Grow My Business

Cash reserves for businesses: How much?

Most people have heard the personal finance adage that they should have cash equal to 6 months of expenses on hand, in case they lose their job or have an emergency expense. But should businesses? And is it realistic or wise to have that much capital sitting around?

The short answers: Yes, and yes. How much you need will depend a lot on your business and cash flow, so talk with a banker or business advisor who can draw on experience working with many businesses like yours.

One other thing: Reserves don’t need to be stuffed under a mattress. Depending on the reserve size and how quickly you may need to access it, some might be held in higher interest earning but still safe and liquid products. If it seems more complicated for a business than a person – that’s because it is. Come talk to an Alerus business advisor to help guide you through it.