It’s easy to feel secure when business is booming but cash flow surprises rarely announce themselves in advance.
A tax bill, a delayed payment, or an unexpected repair can throw everything off balance if you don’t have a safety net.
That’s why building a cash buffer is one of the smartest financial habits you can develop.
What Is a Cash Buffer?
A cash buffer is money your business sets aside to cover short-term costs or emergencies.
It’s not for regular spending, it’s a reserve you hold in a separate account just in case.
Think of it as your business’s rainy-day fund.
Why It Matters (Even in Good Times)
Many small business owners draw out most or all of their available cash, especially during strong sales periods.
But here’s why that can backfire:
- Sales can dip suddenly (seasonal lull, cancelled contracts)
- Clients may pay late even when you’ve invoiced properly
- Unexpected expenses always come up (repairs, tax bills, supplier issues)
With a buffer in place, you don’t have to panic, dip into personal savings, or scramble for short-term credit.
How Much Should You Set Aside?
There’s no one-size-fits-all answer, but here’s a good rule of thumb:
- Aim for 1–3 months’ worth of essential business expenses
- Start small. Even £100–£200 per month can add up quickly
- Keep it in a separate savings account so it’s not accidentally spent
Download our free Taxes Made Simple guide which breaks down all you need to know about taxes as a UK business owner, including saving taxes in advance.
When to Use Your Buffer
A cash buffer is there for genuine need, not to cover overspending. Use it for:
- Emergency repairs or equipment failure
- Bridging short-term cash flow gaps
- Covering payroll if a client pays late
Then aim to top it back up as soon as things stabilise.
How we help you
At Legacy Figures Accountancy, we specialise in helping UK small business owners take control of their finances, especially when it comes to cash flow.
Whether you’re battling late payments, struggling to save for tax, or just want more confidence in your numbers, we’re here to help.
We don’t just keep your books tidy, we give you clarity, insight, and a plan.
From monthly cash flow tracking to budgeting support and Making Tax Digital compliance, we’ll tailor our service to fit your business.
Let’s make your money work for you, not the other way around.
If you have any questions or need some guidance, get in touch today for a friendly, no-obligation chat.
