Corporate Investing

How we help businesses produce returns on surplus working capital

All companies need working capital that is readily accessible as and when they need it. In these circumstances, the company bank account is likely to be the most sensible place to deposit it. But if they have more on deposit than they need, is this surplus cash working hard enough for them?

What is corporate investing

In its simplest form, corporate investing is when a business invests the companies money. This can be via a wide range of assets and accounts. Often triggered when the business has excess profits and surplus working capital. 

Instead of the withdrawal of income (dividends / salary) or holding the cash, the business will invest the funds with the objective of making the money work and produce a return. In the exact same way as an individual investments in their ISA and pension for xxx.

Retained profits of the company are typically used for the strategy and not the actual cash in the bank, which prevents future cashflow issues.

Why corporate investing

Businesses has different requirements and ultimately reason behind why they need to invest company money. 

One of the most common reasons is the build up of capital on the balance sheet (in the business). This capital is not planned for any short term mechanism for the running of the business and is considered to be surplus working capital.

So income is taken care of, dividends and other expenditure that the business has factored in to its ongoing planning.

Therefore, making the surplus working capital work while it stays in the business leads to the objective to, get it working.

Another reason is inflation, and as we see inflation rising globally losing purchasing power on money is not only a risk but a substantial threat. For example, £100,000 at a 5% inflation rate will be worth £78,352 after 5 years and £61,391 after 10. 

This inflationary impact should not be ignored by business owners and further UK monetary policy information should be looked into.

Before investing business owners should consider;
  • Saving accounts
  • Distributions to shareholders with dividends
  • Pension contributions
  • Do nothing and continue to build up the balance sheet of the business. 

Please note corporate investing is different to employer pension contributions.

How we can help

Fortuna Financial Planning can assist clients with corporate investing, in the same way as we manage personal client investments. Our firm can help directors improve the return of business capital by providing a financial planning service for their business. The service is suited for corporate investing and providing business with investment management.

Summary, things to consider?
  1. Does your business have excess cash?
  2. Could it benefit from investing the longer term cash into an investment portfolio?


When speaking to clients about corporate investing, some of the things to we consider as part of our planning process are;

  • Is there surplus cash to invest?
  • Are low interest rates a concern?
  • The impact of rising inflation and its consequence on cash and buying power?
  • Would the possibility of smoothed returns be attractive?
  • What accounting method is used and what impact this has on the amount of tax to pay?
  • What is the potential impact of surplus cash on any tax reliefs available?
  • investing as a Trading vs Investment Company?