Unlocking business growth through the untapped potential of cash investments

In today’s challenging and competitive environment, businesses need to ensure that they are maximising every asset and entrenching resilient profitability however they can. The problem, of course, is that most owners and managers of small and medium enterprises are so intently focused on their day-to-day operations, that they don’t have the time to consider alternative bottom-line growth possibilities, like investing surplus cash in interest bearing accounts to enable them to grow their money and use the returns for business growth and cash flow management.

According to Pregasen Padiachee, National Sales Head at FNB Cash Investments, the number of businesses that are overlooking the money-making potential of utilising their surplus cash to earn interest is staggering. These clients are potentially missing out on competitive returns.

“In our discussions with business owners, we are constantly surprised at how few of them underestimate the potential that their cash reserves have to deliver additional income for their businesses,” Padiachee explains.

In response to these insights, FNB's Cash Investment solutions challenge the widely held misperception amongst business owners that investing is inherently complex or is only useful for those willing to make a long-term commitment. "Our suite of investment solutions is crafted to ensure businesses can leverage their cash reserves for growth without locking them away. The outcome is a dynamic resource that contributes to the business's financial health and competitive edge."

The bank's approach is multifaceted, offering low or no-fee structures while providing flexibility in terms of investment terms and capital liquidity, ensuring that businesses can access their funds when needed. "Imagine a business that typically has around R500 000 in turnover lying idle in a transactional account every month,” Padiachee says, “and the positive financial impact on that business if it instead invested that cash in a high-interest call account.” He argues that this simple change in mindset has the potential to generate thousands of rands in passive income for the business every year. While this may not seem like much, it can cover a variety of business expenses that would otherwise have reduced margins or profitability, like bank charges, operational costs, and even inventory purchases.

Padiachee also highlights the practicality of separating daily funds from growth-targeted reserves, drawing parallels with personal financial management where income is allocated to different expenses and savings. "Just as individuals budget for immediate and future needs, businesses should safeguard their capital for upcoming expenses like VAT payments," he explains. "Leaving such funds for longer-term needs in a current account can lead to inadvertent spending and lost growth opportunities."

To align with diverse business needs, FNB recommends structuring cash investments using a variety of accounts, each with tailored terms and rates. From short-term call accounts for impending expenses to longer-notice investment vehicles for funds not required in the immediate future, FNB's offerings are designed to be as versatile as the businesses they serve. The bank even offers the option to segment a single Cash Investment account into different notice periods for portions of the invested money that will be needed at various times, which, Padiachee says is a testament to its understanding of unique business needs and its commitment to providing, convenient, flexible, and value-adding business facilities.

Ease of integration with existing transactional accounts and simplicity of managing investments through digital banking platforms are also part of FNB's comprehensive Cash Investment promise, ensuring that businesses can seamlessly transition between everyday banking and growth-focused financial strategies.

“By raising awareness of the many benefits of the strategic use of cash reserves, FNB is working to bring about a shift in mindset among South African business owners,” Padiachee says, “especially since we have seen first-hand that optimising cash through flexible investment in our Cash Investment offering can add meaningful value to a business’ core functions, and contribute to its sustainability, resilience and growth.”