How long will your cash last?
Runway is the plainest number in the business: how many months you can keep going at today's pace. Enter your cash on hand and your average money in and out.
Runway is cash on hand divided by monthly burn, and burn is average money out minus average money in. If more comes in than goes out there is no burn. A large one-time bill shortens the runway from the month it lands.
The math
How this works
What is cash runway and how do you calculate it?
Runway is the number of months your business can keep operating before the account hits zero, assuming nothing changes. You calculate it in two steps: subtract average monthly money in from average monthly money out to get your monthly burn, then divide cash on hand by that burn. If money in is higher than money out, there is no burn to divide by, because your balance is growing rather than shrinking. Averaging 3 months of bank statements gives a steadier number than using a single unusual month.
How many months of cash should a small business keep?
There is no universal number, and the honest answer depends on how predictable your revenue is and how quickly you could cut costs. A business with recurring contracts and reliable collections can run leaner than one with seasonal work or a handful of large customers. A practical way to set your own target is to ask how long it would take you to replace your biggest customer or get through your slow season, then hold at least that much. Whatever number you choose, the value is in noticing when you fall below it while there is still time to act.
What should you do when your cash runway gets short?
Work on timing before you work on cuts. Invoice everything that is finished, call your oldest unpaid invoices, and ask customers who can pay by card or bank transfer to stop mailing checks. Then look at what leaves the account: ask suppliers for longer terms, push a large one-time purchase out a quarter, and pause spending that does not bring in revenue. If you still need a bridge, talk to your bank or credit union early, because a line of credit is far easier to arrange while the numbers still look healthy.
Questions people ask
Does runway include money I could borrow?
No. The number here uses cash you already hold, so it shows how long the business lasts on its own. An unused line of credit would extend how long you could keep going, but it is borrowed money with a cost, so it is worth seeing the unaided number first. Run it both ways if you want to see the difference.
Should I count invoices customers have not paid yet?
Not in cash on hand. Runway is about money in the account, and an unpaid invoice is not money yet. Expected collections are already reflected in average monthly money in, which captures how long your customers actually take to pay.
What is monthly burn?
Burn is how much more leaves the account than comes into it in a typical month. If 26,000 goes out and 22,000 comes in, your burn is 4,000 a month. When money in is higher than money out, there is no burn and the balance climbs.
How often should I recalculate my runway?
Once a month is enough for most businesses, right after you reconcile the bank account. Recalculate sooner when something big changes, such as losing a customer, adding payroll or taking on a loan payment. Owners who check it monthly tend to see a squeeze coming a quarter ahead.
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This is an estimate to help you think, not financial, tax or legal advice. Finli is not a bank and does not lend. Your own numbers, and your banker, beat any calculator.