A domestic company is a company that runs its operations from its home country. Therefore, a Nigerian company that conducts its business from Nigeria is a domestic company. If the same company were to move to Ghana to conduct its affairs from there, it will be referred to as a foreign company.
However, in some cases, a domestic company is limited to the province, territory or state it was incorporated. This means that it may be referred to as a foreign company if it runs its operations out of the province it was incorporated in, even though it is still within the same country.
Additional Info: Typically, a domestic company is taxed differently than a foreign company.
Now that we’ve provided clarity on what a domestic company means, let’s clarify if investing surplus cash in mutual funds is an option.
Can a domestic company invest surplus cash in mutual funds?
From the definition of what a domestic company is, there is nothing that indicates restrictions on investing in mutual funds. Therefore, they are a great investment type for both domestic and foreign companies.
However, the points below will help you with making a better-informed investment decision for your business:
- The type of business you run and your long-term goals
- The regulations, policies or restrictions placed on your type of business
- If your business is solely owned by you or has other stakeholders and investors
Now, what are mutual funds?
Mutual funds are investment arrangements that pool funds from various investors. This pool of funds is then invested in a mix of carefully selected instruments like treasury bills, bonds, and stocks.
Unlike the case of individual trading where you’re tasked with finding the “best performing” stock and investing in just that one stock, mutual funds allow individuals and businesses to easily diversify. For example, a mutual fund can invest your money in a basket of different stocks or in a mix of stocks and bonds.
Learn more about mutual funds here
Business investing: how to invest surplus cash in mutual funds?
Previously, it used to be a herculean task to invest your surplus business cash in mutual funds.
The good thing is, now, you have Sprout. Sprout is the seamless way to manage your business treasury. It allows you to take advantage of low-risk mutual funds and put your business’s idle cash to work in just 5 minutes!
All investment options on Sprout are conservative and risk-free mutual funds that allow you to enjoy steady returns.
Why choose Sprout for your business’ treasury management?
- Easy access to diverse, business-friendly investments from top fund managers
- A transparent, easy-to-use investment dashboard
- Flexible investments’ liquidation process
- Capital preservation with low-risk investments
- Stay secured and compliant with regulations
So, are you a domestic company or a foreign company based in Nigeria and looking for ways to invest your surplus cash in mutual funds? Then take advantage of Sprout here.
Also, watch this video to know how to invest your excess business cash with Sprout: