MarginWorkshopCash & Capital
Payroll Reserve / Cash Buffer
Calculate how large a payroll cash reserve to hold, from your real crew size and loaded labor cost, not a round-number guess.
Payroll reserve target$20,800
Weekly payroll cost$5,200
Shared fields save automatically as you edit them. Review or edit everything in one place in your Business Profile, so every engine starts pre-filled.
Next Decision
Based on your results, these related decisions are available.
Want to Learn More?
Methodology
Formula: Weekly payroll cost = loaded labor rate × crew size × avg hours/week. Reserve target = weekly payroll cost × desired weeks of cover.
Assumption: This is a steady cash-cushion target, not a pay-cycle schedule; it does not model payroll tax timing or biweekly vs. weekly boundaries.
Limitation: Assumes a stable crew size; a crew that flexes seasonally should re-run this at its typical size, not its peak.
Frequently Asked
- How many weeks of payroll is typically recommended?
- Common guidance ranges from four to twelve weeks depending on revenue volatility and how quickly the business could adjust staffing in a slow stretch; a seasonal or project-based business generally needs more than a steady-recurring-revenue one.
- Why payroll specifically, not overhead broadly?
- Payroll is usually the largest, least flexible near-term obligation, hard to reduce quickly without real disruption, which is why it gets its own dedicated reserve target distinct from general operating reserve.
- How does this relate to Operating Reserve Sizing?
- Payroll reserve is one component that Operating Reserve Sizing combines with overhead cover and a revenue-volatility buffer into a single all-purpose reserve target; use this engine for the payroll-specific piece alone.
- Should this reserve grow as the crew grows?
- Yes, weekly payroll cost rises with headcount, so the reserve target should be recalculated whenever crew size changes meaningfully, not set once and left static.