Do you own your own business? If so, then you know how important it is to keep some cash available to pay bills. But assuring adequate cash flow doesn't mean your assets can't do more for you. For example, if you have an infusion of cash that you don't expect to spend immediately, you don't have to let it sit idle. It may make sense to explore alternatives for putting at least some of that money to work. Managing your working capital wisely can help improve your business's overall performance.

Determine Your Time Frame
Before you think about increasing returns on any excess cash, you need to make sure you've adequately forecasted upcoming needs. What looks like excess now could be needed if your cash flow projection is faulty or an emergency arises.

Is your cash flow relatively steady? Does it change dramatically from season to season? Vary from month to month, or year to year? All of these factors will influence whether and how you should put working capital to work.

For money that's likely to be used at any moment, your major objective is to preserve both capital and liquidity. For money that isn't needed immediately--for example, money you plan to use eventually to grow the business or pay off existing debts--you may have additional flexibility to try to increase the return on that money until it's needed.

For Money You'll Use Soon
A high-yield savings account, especially one linked to your checking account, is a relatively straightforward option, and one you may already be using. You may be able to combine your checking and savings balances to meet any minimum balance requirements and avoid monthly fees. A savings account's yield will depend in part on how actively a bank is courting deposits, so it can pay to comparison-shop. Also, check on how many transactions are allowed each month.

If you're a sole proprietor or run a nonprofit organization, you may be able to find an interest-bearing checking account. Otherwise, a sweep account combines a checking account with an investment account that pays interest. With a sweep account, you set a target balance for the checking account. Once transactions have been posted each day, the account automatically sweeps any cash above that target amount into the income-producing account--often a money market account or mutual fund, though you may also be able to choose from a range of investments. Investments are automatically liquidated as necessary and the proceeds moved into the checking account to cover outstanding payments and maintain the target balance, which in some cases may be as low as zero.

A sweep account also may be linked to a line of credit, enabling you to set a zero target balance for one or more checking accounts and borrow to cover checks. Deposits are then automatically used to pay down the line of credit and minimize interest charges.

If You Have a Longer Time Horizon
If you're confident you won't need the money for at least several months--for example, if you're raising capital for a future expansion or equipment purchase--you could explore buying a certificate of deposit (CD) with a term that matches your time frame. You get a guaranteed interest rate, FDIC insurance up to $100,000, and return of your principal when you need it. Or put some money into a short-term CD and the rest into a longer-term investment with a higher yield. If an emergency requires use of the money, you might forfeit interest on only part of the assets.

You also could explore short-term Treasury bills, which can be bought in $1,000 multiples and whose terms range from a few days to six months. T-bills are bought at a discount to their face value; when they mature, you receive the difference between the purchase price and the face value as interest. Treasury notes are available in 2-, 5-, and 10-year denominations. CDs and T-bills can be rolled over if they mature before you need the cash.

A short-term bond fund might offer a higher yield; however, it will not be FDIC-insured. Also, share prices of the fund may go down as a result of interest rate increases, and you could lose principal. Companies in a high tax bracket or with frequent large cash balances might consider tax-exempt bonds or even a custom-tailored money management solution.

If you're a sole proprietor, you have more freedom to invest the money as you might in a personal account--for example, by having an investment account with a specific goal, such as retirement or purchasing office space.