Solving the ‘surplus business funds’ conundrum

Businesses can benefit from placing their surplus income in banking instruments that offer higher returns on the fund to create a larger corpus.

Companies in the Middle East benefit from the region’s geography, and hence, proximity to the world’s leading trade and commerce channels. Additionally, the Middle East offers an environment conducive to the growth and development of a large number of businesses of varying sizes. As a result, several enterprising individuals have started large to small businesses in the Gulf region, catering to a variety of industries and business sectors. The mushrooming of several start-up companies in the region is a testament not just to the supportive environment, but also the presence of funding instruments that offer a range of solutions to help businesses grow.

A major component of the business ecosystem is the finance resource: this is often a trusted bank or financial institution that serves all the funding requirements of a company. From providing working capital to extending business loans, and from financing supply-distribution channels to offering easy repayment options, banks and financial institutions in the Middle East are helping several businesses expand the scope of their operations in many ways.

Businesses that perform well end up with surplus funds that they must either reinvest in the business or set aside for later use. Several companies choose the latter route – after all, surplus money can come in handy in case of emergent financial difficulties in the future. But businesses are opposed to letting their money sit idle as well. Hence, they look for ways to augment the surplus funds at their disposal. Savings bank accounts and fixed deposits for business are useful instruments for this purpose.

However, choosing the right bank is crucial: selecting one that offers a high rate of interest on the residual funds is key.

Of these, the Investment Savings Account and Fixed Deposit Account are extremely popular among businesses based here, owing to the high interest rates offered on the funds deposited in both. Emirates Islamic provides these two instruments as a means for companies to not just deposit their surplus income, but to also generate good returns on them. Businesses find that their initial capital grows steadily and predictably by using these accounts.

It is crucial to pick savings and investment solutions that earn a high interest on the money before it is spent on other purposes. This is a vital consideration especially for those businesses that are prone to receiving periodic large orders where they may require their reserve funds to complete a project, get a new contract or even expand their operations to the next level. However, choosing the lock-in period for the funds, especially when accessing a Fixed Deposit Account, depends largely on the business’s short term and long term financial strategy.

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