All articles · 2026-03-13 · Taxation
Excess cash in your company: how entrepreneurs leave value on the table (and how to fix it)
Many entrepreneurs recognize it: there's a nice sum of money in the company's account. The figures look good, liquidity is healthy and…
By Jan Hermans, CEO & founder of Lyff.
Why cash in your business account destroys value
Entrepreneurs often deliberately maintain large cash buffers. Entrepreneurship brings uncertainty: income can fluctuate, investment opportunities can suddenly arise, and taxes must be paid. And what's safer than a large pile of cash in the account? But safety should not be confused with stagnation or decline.
When large amounts remain in a current or savings account for years, three things happen economically:
• Inflation reduces the purchasing power of your money • Opportunities are missed • The capital generates no return
Suppose inflation averages 3% per year. Then €100,000 in an account loses approximately a quarter of its purchasing power in ten years. This means that the same amount will buy less in ten years, even if the nominal amount has not changed.
The first strategic step: determining how much cash you really need
Of course, not all cash should be invested. Liquidity remains essential for a healthy company. Therefore, every good strategy begins with one crucial question: how much cash does the company operationally need? For many businesses, a realistic buffer lies between three and twelve months of fixed costs, depending on the size and risks involved in your business. Think of:
• salaries • VAT and taxes • suppliers • unexpected costs • short-term investments
Everything above that buffer can potentially be considered as excess liquidity. And excess liquidity can be strategically deployed to create value.
Investing cash in a company (vennootschap): different rules than private
A major mistake entrepreneurs make is treating business assets as if they were private assets. Yet, inherently different rules apply. When you invest through a company (vennootschap), several extra factors come into play: the tax treatment of returns, accounting processing of value fluctuations, impact on business results, liquidity, and balance sheet structure.
An investment that works perfectly privately may be less efficient within a company (vennootschap). For example: certain investments are taxed more heavily in a company, while others offer interesting benefits. Therefore, it is important to look not only at return but also at taxation and accounting.
The role of your investment horizon
A second crucial factor is time. You cannot build a strategy if you do not link a horizon to your capital. Therefore, it is important to clearly determine what the money is intended for. Do you want liquidity for the next 12 months? Are you planning investments within three years? Or do you want to work on long-term wealth accumulation? The horizon determines which solutions are possible. Short-term capital, for example, must remain sufficiently stable and liquid. Long-term capital, on the other hand, can be deployed more productively.
Balance sheet stability: an often underestimated risk
Many entrepreneurs only think about return when investing. But another factor plays a role within a company (vennootschap): balance sheet stability. Certain investments can cause significant value fluctuations. These fluctuations can impact the company's (vennootschap) results.
This can, for example, be relevant for:
• creditworthiness with banks • dividend policy • tax planning • future investments
Therefore, an investment strategy for a company (vennootschap) must not only be profitable but also fit within the company's financial structure.
How strong entrepreneurs deal with excess cash
Entrepreneurs who strategically manage their assets treat their balance sheet as they treat their business. They do not let resources sit idle without reason. Instead, they analyze their liquidity, determine their risk, and then build a plan that considers liquidity, return, taxation, and stability. The goal here is not to maximize risk but to make capital work more efficiently.
When entrepreneurs analyze their excess cash, they often discover that a significant part of their capital can be used more productively. This can be, for example, through a structured investment strategy or wealth accumulation within the company (vennootschap). Other entrepreneurs, in turn, look at optimizing tax structures or begin preparations for their retirement. The key to success is that every euro is given a clear role within the entrepreneur's broader financial plan.
Many entrepreneurs wonder if their cash is safe, but that's actually the wrong question. A more correct question is: “How much of my cash is creating value today?”
If you don't know that answer exactly, chances are there's untapped potential on the balance sheet. And that's where you, as a manager (zaakvoerder), should start with financial optimization. So don't take big risks, but start managing the capital you already have more consciously.
Would you like to review your situation? Make an appointment with one of our experts and discover where your fiscal space lies.