Most companies have business idle cash in their current accounts for about 10 to 15 days in a month when there are no major expenses. As the money is in the current account, it fetches no returns. However, if businesses start investing this money in mutual funds, they can create wealth and boost profits simultaneously. The question, however, is how companies can invest business cash in mutual funds. Let’s find out.
Board Resolution & KYC
To start with, the Board of Directors must pass a resolution to start mutual fund investments, post which power is given to the authorised person for documentation. After this, getting KYC or (Know Your Customer) done is essential as it is mandatory to invest in mutual funds under the Prevention of Money Laundering Act 2002.
You can do it at any SEBI-registered KYC Registration Agency (KRA), Asset Management Company (AMC) office and need the following documents.
- The balance sheet of previous 2-3 years
- Latest shareholding pattern
- DIN, PAN of Directors, along with proof of identification and photograph
- Board resolution for investment
- POI, POA, and PAN of individual promoters holding control
- Memorandum and articles of association and certificate of incorporation
You need to sign the mutual fund application form and submit it with these documents:
- Copy of Board resolution
- Signatory list with specimen signatures
- Copy of memorandum and articles of association and certificate of incorporation
- Cheque drawn in the name of the scheme
To know how Shootih can help you complete KYC, click here.
Choose the Fund to Invest
Once your KYC is done, you can invest in your chosen mutual fund. AI-driven business wealth management platforms like Shootih provides funds recommendations based on your investment duration, which can last from a week to more than a month. You can choose the fund to invest in depending on the investment horizon and your need.
Invest the Amount You Want To
Once you have chosen the fund, you can invest your business’s idle cash. You can either invest a lumpsum amount or invest via systematic investment plans (SIPs) wherein a particular amount is invested in your chosen fund on a fixed date.
AI-driven small business wealth investment management platforms like Shootih provide instant alerts on future income and expenses that help you get a 360-degree view of idle cash and invest accordingly.
Summing it Up
Investing idle business cash in mutual funds can help you, as a corporate, to generate more returns than fixed deposits and even potentially make an employee’s salary. It can help you maximise gains and grow profits in a disciplined and sustained manner.
Disclaimer: Mutual Fund investments are subject to market risks, please read all scheme-related documents carefully.
The content of this blog is not intended to serve any professional advice or guidance and Shootih takes no responsibility or liability in whatsoever manner for any investment decisions made by the readers of this blog or other blogs. Readers should seek independent professional advice before making any investment decision based on the information provided on this website.
