Rethinking your assets strategy

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.

Some fortunate companies have been sitting on excess cash, beyond the day to day need of the business, this is both a blessing and a curse. Excess cash comes under scrutiny by investors for missing out on expected returns, destroying value sitting in nil or negative interest accounts, or driving questionable investments and increased agency costs. On the other hand, managers are worried about a downturn, unwilling to pay repatriation taxes, trying to protect jobs or even hoping to take advantage of recession bargains. Until then, excess cash can still responsibly make substantial returns flowing through the business and the supply chain.

The best option to meet both investors and management desires is to facilitate a strategic allocation of that cash into a low risk, high return and easily reversible current asset or contra-liability investments (pre-payments, early settlement discounts, dynamic discounting, or a supplementary extended customer term in return for purchase cost reduction and customer price premium). Such investments can yield up to 36% annual return.

Higher risk investments in working capital wouldn’t necessarily come at higher returns (i.e. VMI, inventory for incremental sales, Risk and revenue sharing partnerships…), however they can still offer a more profitable home than a bank. When such opportunities are exhausted and growth investments are not an option, inventor pressures will continue forcing companies to act; private companies will favour using the remaining excess cash to pay down their principle debt as a key value creation lever whilst listed companies would naturally reacquire their shares.