09/24/2026
Personal finance rules don't translate directly to corporate cash management. When gurus tell business owners to keep "3 months of operating expenses," they often calculate that number based on basic overhead (rent, utilities, software).
They ignore the biggest cash drain in any service or government contracting firm: Payroll.
If your clients pay on Net-60 terms, but your employees and subcontractors expect payment every 14 days, your business is constantly advancing cash to stay operational.
The 3-Tier Cash Reserve Framework:
✔️Baseline Operations: 3 months of fixed overhead (non-payroll operating costs).
✔️Payroll Buffer: A minimum of 2 full payroll cycles held in liquid cash at all times.
✔️Tax Reserve Account: 20%–30% of monthly net income swept automatically into a separate high-yield account.
Want to calculate your firm's true liquidity and working capital runway? Drop a 📊 below or DM me "RESERVE" to run a CFO liquidity audit. 🔍