As a small business owner, you’re no stranger to the constant ebb and flow of cash. One day, you’re riding high on a wave of incoming revenue, and the next, you’re navigating the choppy waters of expenses and payroll. It’s a cycle that can be as exhilarating as it is exhausting. But what if there was a way to bring a little more stability to your financial seas? Enter the Operating Cash Account.
The Operating Cash Account is your business’s financial anchor. It’s the primary checking account used to cover everyday expenses and payroll, as well as receive incoming revenue. Think of it as the heart of your business’s financial operations, pumping cash in and out to keep everything running smoothly.
But here’s the kicker: to truly harness the power of the Operating Cash Account, you need to keep a certain amount of cash on hand at all times. Specifically, you should aim to have two payrolls’ worth of cash in this account. Why? Because this amount should cover you through your cash flow cycle. It’s a safety net that ensures you can always meet your basic financial obligations, even when cash flow is tight.
Most business owners know their payroll figures offhand. It’s a number that’s already top of mind, making it an easy benchmark to remember and maintain. Moreover, maintaining a healthy Operating Cash Account, along with your cash reserve and tax reserve accounts is a testament to your commitment to your business. It shows that you value financial stability and are proactive in managing your money. It’s a sign of your authenticity and dedication to your brand and values.
The Operating Cash Account is more than just a checking account. It’s a tool that can help you navigate the financial highs and lows of running a business. By keeping two payrolls’ worth of cash on hand, you can ensure your business stays afloat, no matter what comes your way.
So, let’s start making your money work for you. Remember, as a small business owner, you’re not just in the business of whatever your business does. You’re in the business of money management. And mastering your Operating Cash Account is a crucial step on the path to consistent, positive cash flow.
