Managing Cash Surpluses

In 2019, I worked at an accounting firm that showed me a completely different way of thinking about business finances.. Especially when it comes to cash reserves: You can be profitable on paper and still go under. My advice to clients is to keep between 2-12 months of operating expenses in their business accounts as a baseline. An exact number will depend on: • Your risk tolerance • Your industry • Your overall business outlook • Your growth plans • Your operating expenses For most businesses, 6 months is usually a safe middle ground. Once you establish your baseline number, the strategy is simple: • Keep that baseline amount in your account • Distribute any excess monthly or quarterly • Adjust the baseline as your business grows This system works because it provides security and opportunity. Solid cash reserves mean unexpected expenses don't derail your plans. No decisions based on panic or fear, and when opportunities come up, you have the cash to take advantage of them. And you maintain predictable owner distributions while knowing there's a safety net. That's worth more than any interest you might earn by keeping your reserves razor-thin.

How To Manage Cash Original Content Creator: Oana Labes, MBA, CPA (give her a follow) ---- Learn to Manage Cash. Here's why: To seize growth opportunities To protect against critical business risks To avoid financial distress and loss of business value To maximize shareholder value and return on investment. 🎯 Cash comes into a business from 3 main sources: >> Operations >> Investments >> Financing 🎯 Cash 1.0 is optimizing AR, AP and Inventory terms and turnover 🎯 Cash 2.0 is working on: >> Cash Flow Forecasting Techniques >> Effective Debt Management >> Capital Expenditure (CapEx) Cash Flow Optimization 🎯 Here are 4 critical reasons to remember for managing cash: 1️⃣ Seize Growth Opportunities: ⚫ you need agility to capitalize on acquisitions, expansions, or innovation ⚫ cash reserves may not be sufficient, so having a strategy to attract the incremental cash you need will allow you to take quick action on opportunities and give you a competitive edge. 2️⃣ Protect Against Critical Business Risks: ⚫ cash acts as a financial buffer against economic downturns, demand fluctuations, or supply chain issues ⚫ taking steps to ensure sufficient excess cash will help ensure your operational stability and strategic focus during unforeseen challenges 3️⃣ Avoid Financial Distress and Loss of Business Value: ⚫ effective cash management will prevent cash flow shortfalls, which are a leading cause of business failure. ⚫ the worst time to get other people's money (bank, investors) is when you actually need it ⚫ planning ahead will help you meet short-term liabilities (payroll, suppliers, debts) and avoid eroding business value and reputation. 4️⃣ Maximize Shareholder Value and Return on Investment: ⚫ strategic investments and operational decisions that drive long-term growth and profitability require advanced cash flow planning ⚫ managing cash effectively will always position companies favorable to generate and provide superior returns to shareholders What would you add? __________________ Original Content Creator: Oana Labes, MBA, CPA (give her a follow)

Let's talk Cash! After 50+ portfolio reviews this year alone, I can confidently say that #CashManagement is one of the most overlooked areas of #FinancialPlanning. Here's the headline: - Too much cash in checking = you're eroding your buying power due to #inflation. - Too little cash set aside = you're a forced seller when the unexpected hits you (e.g., home repair, tax liability, or a last minute destination wedding). There's no one size fits all for cash management, but this framework works pretty well for most people: 1. #Checking: just enough for monthly expenses + a small cushion to avoid overdraft. 2. #Savings: 3-6 months of expenses in a high-yielding cash account above the rate of inflation for emergency/unforeseen expenses (e.g., HYSA, Money Market fund). 3. Anything else? Consider putting it to work – #Equities for growth, #FixedIncome for stability over 1yr periods, CDs/T-Bills for expenses within 6-12 months. With #rates where they are today, and potentially where they are headed, now might be the right time to revisit your Cash position. Feel free to reach out if you'd like to discuss, or drop a comment if you agree/disagree. Disclosure: Merrill, its affiliates and financial advisors do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Managing Money = A Powerful Enabler Most money talk starts with “where to invest.” I think better question is “how to manage money.” Money has five levers: earn, spend, save, invest, insure. A simple playbook that I follow: a. Minimize spending → invest the surplus; keep 4–6 months as an emergency fund b. Don’t deprive yourself—enjoy treats to avoid stress/anxiety c. Automate your money flows (salaries in, bills out, investments on autopilot) d. Use debt as leverage only when cashflows and coverage are clear e. Do a 15-minute monthly review: find leaks, plug them, move on Non-negotiables I budget for - Time with family & friends—real joy compounder - Fitness & coaching—health is true wealth - Productivity tools & upskilling—better perspective, better career compounding - Insurance—non-negotiable; life is unpredictable Bonus: Define your “why of having money” For me, money’s job is to buy time—to play, learn, read, travel—and to give me the freedom to support causes I care about.