kontantreserv

Kontantreserv, often rendered as cash reserve in Scandinavian contexts, refers to funds held in liquid form to cover short-term obligations and unexpected needs. It serves as a liquidity buffer for individuals, businesses and governments, enabling them to meet payroll, supplier payments, or sudden expenses without resorting to costly borrowing.

The reserve typically includes cash on hand, deposits in checking or savings accounts, and other highly liquid assets such as money market instruments or short-term government securities. The size of a kontantreserv depends on operating expenses, revenue stability, access to credit, and risk tolerance. For a company, a common rule is a number of months of operating expenses or net cash flow, while households often target three to six months of essential living costs.

Management involves establishing a policy that defines the target level, monitoring cash flow, and automating transfers to and from the reserve to maintain the target balance. The main benefits include improved solvency during downturns, reduced borrowing costs, and greater financial agility. Drawbacks include opportunity costs, the eroding effect of inflation on cash, and potentially lower returns compared with investments.

Commonly used terms include liquidity buffer, cash buffer, or reserve funds. See also liquidity management and emergency fund.