2026-03-18
When an SME Should Build a Cash Reserve—and How Much
Reserve targets that fit trading and light manufacturing businesses rather than textbook corporate rules.
Textbook advice of six months of expenses rarely fits growing Thai SMEs that reinvest heavily. A more useful range for stable traders is six to ten weeks of fixed outflows, held separately from operating accounts.
Build the reserve after clearing high-interest revolving debt. Parking cash while carrying expensive overdrafts costs more than it protects.
Seasonal businesses should size reserves against their longest historical quiet stretch, not against an average month. A quiet Songkran period plus delayed B2B payments can stretch longer than owners expect.
Document the rules for when the reserve may be used—equipment failure, tax assessments, or temporary receivable shocks—so it does not quietly fund discretionary spending.