What to do with surplus cash in your business


As your business grows and you have accumulated profit over time you may find that you have built up a pot of surplus cash that you’re not sure what to do with.

Surplus capital is the money in your business that exceeds what you require for day-to-day operations and once all overheads are accounted for.

It’s a great problem to have, but only if you put those funds to good use.

Effects of having ‘too much’ cash in a business

Accumulating surplus capital in your business can potentially cause problems. For example, if your bank fails and goes into administration the Financial Services Compensation Scheme (FSCS) only protects up to £85,000 of your money per UK-authorised bank or building society, anything over £85,000 is at risk as it’s not protected. 

Another reason why it’s not a good idea to leave too much cash in a regular bank account is due to the impact of inflation. This year UK inflation reached levels that were last seen in 1992. As inflation soars, so does the cost of goods and services. This means surplus capital sitting in a low-interest bank account is losing value in real terms. How? Because the cost of goods and services is rising faster than the interest you’re earning on cash reserves. 

In a bid to tackle high inflation the Bank of England has increased the base rate several times this year. Higher interest rates are bad news for borrowers, but good news for savers. Savers, and business owners with surplus cash, can benefit from a higher rate of interest on their savings.

How to manage surplus cash

There are several ways you can put surplus cash to good use, for example you could:

  • Reinvest the money to fund business growth
  • Invest the money without drawing it from your limited company
  • Make pension contributions
  • Take more dividends
  • Gift to charity

Or, you could simply leave the funds in the bank so the money is available as and when you need it. It’s always a good idea to keep cash reserves to pay for unexpected bills and continue to meet your outgoings during difficult periods. However, if you choose to leave funds in the bank, it’s important to make sure those funds are working as hard for you as possible.

A solution for money stuck in a limited company

A solution we recommend to our clients who have surplus capital is the St. James’s Place Cash Deposit Service, powered by Flagstone.

Flagstone is a cash management platform designed to tackle money challenges that many business owners face. The platform allows users to open multiple bank accounts through one easy-to-manage interface. By opening multiple bank accounts users can spread their funds to ensure they do not hold more than £85,000 in each account and therefore, their money is 100% protected by the FSCS.  

What’s more, Flagstone offers exclusive and market-leading interest rates across more than 50 banks and building societies. This means business owners can gain peace of mind that their money is protected while working as hard for them as possible. 

If you would like to learn more about the St. James’s Place Cash Deposit Service, please get in touch. 

Please note that this is a referral service, as such the services provided are separate and distinct to those offered by St. James’s Place.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Make an enquiry

This field is for validation purposes and should be left unchanged.

The Partner together with St. James’s Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner’s Privacy Policy or the St. James’s Place Privacy Policy.