The recommendations of José-Carlos Torrecillas, Specialist in wealth solutions, on the management of cash surpluses, appeared in PME magazine (Switzerland) on October 1st 2024.
Cash management is a key factor in the survival of businesses in Switzerland. According to José-Carlos Torrecillas, ‘nine out of ten bankruptcies are caused by weaknesses in cash management. This observation highlights the importance of efficient cash management for all businesses, whether they are in difficulty or profitable. He stresses the need to retain sufficient cash to meet short- and medium-term financial obligations, such as paying invoices, salaries and dividends.
José-Carlos also emphasises the investment strategies that can be adopted once liquidity requirements are covered. With the current fall in interest rates, he recommends optimising surplus cash through short-term investments in the money market, as well as longer-term investments in equities, bonds and property. ‘We implement specific plans based on companies‘ liquidity requirements,’ he concludes.
He also evokes the tax differences between companies and individuals when it comes to investments, and suggests a little-known solution: investing surplus cash in pension-related savings, thereby building up reserves which reduce the tax burden in times of substantial profits.