Why Should Businesses Have Cash?

[Suba]

In accounting, cash and cash equivalents are the most liquid form of assets. Cash includes not only cash but also assets classified as cash equivalents, such as bank deposits, whether checking or savings accounts, short-term bonds, and money market mutual funds. Therefore, cash is placed at the top of the balance sheet, in the debit column.

Excessive cash can lead to managers' inability to manage cash effectively, and conversely, a cash shortage can also impact business performance.

So, cash is a vital asset in business. So, for what reason/purpose does a company need to have cash?

 

[Augusta]

Cash is very important as cash allows a business to pay its bills. The main cash payments a business makes include: payments to suppliers. payments to employees.

 

[eLdavis]

Evey business needs to have cash cause you need cash to run and manage the business, even for maintenance, cash is needed.

 

[Augusta]

With a healthy cash flow, the company can meet its financial obligations, such as paying employees and vendors on time and in full, while also building trust

 

[Starmix]

No cash, no money. And not all acquired a credit card in case it is about business and marketing. So customers who don't have a credit card must be changed with cash.

 

[Springtime]

Without enough cash, the business cannot survive. Businesses need cash to pay bills, suppliers.

 

[Bigshow]

Cash allows business to pay its own bills without borrowing elsewhere , and its good tho so you can manage profits well

 

[Starmix]

How could your business grow without a cash? You can't pay your workers and pay sudden deliveries of products.

 

[Min George]

Businesses need to have some cash in case bank networks gets bad and they can't make bank transfers.

 

[Fire&Rain]

Cash is essential because it keeps the business running smoothly. It covers daily expenses, payroll, and emergencies. Without it, even profitable businesses can struggle. The right amount ensures stability while also allowing for investment or growth.

 

[oliver991]

Having cash gives you options. No cash? You’re stuck, borrowing, or missing out on growth opportunities. Liquidity is underrated until you’re broke.

 

[Kross]

It depends on the kind of business. A business that recycles products quite often should have cash every time.

 

[Augusta]

Cash provides liquidity and control, allowing a business to manage financial obligations, avoid costly debt, and make strategic decisions without relying on external funding.

 

[Stardom22]

For a business to run the day to day activities in a great manner, they should have the access to some cash.

 

[klassicdoll]

True, a company needs cash to keep things running—paying employees, settling bills, and dealing with any unexpected costs. It’s like the fuel that keeps the business moving.

 

[Starmix]

No cash, no business and no cash no profit to roll. Not all customers pay in a debit card or credit card, it's not yet adapted by all. There are deliveries that require payment in cash to be sure the business person has money to pay.

 

[Suba]

The role and function of cash is not only to finance business operations, but also to maintain business liquidity, businesses that have adequate cash can also face crises or emergencies.