Rates: Unlike traditional savings accounts, which typically offer low returns, P2P lending often provides higher interest rates. Depending on the specific loans you choose, easyMoney’s platform allows businesses to earn up to 10% per annum (as per September 2024), significantly outperforming typical corporate savings accounts.
2. Monthly Income Stream: With easyMoney, your business earns monthly interest payments, providing a regular income stream. This gives you flexibility in deciding whether to reinvest the interest or use it for operational expenses.
3. Secured Against UK Property: All loans on the easyMoney platform are secured against UK property. This security mitigates some of the risks involved, ensuring that your business’s capital has an extra layer of protection should a borrower default.
Understanding the Risks
While peer-to-peer (P2P) lending offers businesses the potential for higher returns compared to traditional savings accounts, it’s essential to understand the associated risks. One of the primary risks in P2P lending is the possibility of borrower default, which can lead to a loss of the capital you have invested. At easyMoney, this risk is mitigated by securing loans against UK property, offering an additional layer of protection. However, it’s important to note that even with secured loans, recovery of capital can take time if a borrower defaults, and in some cases, the full investment may not be recovered.
Another consideration is liquidity. While easyMoney provides a monthly income stream through interest payments, accessing your full investment before the end of a loan term might not always be straightforward. This is because early withdrawal usually depends on another investor being available to take over your loan in the secondary market. If no buyers are available at the time you wish to withdraw, you may need to wait until the loan matures to access your capital.
Diversification remains a crucial strategy to manage these risks. By spreading your investments across multiple borrowers and sectors, you reduce the impact of any single loan underperforming. However, as with any investment, past performance is not indicative of future results, and capital remains at risk. Always consider your business’s risk tolerance before committing to any investment.
The Importance of Diversification in Corporate Cash Management
When it comes to investing corporate cash, diversification is a key strategy for managing risk. By spreading your investments across multiple asset classes – such as P2P lending, stocks, bonds, and cash savings – you reduce the impact of any single asset’s poor performance on your overall portfolio.
At easyMoney, businesses can diversify within the property lending sector, lending to multiple projects and borrowers. This reduces the reliance on any one borrower, minimising risk while still benefiting from attractive returns.
Benefits of Diversifying with easyMoney:
1. Reduced Exposure to Individual Borrowers: By lending to multiple borrowers across various property developments, you reduce the impact of any single loan underperforming. easyMoney’s platform allows businesses to choose from a wide variety of secured loans to create a well-balanced portfolio.
2. Property-Backed Security: Diversifying with easyMoney provides access to loans that are secured against UK property. This adds an additional safety net, as the properties can be sold in case of borrower default, reducing the likelihood of capital loss.
3. Consistent Returns: Diversified investments typically offer more stable returns over time, as different asset classes or loans react differently to market conditions. Thisconsistency can help businesses plan their cash flow more effectively while maximising returns on spare corporate cash.
Getting Started with easyMoney as a Corporate Investor
At easyMoney, we make it simple for businesses to start earning more on their spare corporate cash. By lending directly to property developers, your business can enjoy competitive interest rates, flexible investment terms, and a streamlined investment process.
Step-by-Step Process to Start Investing:
1. Register a Corporate Account: Visit the easyMoney website to set up a corporate account. This will allow your business to access a variety of investment opportunities in the P2P lending space.
2. Select Your Investment Amount: Choose the amount of cash you’d like to invest in property-backed loans. With a minimum investment of £20,000, easyMoney makes it accessible for businesses to start small and scale up as they become more comfortable with the platform.
3. Earn Monthly Returns: Once your investment is made, you’ll begin receiving monthly interest payments. This regular income stream can be reinvested or used to cover business expenses, providing an ongoing source of revenue for your business.
Why easyMoney is the Right Choice for Corporate Investors
easyMoney offers businesses a unique and flexible approach to corporate cash management through its P2P lending platform. With the security of property-backed loans and the potential for higher returns, easyMoney allows you to grow your capital while maintaining flexibility and liquidity.
Key Reasons to Choose easyMoney:
1. Property-Backed Loans: All loans are secured against UK property, helping to protect your capital and providing peace of mind that your investment is backed by real assets.
2. Competitive Interest Rates: With target rates of up to 10% per annum, easyMoney offers returns that far exceed those available from most corporate savings accounts, making it an excellent choice for businesses looking to maximise their returns.
3. No Fees: Transparency is a priority at easyMoney, with no fees or charges. This ensures that your business can fully maximise the return on its investment.
4. Flexible Investment Options: Start investing with £20,000, and benefit from monthly interest payments and the flexibility to withdraw or reinvest your returns as needed.
Putting your business’s spare cash to work through peer-to-peer lending offers a flexible, tax-efficient way to maximise returns while maintaining liquidity. With easyMoney’s secured property loans, your business can earn higher interest rates, receive monthly income, and still have the flexibility to access funds when necessary.
However, it’s crucial to remember that capital is at risk, and P2P lending investments are not protected by the Financial Services Compensation Scheme (FSCS). A prudent approach to investment, combined with diversification and the security of property- backed loans, can help your business achieve better returns on its spare cash.
Past performance is no guarantee for future results.
Tax treatment depends on individual circumstances and may be subject to change.
