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The concept of the company's financial reserve

A financial airbag for a business is a certain amount of money that needs to be accumulated and not touched for several months. This reserve is intended to be used in emergency situations only. A financial reserve will give the company the opportunity to continue its activities.

In what cases can you use a financial airbag?

Demand is falling

There is not enough money to pay employees

Court costs and other legal problems

Rental prices have risen sharply

Repair expenses

Deliveries are delayed

Calculate the company's financial cushion

Costs can be divided by type into variable and fixed.

Variable costs include costs that are affected by production and sales volumes. These include the costs of raw materials and materials, storage and transportation of products. Unlike variable costs, fixed costs remain unchanged. Even if volumes decline, fixed costs remain the same.

Fixed expenses include:

  • payment of rent and utilities
  • payment of wages
  • hospitality expenses
  • depreciation
  • insurance payment

Stages of creating a financial airbag

Using constant deductions from profits, make a calculation to form a financial reserve for the enterprise. Choose one of the methods: deposit fixed amounts by month, for example 5%. The percentage can be increased depending on the condition.

  • keep a table of income and expenses
  • highlight expenses that can be left for later
  • explore new calculation apps and services
  • sell or rent out unnecessary company property
  • decide where else you can save money

Create financial reserves from free money.

It is better to keep a financial safety net in accounts or deposits, as these are highly liquid assets. With this method, you can use them at any time. It takes longer to sell stocks and bonds. A convenient option would be a bank deposit on which interest is charged. And if the bank is deprived of its license, the insurance system will protect your funds.
Experts advise creating financial reserves that will be enough for about 3-4 months for the company to survive. Sometimes the period can be extended by six months or a year. Not all companies have such long-term crises, so it is better to spend the freed up savings on development.
Natural disasters, policy changes, and other global situations can be difficult to pinpoint. But you can predict what you will do if production declines.

A financial airbag will help save your business

With good money management, your risks of bankruptcy can be reduced.

Join us and you will learn useful tips from the financial sector


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