News from European Merchant Bank – EMBank

How can businesses effectively manage their excess funds?

I presume that highly successful businesses sooner or later encounter the dilemma of what to do with the company’s excess funds? This question is particularly relevant during uncertainty in the global economic environment. Consequently, some businesses are hesitant to invest in new equipment or expansion, and instead, they keep the company’s funds in bank accounts awaiting more favourable times. However, it is not news that inflation depreciates this money’s value over time. Let’s discuss some strategies that can enable companies to employ excess funds. However, before choosing one or the other, consider the need for liquidity and the return criteria for the excess funds. It is essential to be aware that, in general, the greater the return, the greater the risk, including the risk of investment liquidity.

Investing in real estate

For a business, investing in real estate offers the opportunity to earn a stable rental income, while the rising value of the property can provide a generous future return. However, selecting the right property requires an in-depth knowledge of the current trends in the property market and the ability to anticipate future developments. For example, some commercial properties in the city centre or elsewhere may be desirable because of the prospects of generating regular income and growth in value. The wrong choice and poor investment can be counterproductive in the long term. This is why investing in real estate requires a responsible assessment of prospects, risks and liquidity. Property maintenance, taxes, and market fluctuations should also be considered inseparable factors when investing in property. According to experts, commercial real estate has a greater return on investment but lower liquidity than residential real estate.


Bonds are another way for companies to use their excess funds. Bonds, issued by both public and private companies, allow investors to earn interest. The risk of an investment differs considerably depending on the bond issuer. The risk will be minimal for government bonds but increases significantly when investing in corporate bonds. Corporate bonds may be secured by collateral but are usually unsecured. Anyone considering purchasing a corporate bond should know that some bonds may be redeemable after two years, while others may be maturing after ten years or longer. Some bonds pay accrued interest semi-annually or annually, while others offer accrued interest only at full maturity. At present, bonds may yield between 6% and 15% per annum.

Interest on funds held in a bank account

This type of investment is particularly well-suited for companies prioritising financial security and liquidity. In Lithuania, funds up to EUR 100,000 held in a current account are insured, giving businesses the flexibility to dispose of their funds for day-to-day needs, but with the added benefit of earning interest on the bank account balance. Before selecting such an investment tool, one should do their research and homework on the terms and conditions of banks and credit unions since there is a wide range of offers on the market.
For instance, a company with a current account with the European Merchant Bank (EMBank) could earn 3% on the balance in the account. Interest is calculated and paid at the end of each month if the account’s average daily balance is more than EUR 50,000 per month. In addition, until the end of July this year, an additional interest rate of 0.5% per annum applies if the average daily account balance is more than EUR 100,000. For more information on EMBank’s offer, see
Businesses may lose significant amounts of money yearly due to inflation just by holding funds in a bank account. Utilising excess funds can not only offset inflation but also generate additional returns. However, each investment tool has advantages and risks.
It is essential to understand that there is no one-size-fits-all approach for all businesses. Each choice must be considered in the context of the company’s specificities, financial situation, market dynamics and long-term objectives.

Aurelijus Šveikauskas, Deputy Director, Member of the Board at EMBank