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Cash reserve calculator

How many months of expenses your business should hold, sized to how your revenue actually arrives — and how far you are from it today. Nothing stored.

The business
How does revenue arrive?
Revenue lands roughly evenly every month.
Recommended reserve
3–4 months
€36,000 to €48,000 at your spend
You hold today
1.2
months — about 35 days
Gap to the low end
€22,000
to reach 3 months of expenses

You hold 1.2 months of expenses — about 35 days. For scale, the JPMorgan Chase Institute found the median small business holds just 27 days. Reaching the low end of your range takes €22,000 more; filled over six months, that is €3,667 a month set aside before anything else — the pay yourself calculator budgets exactly that set-aside ahead of owner pay.

The 3-to-6-month range is a rule of thumb repeated by banks and finance writers, not a measured statistic — the honest version of where it comes from, and where it breaks, is below. If revenue stopped entirely, the months you hold are your runway; the cash runway calculator runs that number against your real burn.

The formula, and what sets the months

reserve target = monthly operating expenses x target months
buffer you hold = cash on hand / monthly operating expenses

The arithmetic is trivial; the judgment is in the months, and the honest input is volatility. Revenue that arrives evenly every month needs less protection, because a bad month is a dent. Seasonal revenue needs enough to cross the predictable trough with payroll intact. Lumpy revenue — a few large payments a year — needs the most, because one delayed invoice can be a quarter's income, and when one customer is a big share of revenue the reserve is what turns their payment terms from a threat into an inconvenience.

The rule of thumb, and the measured reality

The 3-to-6-month range is quoted by nearly every bank and finance writer, and it is worth being clear about what it is: a rule of thumb with no study behind it. It is a sane one — it maps to how long finding new revenue or cutting costs actually takes — but it is advice, not data. The measured figure on this subject points the other way: the JPMorgan Chase Institute, from the real account flows of hundreds of thousands of small businesses, found the median holds just 27 days of cash buffer. Most businesses are not choosing between three months and six; they are an ordinary slow month away from trouble, which is why the causes and fixes in the cash flow problems guide so often come down to the missing buffer.

Building the reserve is a sequencing decision: it gets filled from profit, on a schedule, before discretionary spending — including owner pay, which is why the pay yourself calculator budgets the reserve set-aside first and pays the owner from what remains. The other benchmark ranges founders track, with their sources, are on the benchmarks page.

Common questions

How much cash reserve should a small business have?

The commonly cited answer is 3 to 6 months of operating expenses, and it is a rule of thumb, not a measured statistic. Where you should sit inside it depends on how revenue arrives: steady monthly revenue supports the low end, seasonal revenue needs enough to cross the quiet months, and lumpy project revenue argues for the top of the range or beyond, because a single delayed payment can be a large share of a quarter's income.

How much cash does the average small business actually have?

Far less than the advice assumes. The JPMorgan Chase Institute, analyzing the actual account flows of hundreds of thousands of small businesses, found the median holds just 27 days of cash buffer — under one month of expenses, against a commonly recommended three to six. The gap between the rule and the reality is why a slow month so often becomes a crisis.

Is a cash reserve the same as runway?

Same cash, different question. Reserve asks how many months of expenses you hold as protection while revenue continues; runway asks how many months you survive on current burn — for a loss-making business, until the money runs out. For a profitable business the reserve is a shock absorber; for a startup spending ahead of revenue, reserve and runway collapse into the same number, and runway is the sharper way to look at it.

How do I build a cash reserve for my business?

From profit, on a schedule, before discretionary spending — including your own pay. Set the target in months of expenses, divide the gap by the number of months you give yourself to fill it, and move that amount to the reserve first each month. Filling the gap over about six months is a livable pace; a plan that pays the owner nothing for a year is a plan nobody follows.

Can a business have too much cash in reserve?

Past the top of your range, more reserve stops buying much extra safety and starts having a cost: cash sitting still is cash not funding growth, debt paydown or owner pay. That is a real trade-off rather than a rule — some owners rationally hold a year of expenses because sleeping well is worth the return they give up. The point of a target is that beyond it, holding cash becomes a choice you are making, not a gap you are closing.

A reserve target is only useful if you notice it draining

Plainhub keeps cash, spending and revenue in one live model, so the months of buffer you hold update the day a payment slips — not the next time you check.

Build your modelCash runway calculator