How much cash should your business be holding?
Too little cash and one slow month becomes a crisis. Too much and capital goes unused when it should be working for you. Answer a few questions about your business and we will give you a target cash position, along with the reasoning behind it.
Your monthly numbers
All figures are monthly, in dollars. Nothing is stored or sent until you choose to.
Monthly wages and payroll costs for the people who produce what you sell.
Use a 3-month average. If your business is seasonal, use a 12-month average instead.
Monthly interest, already inside your operating expenses. We take it out so it isn't counted twice with the debt payment below.
Principal plus interest, every loan and line of credit added together.
Two months is the minimum. One month only makes sense while you're paying down a line of credit with the extra cash. If revenue is seasonal or unpredictable, go higher. Ask your advisor how many months your business should hold.
Planned investments optional
Cash you will need beyond the buffer, net of any financing. Added to the total.
Remodels, equipment, vehicles, systems. Net of debt.
A new location, product line, or business. Net of debt.
$0
2 months of expenses
This is the cash your bank account should hold to fund operations.
Enter your numbers to see your buffer.
Your total capital needed, including planned investments, is in the breakdown.
See the full breakdown
Enter your email and we will open the complete analysis: how this target is built, how your current position compares, and the specific steps to get there. No spam, and no sales call unless you ask for one.
Full breakdown
Monthly burn detail, planned investments, and your total capital needed.
No spam. The calculator runs in your browser; your figures are only shared with us when you submit this form.
What goes into the number
Four inputs, one honest answer.
The calculator uses the same worksheet our advisors fill in with clients during a capital-needs review. Here is what each line is really asking.
Direct labor
The wages that stop the moment work stops. Payroll is the first thing a cash buffer protects.
Operating expenses
Rent, software, insurance, suppliers, all of it. Three months of history is usually enough to see the real number; twelve if your year has a high season and a low one.
Interest and debt
Interest is already counted in your operating expenses, so we remove it and add back the full monthly debt payment, principal included. That's the cash that actually leaves the account.
Months on hand
Two months is the minimum we recommend. One month can make sense while you're paying down a line of credit. Seasonal or unpredictable revenue argues for more.
What to do with it
A buffer is a decision, not a hope.
Most owners find out their number the hard way: a slow quarter, a late receivable, a surprise tax bill. The point of the calculator is to know it in a calm month.
- If you're below the number, decide how you'll cover the shortfall: a monthly transfer to a reserve account, slower distributions for a season, or a line of credit you don't touch. Pick one and give it a date.
- If you're at it, protect it. Reserve cash lives in its own account, and it's not the down payment on the next truck.
- If you're well above it, that surplus has a job to do. Paying down expensive debt, funding a planned investment, or a distribution are all reasonable. Leaving it idle is the one answer that costs you.
This calculator from Ascend Consulting LLC is an educational estimate, not financial advice. Results depend entirely on the numbers you enter. Talk to an advisor about the right months-on-hand target for your business.