Estimator
How long does your cash actually last?
Dividing cash by this month’s burn assumes nothing changes. This projects forward month by month, so growth, rising costs, slow collection, and the tax payment you know is coming all land where they actually fall.
Your numbers
Refine the projection
These four are what separate a straight line from something you can plan against.
Runway on these assumptions
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- Net position today
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- Revenue needed to break even
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- Month revenue covers costs
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- Lowest cash point
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- Collection lag applied
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First twelve months
| Month | Collected | Out | Balance |
|---|
Read this part
What this still leaves out
A number without its assumptions is worse than no number. Here is what the model does not reach.
- Seasonality. Growth is applied evenly. A business with one strong quarter and three quiet ones will read better or worse than reality depending on where you start it.
- Credit you have not drawn. A line of credit extends runway without changing burn, and has to be arranged before you need it, which is the part owners leave late.
- Customers who do not pay. The lag assumes everyone eventually pays. A concentration of revenue in one slow client is a different risk and the projection cannot see it.
- Your own flexibility. Most owners cut costs or defer their draw well before cash reaches zero, so the true floor is usually later than the model says and more painful than the number suggests.
Read the low point rather than the zero date. The month where cash bottoms out is where the decision actually has to be made, and it is normally several months before the projection runs dry.
The mechanism
Why the month-by-month view changes the answer
Burn is cash out less cash in, and runway is cash divided by burn. That is fine as a headline and misleading as a plan, because it freezes today and rolls it forward forever.
Growth compounds. A business burning $10,000 a month but growing revenue 3% a month is on a completely different path from one that is flat, and a single division cannot show the crossover where revenue finally covers costs.
Collection timing shifts everything right. If customers pay in 45 days, the revenue you win in month one arrives in month two and a half. In a growing business that lag is permanent and widening: the faster you grow, the more cash is locked up in work already delivered.
And lumpy costs decide it. An estimated tax payment or an annual premium landing in the wrong month is what turns a comfortable projection into a scramble, which is why the low point matters more than the average.
Common questions
Before you act on the number
Because the profit and loss records revenue when it is earned and expenses when incurred, while the bank moves when money actually changes hands. A profitable business can run out of cash if customers pay slowly, inventory ties money up, or a large tax payment lands. It is the single most common reason a business is surprised by its own balance.
Six months is a common floor for an owner-operated business, because that is roughly how long it takes to fix a revenue problem through actual sales rather than cuts. Under three months the options narrow to the fast and unpleasant ones. The right target depends on predictability: subscription revenue justifies a thinner cushion than project work does.
Yes. A runway figure that only works because the owner is not being paid is not a real figure, and it hides the problem it is supposed to reveal. Put in what you actually need to take out to live.
It delays every month's revenue by that many days before it reaches cash, and it means the opening receivables balance is what carries you through the first stretch. Raising the lag from 30 to 60 days on a growing business can move the low point by more than a large cost cut would, which is usually an argument for chasing invoices before chasing savings.
This gives one projection from one set of assumptions. A CFO engagement builds the rolling forecast underneath it, so you can test a hire, a price change, or a slow-paying client before committing, and the numbers update as the business moves rather than as you remember to revisit them.
Want the version that updates itself?
A rolling forecast turns this one-off projection into something you can steer by.