2 min read
Definition
A cash reserve is liquid cash set aside beyond day-to-day needs, sized against fixed costs so the business can keep trading through a shock. A common target is one to three months of operating costs.
In plain terms
It is your business emergency fund. It is the difference between a lost contract being a setback and being a crisis.
Why it matters for your company
A reserve reduces reliance on emergency credit, which is always the most expensive kind. Many firms hold a lean reserve and pair it with a standby facility for headroom. Size the buffer with the seasonal cash buffer calculator.
Related reading
Liquidity
Liquidity is how readily a business can convert assets into cash to meet its short-term obligations — the…
Read →Seasonal financing
Seasonal financing bridges the predictable cash troughs of a seasonal business — stocking up before a peak,…
Read →
Working capital
Working capital is the money a business has available to fund its day-to-day operations, calculated as…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.