Businesses: how to add crypto to your cash flow

The spectacular price recovery seen since the start of the year, and more broadly since October, is prompting many business leaders to take an interest in cryptocurrencies with a view to boosting their cash flow.

"I have almost one appointment a day linked to this type of request. There has been a real trend emerging over the past month and a half," confirms Houssen Issouf Aly, CEO and founder of Hodl Consulting, an accountancy firm whose one of its specialities is cryptocurrencies.

In both the short and medium term, cryptocurrencies have shown that they can outperform traditional assets. "Especially as the educational work is starting to bear fruit. Many companies that were reluctant to take the plunge are starting to take the plunge and want to invest for the long term," confirms Maxime Alazet, director of sales and operations at Coinhouse.

👉 A question of image

While this is obviously not a topic for crypto-native businesses, the majority of traditional businesses that are launching are overwhelmingly SMEs or VSEs.

"This type of business now makes up the vast majority of our corporate customers," Maxime Alazet points out. "They are much more flexible both in terms of decision-making and accountability to their shareholders, unlike large groups," notes Maxime Alazet, who points out that today, 37% of Coinhouse's turnover comes from businesses.

While the trend is palpable, this type of investment is not being proclaimed from the rooftops, for the time being. "Cryptos sometimes have a negative image with the general public. To say publicly that you've invested even 2% of your cash in them could make me look like a crank. I clearly see it as a risk to my company's reputation," explains this SME boss.

"Although obviously we're still in the study phase, cryptos now appear to be essential for diversifying your cash flow," a representative of a major French group listed on the CAC40 tells The Big Whale, who is particularly interested in staking on Ethereum.

👉 Bitcoin (BTC) and ether (ETH) largely dominant

Not surprisingly, the majority of companies taking the plunge are positioning themselves first on bitcoin and then ether, the native cryptocurrency of the Ethereum network.

"Generally speaking, exposure with moderate risk will be based on excess cash and will never exceed 20% of the total amount of cash," advises Houssen Issouf Aly. "Someone unfamiliar with the sector might be tempted to bet on more exotic cryptos in the hope of maximising the capital gain, which I obviously do not advise if you are a novice," warns the chartered accountant.

On the Coinhouse side, we agree with this view even though "some clients are starting to find out more and even position themselves on slightly riskier stocks such as Aave or Solana," says Maxime Alazet.

Both for accounting and time reasons, dynamic management is largely neglected by traditional companies for the time being.

"Getting your crypto to work in decentralised finance (DeFi) requires advanced knowledge of the sector. Clients who have just started out already confide that they watch the prices almost every day when they invest for their own account. It's all the more anxiety-provoking when it's your company's money," smiles Houssen Issouf Aly.

On the other hand, if providing liquidity via a decentralised finance (DeFi) protocol to generate returns is not a solution to be favoured initially, turning to Ethereum staking via established players such as French start-up Kiln or a regulated platform may prove feasible.

In most cases, then, it is advisable to make a long-term investment via a regulated player.

"The more adventurous can invest part of their crypto cash via a hardware wallet solution such as Ledger. Even if you are guaranteed total control over your funds, you are exposed to theft or loss of your password and therefore loss of your funds," explains Sébastien Dérivaux, CEO of Steakhouse Financial, which has the distinctive feature of not having a conventional bank account.

👉 The accounting headache

"For beginners, managing accounting involving crypto can quickly become a headache," warns Sébastien Dérivaux, who advises newcomers to go through centralised players offering accounting solutions. "Every transaction, even crypto to crypto, needs to be accounted for," continues the CEO of Steakhouse Financial.

With this in mind, solutions such as Request Finance, Coinhouse Business or Monerium can prove to be invaluable tools. But for very simple cash investing, a regulated exchange platform can do just fine. "Using a chartered accountant specialising in crypto can also help," smiles Houssen Issouf Aly.

"The earnings in cryptocurrencies for businesses are integrated into the company's revenue and are therefore subject to the corporate tax (IS)", explains Pierre Morizot, CEO of Waltio, a French start-up specializing in crypto taxation.

Even if, to date, there is very little clarification from the authorities, it is advisable to respect certain principles found in conventional accounting. At the end of each accounting period, the price of a crypto-asset must be re-evaluated, both upwards and downwards.

"If there is a loss, a provision for unrealised loss must be recorded. On this subject, the tax authorities have not yet specified whether this loss is tax deductible", notes Houssen Issouf Aly, who points out that in a company, all transactions are accounted for giving rise to a capital gain or loss.