Conventional wisdom holds that a business should have liquid assets (cash in bank accounts and very liquid investments) equal to three to six months of operating expenses. If your company spends $100,000 a month on average, then your business should keep $300,000 cash in the bank at all times. Seasonal businesses should have enough cushion to last through both their busy and slow seasons.Cash can also create problems because holding an excessive bank balance is often just as bad as holding excessive debt. Money sitting unused creates opportunity costs, which amounts to the difference between the interest earned on holding cash and price paid for having the cash as measured by the company's cost of capital. If a company, say, can get 20% return on equity investing in a new project or by expanding the business, it is a costly mistake to keep the cash in the bank. If you find yourself in the position of having more than enough cash on hand to cover both current operations and your contingency fund, use the extra cash to grow your business. Upgrade your equipment to boost capacity or efficiency, bring on additional sales staff or consider an acquisition.