Available cash is the portion of your business cash that remains available for use after considering money that has already been committed or set aside for other business needs.
For a small business owner, this gives additional context to the amount of cash currently held in the business.
If your business has $10,000 in its bank accounts, for example, the full $10,000 may appear in your bank balances. If $3,000 of that money has already been designated for upcoming needs, your available cash would be $7,000.
What Affects Available Cash?
Available cash depends on what is happening in the business at a particular point in time.
Some of the cash you currently have may already be connected to:
bills that need to be paid
recurring expenses coming due
planned purchases or expenses
money reserved for taxes
other amounts intentionally set aside
Each of these reduces the portion of your current cash that remains available for other uses.
As those obligations are paid, new expenses arise, or additional money is received, the amount of available cash can change.
What Does It Mean for Cash to Be Available?
When cash is available, it has not already been designated for another known business need.
Suppose a business has $15,000 in cash. During the next several weeks, $6,000 will be needed for known expenses, and another $2,000 has been set aside in reserve.
That leaves $7,000 that has not already been assigned to those needs.
Thinking about cash this way gives the business owner a clearer view of the portion of current cash that remains open for other decisions.
Why Does Available Cash Change?
Available cash changes as the financial activity of the business changes.
A customer payment may increase the amount of cash the business has. Paying an upcoming expense may reduce it. Setting aside additional money for a future need can also change how much of the current cash remains available.
This means available cash is a current measure rather than a number that stays the same over time.
Regularly updating the information that affects your cash keeps the amount connected to what is actually happening in the business.
How Can Available Cash Be Used in Business Decisions?
Knowing the amount of available cash can provide useful context when considering decisions that require money from the business.
Those decisions might include making a purchase, taking an owner withdrawal, adding a new recurring expense, or deciding whether there is room for an unplanned cost.
Available cash provides a starting point for considering how much of the business's current cash has already been accounted for and how much remains uncommitted.
The decision itself may involve other factors, but understanding available cash gives you a clearer picture of the cash position you are making that decision from.
How Business Cash Manager Shows Available Cash
Business Cash Manager brings together the information that affects the cash currently available in your business.
As you track your cash accounts, upcoming expenses, and amounts you have chosen to reserve, Cash Manager can reflect how much of your current cash remains available.
That gives you one place to see the cash you have and the portion that is still available for other business needs.
Available cash changes as your business activity changes. Keeping the information behind that number current allows it to remain useful as you make everyday financial decisions.
