The cash a business has on hand at any given time includes its bank account balances as well as the physical currency it holds in safes, cash drawers or other places. It is important to calculate and monitor your cash on hand frequently to know how much you have available to spend.

Your small business might generate strong sales, but it can sometimes take time to collect from customers if you sell on account. You need cash on hand in the meantime to make payroll, buy supplies and pay for your other daily expenses.

1. Tally Up Cash in Accounts

Add the balances of your bank accounts, such as checking accounts and savings accounts, to figure your total cash in bank accounts. Exclude the amount of any checks you have written or transactions that have yet to clear your accounts. In this example, assume your small business has $25,000 in a checking account and $7,000 in a savings account. Add $25,000 to $7,000 to get $32,000.

2. Add Up Physical Checks

Add the amount of any checks, cashier’s checks or money orders you received from customers or other parties that you have yet to deposit into your bank accounts. In this example, assume you have yet to deposit $1,800 in checks and $200 in money orders. Add $1,800 to $200 to get $2,000.

3. Calculate the Amount of Physical Cash

Add the amounts of physical cash you keep in a petty cash drawer, safe, cash register or other location in your business to figure your total physical cash. For example, assume your small business has $1,000 in a petty cash box, $5,000 in a safe and $250 in a cash register. Add $1,000, $5,000 and $250 to get $6,250 total money in hand.

4. Add It All Together

Add together your total bank account balances, total money you have yet to deposit and total physical cash to calculate your total cash on hand. Concluding the example, add $32,000, $2,000 and $6,250 for $40,250 in cash on hand.

If you have any money that you are restricted from using for any reason, subtract it from your cash on hand to figure your unrestricted cash on hand. For example, assume you have $40,250 in cash on hand but a lender requires you to keep a minimum of $10,000 in a bank account as part of a loan agreement. Because you cannot spend that $10,000, your unrestricted cash on hand is $30,250.