Economic uncertainty continues to shape today’s decision-making for business owners. While businesses may remain confident in their own outlooks, concerns about broader economic conditions persist, reinforcing the importance of strong liquidity planning.

Cash reserves are a critical tool for helping businesses manage volatility and maintain flexibility when market conditions change unexpectedly. Traditional guidance often suggests having three to six months of operating expenses, but static rules of thumb may no longer capture the full range of risks businesses face today.

How much cash should a business hold?

Businesses can still benefit from keeping a baseline level of operating cash on hand. However, organizations are increasingly relying on rolling short-term cash flow forecasts to gain clearer insight into near-term liquidity pressures. These regularly updated projections help leaders identify when cash availability may tighten and which actions can ease pressure before it becomes disruptive.

Using treasury tools to support liquidity

Building reserves should not rely solely on manual cash management. Many businesses use tools that help consolidate balances, reduce unused funds, and automate daily liquidity movement. Centralizing funds across accounts improves visibility while ensuring operating accounts maintain adequate balances.

Automated sweep structures can further improve efficiency by directing excess cash toward short-term interest opportunities or reducing outstanding credit balances, while preserving access to funds when needed. Operational readiness, including clear access controls, backup staffing, and fraud prevention, also supports liquidity continuity during periods of disruption.

Accelerating cash flow and managing risk

Improving liquidity is not only about holding cash, but also about freeing it faster. Accelerating inflows, optimizing payment timing, and improving visibility into working capital can shorten the cash conversion cycle and support steadier reserve building.

In addition, holding cash is not the only way to manage risk. For certain exposures, transferring risk, such as customer non-payment, can reduce the amount of liquidity required for contingencies, allowing reserves to remain focused on core operating needs.

Positioning for what’s ahead

The purpose of building cash reserves is not to eliminate uncertainty, but to be prepared for it. Businesses that combine forward-looking forecasting, disciplined liquidity management, operational readiness, and thoughtful risk planning may be better positioned to navigate volatility while continuing to invest with confidence.

Headshot:

Disclaimers:
NEITHER HUNTINGTON NOR ITS AFFILIATES SHALL HAVE LIABILITY FOR ANY DAMAGES, LOSSES, COSTS OR EXPENSES (DIRECT, CONSEQUENTIAL, SPECIAL, INDIRECT OR OTHERWISE) RESULTING FROM USING, RELYING ON OR ACTING UPON INFORMATION IN THIS DOCUMENT EVEN IF HUNTINGTON AND/OR ITS AFFILIATES HAVE BEEN ADVISED OF OR FORESEEN THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS OR EXPENSES.

Investment, Insurance and Non-Deposit Trust products are: NOT A DEPOSIT • NOT FDIC INSURED • NOT GUARANTEED BY THE BANK • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • MAY LOSE VALUE