Finance & Moneybeginner
Cash Reserve
Definition
Money set aside in a business account specifically as a safety buffer, covering unexpected expenses, slow periods, or opportunities without disrupting operations.
Why it matters
Most businesses fail not from lack of profit but from running out of cash. A cash reserve buys you time to react, adapt, and survive unexpected downturns.
Example
A founder keeps 3 months of operating costs, £9,000, in a separate savings account and does not touch it unless it is a genuine emergency.
Related terms
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