Restricted cash, in contrast to unrestricted cash, is not freely available for a company to spend or invest. Restricted cash refers to money that is held for a specific purpose and thus not available to the company for immediate or general business use.

Restricted cash appears as a separate item from the cash and cash equivalents listing on a company's balance sheet. The reason for the cash being restricted is usually disclosed in the accompanying notes to the financial statements. Cash can be restricted for a number of reasons, including debt reduction and capital investments.