Lithuanian companies’ money is no longer sitting idle in accounts: they are discovering ways to turn free capital into profit

In Lithuania, free capital held by companies has long been viewed primarily as a liquidity reserve—funds intended to ensure stability rather than generate additional returns. However, in recent years, this approach has been changing, with more and more companies beginning to invest a portion of their accumulated funds.

Aurimas Satkūnas, Head of Investor Relations for major investors and board member at the crowdfunding platform “Profitus,” says that this shift has largely been driven by companies increasingly recognizing the cost of keeping capital in bank accounts.

“Where previously the dominant logic was simply to accumulate reserves and leave them untouched, today companies are more often clearly defining the level of liquidity needed to ensure operational stability, while treating the remaining portion as investable capital. This is also influenced by changes in real purchasing power—even a few percent of inflation gradually reduces the value of capital held in accounts, meaning it does not generate returns or contribute to financial performance. For example, with €100,000, a few percent of inflation can ‘cost’ several thousand euros in purchasing power per year,” says Satkūnas.

According to “Profitus” data, over two years the number of actively investing companies has nearly doubled, and their managed portfolio has grown more than twofold—from around €5 million to €13 million. Currently, 115 companies are investing on the platform. According to Satkūnas, companies with larger capital have an average active portfolio of around €350,000, while the largest single company portfolio is about €1.8 million.

Aušra Brazauskienė, partner at the law firm WIDEN and Head of the Banking and Finance group, states that increased corporate investing is part of a broader trend. According to her, this shift is driven both by growing maturity in capital management and by the current economic and geopolitical environment.

“More active investing by companies may be linked to a favorable economy as well as the geopolitical situation. From our experience, we see that companies that had planned investments in expansion or new projects are postponing them due to economic fluctuations or geopolitical conditions. In such cases, there is a need to temporarily employ funds, which is why we observe investments in short-term projects, such as lending through crowdfunding platforms or lending to project developers via so-called ‘bridge finance loans’,” says Brazauskienė.

From reserves to investing

More active capital management is changing not only attitudes toward funds but also their role within companies. According to Satkūnas, companies often notice the benefits of investing fairly quickly—once funds are put to work, additional income appears, and over time the role of capital itself begins to change.

“When profits are retained in the company and reinvested, this first shows up as additional income, but over time the effect of a larger capital base begins to take hold—returns are generated on an increasingly larger amount, meaning capital grows faster than if it were simply held or immediately withdrawn. This is well illustrated by simple numbers: for example, €100,000 with an annual return of about 10%, reinvested over five years, could grow to approximately €160,000, although the exact result depends on chosen strategies and their risk.

This model also gives companies more flexibility—dividends are taxed only at the time of distribution, allowing more flexible planning of when and how to use accumulated capital. In addition, such capital management enables more consistent long-term financial planning, making it increasingly attractive for companies,” says Satkūnas.

As investment volumes grow, companies are paying more attention not only to potential returns but also to how much of those returns remain after taxes. While individuals in Lithuania will have access to an investment account from 2025 allowing more flexible tax management, companies still have broader opportunities.

“Expenses related to investing can be included as costs, thereby reducing taxable profit, while losses can be carried forward to future periods. This allows companies not only to plan cash flows but also to manage their tax burden more efficiently over the long term.

Additional impact comes from applicable corporate tax rates. Smaller companies—with up to 10 employees and annual revenue not exceeding €300,000—benefit from a reduced corporate tax rate of 7%, and in some cases 0% during the initial period. Meanwhile, individuals are subject to a progressive system, where rates increase with income and can reach up to 32%, with more limited expense deduction options,” says Satkūnas.

Looking for simpler solutions

However, the expert notes that for companies choosing to invest, not only results matter, but also how capital is managed on a daily basis.

“For businesses, it is important not only what return they achieve, but also how much time and attention the investment process requires—whether it is predictable and clear or becomes an additional management function. It is also important how clearly one can understand what will happen to capital over time, when it will return, the investment duration, and possible scenarios. For this reason, companies tend to favor solutions with a defined structure that allow for planning,” says Satkūnas.

For these reasons, he adds, companies are increasingly looking for solutions that make these principles easy to implement.

“We see that companies that want to put capital to work while maintaining clear cash flow planning more often choose structured solutions. One such direction is crowdfunding, including platforms like ‘Profitus,’ through which companies can deploy capital in a structured way. The key aspect is that investments usually have a predefined term and repayment logic, allowing companies to plan quite precisely when capital will return and how it will be used further. In addition, investments can be spread across several projects, reducing the impact of any single decision on the entire portfolio,” says Satkūnas.

“As a result, companies can make investment decisions without taking on asset management functions—they do not need to deal with supervision or administration, so investing remains compatible with their core activities,” he adds.

Discipline is key

The expert emphasizes that the greatest benefit for companies comes from clearly structured and consistent capital management—it is important not only the investment direction itself but also how it is integrated into daily financial management. Long-term results are determined not by individual decisions but by consistency.

“The greatest effect comes not from individual investments, but from consistent capital deployment and reinvestment. When done systematically, the effect of compound growth emerges, which over time can significantly increase capital,” he explains.