How much cash should you save in your business account?

So we know you need three bank accounts to operate a simple cash management system.

If you read my blog yesterday that is :)

But how much cash should you keep in your main account to reduce the risk of business failure?

Well that's a tricky one.

It depends on the nature of your business

How regular is your income?

Are the external market risks high or low?

Do you have contractual obligations for clients to pay?

Are you selling products and subject to the ad algorithm?

It also depends on your risk profile

Are you like Richard Branson and happy to risk it all in the name of growth?

Do you wake up in the night worrying about low cash reserves?

If you want to discuss the right level for you just book a call below BUT

a general rule of thumb is somewhere between 3 and 12 months fixed costs kept back.

Those are the costs that do not vary with sales e.g rent, salaries, internet, insurance and so on.

If you have your team on 1 weeks notice that might be considered a variable cost!

How much cash do you save?

Are you operating the multi bank account system?

Are you getting this kind of advice from your accountant?

If not you could be missing out on maximising your growth by saving too much, or increasing the risk of business failure by

Simon

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