Is Your Business Sitting on Lazy Money? Here’s How to Put it to Work.
As a South African SME owner, you’re no stranger to the pressures of managing cash flow, juggling day-to-day expenses, and keeping your business on a steady growth trajectory. But have you considered whether your hard-earned money is working as hard for your business as you are?
In many cases, businesses — especially small and medium enterprises — keep excess cash on hand for security or operational needs, but this cash often sits idle, earning minimal returns in low-interest accounts. This is what we call “lazy money.” While it’s important to maintain a buffer for unforeseen expenses, letting too much capital remain underutilised can prevent your business from reaching its full potential.
The Hidden Cost of Lazy Money
At first glance, having cash reserves might seem like a prudent choice, but in an inflationary environment, unproductive money can actually lose value over time. Inflation erodes purchasing power, meaning that R1 million today may only be worth R950,000 in a year if inflation outpaces your returns. The opportunity cost of leaving money idle is high when there are more effective ways to make that capital work for your business.
Turning Lazy Money into a Strategic Asset
Here are a few practical steps to help you put your idle cash to work and create a more robust financial position for your business:
- Optimise Cash Management
Your first step is to reassess your liquidity needs. How much cash do you need readily available for operational expenses, and how much can be allocated for short-term investments? With a well-structured cash flow plan, you can ensure you’re meeting both your immediate financial requirements and long-term growth goals. - Explore Treasury Solutions
Instead of keeping all your cash in low-yielding accounts, consider leveraging treasury management solutions designed to maximise your returns. At Merchant West Treasury Solutions, we assist SMEs in accessing short-term investment opportunities such as money market funds, fixed deposits, and structured cash management products that provide better yields without compromising liquidity. - Strategic Debt Management
Lazy money can be used to reduce your borrowing costs. If you have outstanding debt, consider using a portion of your excess cash to pay down high-interest loans. This will immediately improve your financial health by lowering your debt burden and increasing your available working capital for other initiatives. - Invest in Growth
Another way to combat lazy money is to reinvest it into your business. Whether it’s upgrading equipment, expanding your product offering, or improving operational efficiencies, reinvesting cash can deliver long-term benefits that far outweigh the returns from leaving it idle. Investing in your company’s growth is a direct investment in its future success. - Build Resilience
With the right strategy, you can create a financial buffer that doesn’t compromise growth. Liquidity can be optimised through a combination of short-term investments and cash management products, giving you peace of mind while ensuring your capital is productive. By having access to flexible financial products, you can also ensure that your business is agile enough to respond to new opportunities or challenges as they arise.
Partner with Experts to Unlock Value
Many SMEs feel they lack the resources or expertise to implement advanced cash management strategies. This is where partnering with a treasury expert can make all the difference. At Merchant West Treasury Solutions, we understand the unique financial challenges facing South African SMEs and can help you develop a tailored strategy to ensure your money is not sitting idle. From foreign exchange solutions to optimised cash management, we work closely with businesses like yours to unlock the full value of your financial resources.
Final Thoughts
Now is the time to rethink your approach to cash management. Don’t let your business’s capital stagnate. By putting your lazy money to work, you can drive growth, improve your financial position, and create a more resilient business for the future.
If you’d like to learn more about how we can assist your business in making the most of its capital, get in touch with our team at Merchant West Treasury Solutions today.
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Frequently Asked Questions
What is lazy money in business?
azy money refers to excess cash that is sitting idle in low-interest accounts, earning minimal returns, instead of being invested or used productively to support business growth.
Why is lazy money a concern for SMEs?
Lazy money can lose value due to inflation, meaning that idle cash erodes in purchasing power. By not investing or using it strategically, businesses miss out on growth opportunities and higher returns.
How can I turn lazy money into a productive asset?
You can put lazy money to work by exploring treasury management solutions such as short-term investments, money market funds, or reducing high-interest debt. These strategies ensure your capital is actively generating returns.
What are the benefits of addressing lazy money?
By tackling lazy money, you improve cash flow, reduce borrowing costs, and create a financial buffer. This helps your business grow while maintaining liquidity for future opportunities.
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