It is estimated that Lithuanian businesses have over EUR 8 billion in current accounts. While these funds are used for day-to-day business payments, there are ways in which they could be used more efficiently. Businesses can lose significant amounts of money to inflation. In 2023, annual inflation in Lithuania was 1.2%. Employing available funds could help businesses offset inflation and generate additional income.
Various financial instruments can be used to utilise available funds. The choice depends on the business’s growth strategy, risk appetite, approach to liquidity and ability to invest for the longer term.
As the economy gradually recovers, it’s a good opportunity to employ available funds
The European Central Bank (ECB) has already reduced base interest rates three times this year amid falling inflation. It has given some EU businesses more courage to think about business expansion. According to ECB statistics, in the Eurozone in the third quarter of this year, business appetite for loans was at its highest level in two years. Lithuania is also showing positive signs of economic growth. Gross Domestic Product is estimated to have increased by 2.3% in the third quarter of this year compared to last year. Growth looks set to continue in 2025. The latest macroeconomic forecast from the European Commission predicts that the Eurozone economy will continue to grow next year.
Interest paid on current account balances
The European Merchant Bank (EMBank) has launched a proposal for businesses to employ available funds in their current accounts. The bank offers 2.75% interest annually on balances exceeding EUR 10,000. For example, a company with a balance of EUR 40,000 in its account would earn EUR 91 per month. If the balance is EUR 100,000, it would receive EUR 229. Current accounts up to EUR 100,000 are insured.
This financing instrument is suitable for companies that do not currently have the means to invest their available funds for a more extended period because they need it for their day-to-day expenses or planned expansion.
Read more about EMBank’s interest rates on current bank accounts here:
Investing in real estate
Experts estimate that commercial real estate could generate an annual return of 8–11%. Property values tend to increase long term, especially if the property is strategically located. However, buying property requires investing a significant amount of available funds, which can take time when planning to sell a property. It’s also important to remember that real estate requires ongoing maintenance (such as repairs, insurance, property management), which entails additional costs and time investment.
Fixed-term deposits
This form of investment is appealing because of its simplicity and security. However, compared to other investment tools, the returns here are usually not as high. For example, a term deposit could generate a yearly return of 2.5–4%. It is, therefore, imperative to check the interest rates charged by different banks before placing a fixed-term deposit.
It is worth noting that fixed-term deposits have limited liquidity. Funds cannot be accessed until the agreed term ends, and early withdrawal would result in the loss of accrued interest.
Bonds
Public and private companies issue bonds that provide investors with regular income. Corporate bonds are estimated to yield between 6% and 15% on annual returns. However, if a company issues bonds, it is essential to analyse its financial indicators, understand market trends and anticipate future developments. Conducting such analysis requires a significant investment of time.
Available funds can become a valuable tool for a business, supporting growth, covering minor expenses or ensuring financial stability. A company’s funds can preserve their value and generate additional benefits by choosing the right investment instrument. Therefore, managing available funds is not merely a financial decision, but a strategic step toward long-term business success.
Aurelijus Šveikauskas, Member of the Board of European Merchant Bank | EMBank
