Well-managed cash flow can help maximize returns and ensure the long-term financial stability of a business.

Yes but now, when you talk to your banks, you are often disappointed with the proposed return. Especially when it comes to short-term cash investments. Currently, a term account with guaranteed funds earns 3% /year in French banks. While these same banks place your assets at a minimum of 4% /year, the ECB's risk-free overnight rate.

With euro and dollar stablecoins, these digital assets that replicate the value of their underlying currency, you can really benefit from the current interest rate context while maintaining a cautious approach: guaranteed by other assets, return > 6.50% /year, interest paid continuously, withdrawals at any time... they have serious arguments.

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5 tips for defining a cash flow strategy

Before describing recommended stablecoins later in this article, here are a few reminders on the approach to take to optimize your company's cash flow:

1. Analyze your liquidity needs

Before deciding where to put your cash, it's important to understand the liquidity needs of your business. Evaluate your expected cash flow, as well as your short- and long-term expenses. This analysis will help you determine how much of your cash flow you can afford to invest in less liquid investments.

2. Evaluate investment options

Compare different investment options based on their potential return, liquidity, and risk level. For example, certificates of deposits generally offer higher returns than savings accounts, but they also involve blocking funds for a specific period of time. Money market funds offer high liquidity, but their returns may be lower than other investments.

3. Consider long-term goals

If your business has excess cash and doesn't need immediate cash, consider longer-term investments that offer potentially higher returns. This may include stocks from solid companies with a history of stable dividends or diversified index funds.

4. Follow up and reassess regularly

Cash management is an ongoing process. Be sure to monitor your investments regularly and reassess your strategy based on market conditions and the changing needs of your business. Be ready to adjust your asset allocation accordingly.

5. The golden rule: diversify

As always, you don't put all your eggs in one basket. Opt for diversification that reduces the overall risk of your portfolio. You can divide your liquidity between short-term investments, such as certificates of deposit or money market funds, and investments that are more or less liquid, such as euro and dollar stablecoins, high-quality corporate bonds, or index funds.

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Stablecoins backed by assets: a great investment opportunity

Let's go back to our stablecoins as a solution to boost your cash flow.

As a reminder, a stablecoin is a very particular kind of cryptocurrency - we actually prefer the term digital asset - which replicates the value of a currency or a commodity. There are stablecoins for the euro, the dollar, gold, silver... So a euro stablecoin is always worth almost €1, for example the EURC.

Euro or dollar stablecoins can be classified into 2 categories:

• semi-algorithmic stablecoins: they are guaranteed at least 100% of their value by other assets. This means that the existence of these stablecoins is very solid. For example, USDC is 100% guaranteed by real dollars and US Treasuries. There is 30.5 billion USDC in circulation today, so there are 30.5 billion “real” dollars and US Treasuries placed by the Circle company that issues USDC.
• algorithmic stablecoins: these are simple computer codes that were created with the rule of replicating their underlying. This type of stablecoin is very risky because there are no collateral assets, and they can be attacked. In fact, it is an endangered species.

To invest your company's cash, make sure you're only using stablecoins backed by other assets. Here are some examples: AGeur, USDC, EURS, EURS, EURC, EURC, DOLA, DAI, PYUSD (Paypal's stablecoin), CrvUSD...

Attention: while holding semi-algorithmic stablecoins is very low risk, making them grow by investing them on return platforms introduces a dose of risk - low but not zero - of capital loss. You must therefore carefully select the platforms where to place your stablecoins.

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Example of strategy

Whether for a short-term or long-term financial investment, here is a simple example for a balance between availability and performance to invest your company's excess cash flow:

• 30% cash on a bank account, for current transactions,
• 40% on euro and dollar stablecoins, withdrawals at any time and yield 7.20% /year,
• 30% on a term account for 12 months, rate 4% /year.

With such a strategy, you will get a rate of return on your company's cash flow of 4.08% /year. While having 30% immediate cash on the bank account.

If the needs of operational activity require more than the 30% immediate liquidity, you can withdraw some of the funds placed on stablecoins at any time. And if you need to access the remaining 30% placed on the term account, you can also unblock them at any time, even if you will lose some of its bonus return.

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Concretely, how do you put your cash into stablecoins?

This question was addressed in another article on this blog, entitled”How to benefit from the performance of stablecoins“, which you can find by clicking On this link.

The short answer is this: you have several options, the simplest being that of Eco account. A simple transfer in euros to credit your account, and your company becomes the owner of a wallet of several stablecoins placed in performance protocols. You receive a return every day at the rate of 7.20% /year, and you can withdraw your funds at any time in 48 hours and at no cost.

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Placing your company's cash flow in the best possible way requires careful planning, an analysis of liquidity needs and adequate diversification. By following these tips and staying alert to opportunities and risks, you can make money on your free cash flow while maintaining the financial stability of your business.

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