A revenue reserve is a portion of a company's profit that is set aside for a variety of purposes. This reserve is recorded in the profit and loss account and is available for use as follows:

Dividend paid to shareholders
Grow the company
Maintain the dividend rate

A revenue reserve is a part of a company’s profits that is kept aside from its normal earnings instead of being paid out to shareholders as dividends. It is built from day-to-day business income and retained within the organisation to support financial health and stability. The main purpose of a revenue reserve is to provide a cushion for future needs such as covering unexpected expenses, handling minor losses, or ensuring consistent dividend payments in difficult years. These reserves are usually categorised into general reserves and specific reserves based on how the funds are intended to be used. Revenue reserves also help improve a company’s liquidity position and overall financial strength. Unlike capital reserves, they originate from routine business operations rather than one-time gains. Businesses often utilise them to reinvest in operations, manage risks, and maintain steady performance, making them an important element of long-term financial planning and stability.