Building cash reserves to navigate economic uncertainty

When the economy becomes unpredictable, one of the most important questions a business owner can ask is: “Do we have enough cash on hand to weather a downturn?”

Businesses are feeling more optimistic about their own financial outlook than in recent years, yet 63% of business owners cite the possibility of a recession as a top concern, according to the Huntington Bank 2026 Beyond Business Report¹. This gap between internal confidence and macroeconomic uncertainty highlights why cash reserves matter more during volatile periods than in stable times.

Cash reserves serve as a financial cushion; funds intentionally set aside to help businesses navigate economic slowdowns, rising operating costs or unexpected disruptions, such as supply chain challenges or delayed customer payments. But for many organizations, traditional guidance such as “saving three to six months’ worth of cash to cover operating expenses” may offer an oversimplified view of what meaningful protection looks like².

“In today’s unpredictable economy, businesses can’t rely on static rules of thumb. Meaningful cash reserves come from understanding your actual risks and building protection that reflects real-world conditions,” states Lisa Marie Boyd, Treasury Management Sales Director, Huntington Bank.

Today’s most resilient organizations take a more advanced approach to reserve planning, using forecasting, scenario modeling and treasury tools to move beyond basic cash targets and build liquidity strategies that hold up under real-world conditions.

How much cash should your business have on hand?

There is still value in keeping several months of operating expenses available. But businesses operating in uncertain environments increasingly rely on rolling 13-week cash flow forecasts to gain clearer insight into near-term liquidity risks. These weekly projections show leaders exactly when cash availability will tighten, and which levers can ease pressure. “Rolling 13-week cash flow forecasts give business leaders a clearer picture of when liquidity pressure will emerge and which levers can ease it before it becomes a disruption,” shares Boyd.

More advanced organizations take this a step further by modeling downside scenarios:

• What if customer payments slow by 15%?
• What if payroll or supplier costs increase suddenly?
• What if a strategic investment must be made earlier than expected?

Rather than maintaining a general cash target, these businesses set risk-adjusted reserve thresholds: minimum liquidity levels based on projected variability, revenue sensitivity and known obligations. This approach ensures reserves are right-sized, neither wastefully large nor dangerously thin.

Using treasury tools to strengthen and automate liquidity

Building reserves shouldn’t rely solely on manual cash management. Many organizations now use treasury tools that help automate how cash is concentrated, protected and deployed.

Zero balance accounts (ZBAs)

Zero balance accounts (ZBAs) automatically consolidate funds from multiple operating accounts into a master account each day. This eliminates idle balances spread across departments while ensuring that only the exact amount needed is deployed for daily transactions.

Automated sweep programs

Sweep programs help excess funds work harder by automatically moving them into either:

• Interest-bearing accounts to generate returns
• Loan-sweep structures to temporarily reduce revolving line balances and interest costs

These automated movements occur after hours and reverse when needed, ensuring operating liquidity stays intact.

Insured Cash Sweep (ICS)

For larger reserve balances, many companies use Insured Cash Sweep (ICS) to access expanded FDIC insurance through a single banking relationship. This protects multi-million-dollar deposits while preserving liquidity and consolidated reporting.

Treasury operational continuity

Alongside treasury tools, organizations should ensure the operational continuity of the systems that support liquidity movement. This includes maintaining updated employee access profiles, cross-training staff who can serve as backups and following strict fraud prevention measures, especially during disruptive periods.

Together, these tools can create a more automated and resilient liquidity foundation, allowing reserves to accumulate consistently over time.

Shortening the cash conversion cycle to accelerate reserve building

Improved liquidity isn’t just about protecting cash, it’s also about freeing cash faster. Supply chain finance, dynamic discounting and real-time payments all help accelerate inflows and reduce friction in working capital. “Freeing up cash faster is just as important as protecting it,” says Boyd. When businesses leverage these types of tools, they can help reduce the cash conversion cycle and build reserves more steadily.”

Supply chain finance

Under supply chain finance programs, a bank or financing partner pays approved supplier invoices early. Suppliers gain faster access to cash, while the business maintains or even extends its payment terms. This stabilizes the supply base while improving working capital.

Dynamic discounting

With dynamic discounting, businesses can choose to pay vendors early in exchange for a sliding scale discount. This allows companies with excess liquidity to reduce costs while accelerating how quickly they can put available cash to work.

Real-time payments

Instant payment rails allow businesses to receive funds within seconds, improving predictability and accelerating cash availability.

Commercial card optimization

Commercial card programs can help improve cash flow by giving businesses a little more time before funds leave their account, while also centralizing and simplifying how expenses are managed. Strategic card use enhances visibility into outgoing payments and supports stronger working capital management.

The role of risk transfer in reserve strategy

Holding cash is just one way to protect the business, but not always the most efficient. For organizations heavily exposed to customer non-payments, trade credit insurance can serve as a strategic complement. By insuring receivables against insolvency and late payment, companies may be able to reduce the amount of cash they must keep on hand for credit losses. This can also improve access to financing by strengthening collateral quality.

In this approach, transferring targeted risk allows reserves to focus on true operating needs rather than being stretched to cover every potential exposure.

“The goal isn’t to eliminate uncertainty, it’s to be ready for it. Strengthening forecasting, liquidity tools and operational continuity helps businesses make confident decisions in volatile times,” states Boyd.

Cash reserves help position your business for what’s ahead

The goal of building cash reserves is not to eliminate uncertainty, it’s to empower better decisions when uncertainty arises. Businesses that adopt advanced forecasting, automated liquidity tools, reliable payment platforms and strategic risk transfer solutions may be better positioned to protect their operations, preserve workforce stability and continue investing even during economic downturns.

Operational readiness matters, too. Ensuring treasury staff, credentials, systems and security controls can function seamlessly during disruptions may strengthen the infrastructure that supports your liquidity strategy.

Huntington Bank can help business owners evaluate their reserve needs, help implement more advanced cash flow infrastructure and adopt the tools needed for a stronger, more agile liquidity strategy.