Bonds can also fluctuate in value over the short term. If you hold a bond to maturity, you're guaranteed to get your principal (original investment) and interest back (unless the bond issuer goes bankrupt). But if you need to use that money in the meantime, you'll need to sell your bonds at whatever the current market price is, which may be higher or lower than what you paid to buy them. If you buy very short-term bonds, like 4-week Treasury bills, this risk is minimized.
I think that investments that have a stable value, such as bank accounts and money market funds, are the safest choice for cash reserves. They're also convenient, since you can transfer money easily between these accounts and your business checking account.
