About the Cash Runway
Cash runway is the number of months a business can operate before its cash reaches zero at the current rate of spending. Burn rate is the monthly cash outflow net of collections. Together they answer the question every founder, lender and investor asks first: how much time do you have?
Enter the cash and bank balance, the monthly outflow (salaries, rent, purchases, EMIs) and the monthly collections. If collections are growing, add the monthly growth rate and the tool projects the balance month by month, extending the runway as inflows catch up with outflows. A twelve-month balance series shows where the low point falls.
Use the result to plan the next fund-raise or loan: banks like to see at least six months of runway, and equity investors expect a raise to be closed well before the balance turns critical.
How to use it
- 1Enter today's cash and bank balance.
- 2Enter average monthly outflow and monthly collections.
- 3Optionally enter the monthly growth in collections.
- 4Read the net burn, the runway in months and the projected balance for the next twelve months.
How this is calculated
Net burn = monthly outflow − monthly collections Runway (flat collections) = cash ÷ net burn With growth: balance(m) = balance(m − 1) − outflow + collections × (1 + g)^(m − 1), until the balance reaches zero
Frequently asked questions
My collections exceed my outflow — what does 'no burn' mean?
It means the business is cash-positive month on month: the balance grows rather than falls, so there is no runway limit to compute. Watch seasonality — a business that is cash-positive on average can still run short in a slow quarter.
Should EMIs be in the outflow?
Yes. Runway is about cash, so include every cash payment: loan instalments, statutory dues, capital purchases you have committed to. Non-cash items such as depreciation are excluded.
What runway do lenders and investors look for?
Working-capital lenders want to see that collections cover instalments with a cushion — typically six months of visibility. Venture investors usually expect a round to fund 18–24 months so the next raise is not forced.
Can I use this for a seasonal business?
Use average monthly figures for a first view, then re-run it with the slow-season outflow and collections to see the worst-case runway. The twelve-month series is linear; a proper cash budget month by month is the next step (the Finance Studio builds one).