Minimum Cash
Short definition
Minimum cash is the treasury floor that cash must not breach. It covers daily operations, collateral, covenants and a shock pad — not a “zero cash is fine” assumption.
Detailed explanation
The floor is built from payroll, tax, supplier peaks, cash blocked for guarantees and any contractual minimum liquidity. Season and FX move the floor inside the month. If the group pools cash, the floor still has to be held at the legal-entity level where obligations sit.
Minimum cash is not excess cash. Amounts above the floor are candidates for dividends, de-levering or investment; the floor itself is not drawable.
Why it matters for the CFO
The 13-week budget and the facility are stressed against this floor. The bank’s minimum-liquidity covenant and the internal floor may differ; the tighter one binds.
How to read it
Cash above the floor looks liquid; if drawable lines are zero, the floor is not enough on its own. There is no universal “X days of sales” rule; the payment calendar and the facility set it.
Numerical example
Weekly net outflow 10 mn TL, policy of 3 weeks’ operating floor + 15 mn TL blocked for guarantees → minimum cash = 30 + 15 = 45 mn TL.
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Definitions are educational. They are not investment, credit or tax advice.