Cash Runway Calculator

Read the calculator result

Cash runway measures how long available cash can support a specified pattern of cash inflows and outflows. This calculator starts with available cash, subtracts one immediate expense, and projects a constant monthly net cash flow. It shows when the balance first falls below a reserve you select, when a month-end balance becomes negative, and the amount needed to finish the horizon at that reserve.

The result helps a business owner or project manager identify the size and timing of a funding problem. It’s a scenario based on the inputs, not a prediction that customers will pay, expenses will stay constant, or financing will be available. Its value comes from making those assumptions visible and showing what changes when one of them changes.

Use cash receipts and payments, not accounting profit

Starting available cash should represent money that can actually fund the modeled activity. A receivable isn’t cash merely because an invoice has been issued. Inventory and equipment aren’t cash either. If funds are restricted or committed to a purpose outside this projection, identify that limitation before treating them as available opening cash.

Monthly inflow means expected cash received during the month. Monthly outflow means cash paid. The SBA’s business-finance guidance distinguishes cash accounting from recognizing transactions when they occur. That distinction matters here: a recorded sale can increase accounting revenue before the customer’s payment arrives.

Include recurring cash costs consistently. Payroll, supplier payments, rent, and scheduled debt payments may all consume cash even when their income-statement treatment differs. Noncash depreciation doesn’t itself leave the bank account each month. If a large equipment purchase is already included as the immediate one-time outflow, don’t also include the same purchase again in recurring monthly outflow.

The one-time outflow occurs at time zero in this model, before the first month’s net flow. It can represent a planned equipment payment, launch expense, or other immediate commitment. A large expense scheduled six months from now is a different timing pattern. This tool doesn’t place that future event automatically; use a dated cash-flow worksheet when its timing is material.

Choose a reserve and projection horizon

The minimum reserve is a planning threshold you supply. It could represent cash you want to preserve for a known obligation or a selected operating cushion. The calculator doesn’t determine an appropriate reserve for your business, impose a lender covenant, or assume that crossing the threshold is a legal default.

The horizon controls how many month-end balances are displayed and where the ending funding gap is measured. A six-month horizon can show no negative balance even when cash would run out in month twelve. That means no negative month was found inside the displayed period, not that the activity is indefinitely funded.

Use the same monthly basis for inflow and outflow. If a business is seasonal, a flat monthly average can hide a low-cash period. Run separate conservative and stronger scenarios, then use a more detailed schedule for actual decisions involving uneven receipts or payments. A smooth average shouldn’t replace a known seasonal pattern.

How the calculator works

Opening cash after the immediate expense = starting cash − one-time outflow. Net monthly burn is recurring outflow minus recurring inflow. Positive burn means the cash balance shrinks. Zero burn means it stays level under these assumptions. Negative burn means recurring inflows exceed recurring outflows and the modeled balance grows.

For month m, cash balance = opening cash after the expense − m × monthly burn. The model records each month-end balance. It reports the first month that’s strictly below the selected reserve and the first month that’s strictly below zero. If opening cash is already below a threshold, that threshold is reached at month zero.

With positive burn and opening cash at or above the reserve, arithmetic months to the reserve equal (opening cash − reserve) ÷ burn. This can be fractional. It describes the constant-rate arithmetic, while the separate threshold output uses discrete month-ends. Equality with the reserve isn’t yet a month-end below it.

The horizon funding gap is max(0, selected reserve − ending cash). It measures the additional cash needed to end at the selected reserve if every other assumption remains unchanged. It isn’t an approved credit amount or a promise that one financing transaction can bridge every earlier payment date.

Cash runway calculator example: $50,000 starting cash and $4,000 monthly burn

Assume $50,000 of available cash, $12,000 of recurring monthly inflow, $16,000 of recurring monthly outflow, a $10,000 reserve target, and a $5,000 immediate expense. Project the scenario over eighteen months.

The first month-end below the reserve is month 9. The first negative month-end is month 12. A negative balance is a modeled cash shortfall; the calculator doesn’t assume the bank will allow an overdraft or a lender will supply the missing funds. The projection continues below zero to show the cumulative size of the gap.

The $37,000 horizon gap combines the $27,000 negative ending balance with the $10,000 desired reserve. If the goal were only to finish at zero, the arithmetic gap would be $27,000 instead. These are different targets, so always state the reserve assumption when discussing a runway result with a partner or lender.

Test a concrete change in the operating plan

Reduce recurring outflow by $2,000 while leaving the other example inputs unchanged. Monthly burn falls from $4,000 to $2,000. Arithmetic time to the reserve becomes 17.5 months, the first month-end below the reserve becomes month 18, and ending cash becomes $9,000. The horizon reserve gap falls to $1,000.

This improvement follows only if the lower outflow can actually be maintained without reducing the assumed receipts or creating a separate cost. For example, a proposed reduction in marketing, staffing, or inventory may affect later cash inflows. The calculator doesn’t estimate those relationships. Enter a second scenario with the associated inflow change if there’s a concrete reason to expect one.

Compare an inflow improvement with an outflow reduction using the same cash basis. An extra $2,000 of cash collected each month has the same immediate arithmetic effect as $2,000 less cash paid, but an extra $2,000 of invoices issued doesn’t necessarily do so. Timing and collectability determine whether that revenue becomes cash during the modeled period.

Read the chart and check the dates behind it

The chart shows the projected monthly cash balance and the selected reserve line. Their intersection identifies where the reserve begins to be consumed. A separate crossing of zero shows the later point when the model requires external cash or another change. Those two events shouldn’t be described as the same deadline.

Check important payments within each month before acting on a month-end result. Rent or payroll can be due before expected collections. The SEC’s financial-statement guide distinguishes cash-flow information from income and balance-sheet information; this tool is a simplified cash-flow scenario, not a complete set of statements or a daily treasury schedule.

A practical review record includes the starting bank balance date, excluded restricted amounts, evidence for the recurring receipt estimate, major payment assumptions, and the reason for the reserve target. Update the record when actual collections or costs differ materially. Replacing an outdated assumption is more useful than extending a smooth line based on numbers that no longer describe the activity.

Keep a distinction between an improvement already implemented and one still being negotiated. A signed cost reduction with a known start date, a hoped-for sale, and an unapproved financing request have different levels of certainty. The calculator accepts all of them as numbers if you enter them, so label scenarios according to their assumptions. Don’t describe the strongest scenario as cash already available.

When actual results arrive, reconcile the opening cash to the bank record before rerunning the projection. A difference can come from an omitted payment, a delayed receipt, or a one-time item incorrectly treated as recurring. Updating only the monthly burn while leaving an outdated opening balance can compound the error. The next projection should begin from the cash actually available at its new starting date.

For a contemplated loan, model its repayment outflows as well as the initial cash once the terms are known. Adding borrowed cash without its later payments would overstate runway. The loan payment calculator can estimate a fixed installment under a separate explicit loan scenario.

Cash runway calculator questions

Why is runway undefined when there’s no positive burn?

Dividing by zero or a negative burn wouldn’t describe depletion toward the reserve. If cash starts at or above the reserve and doesn’t decline, the calculator doesn’t invent a finite depletion date. That conclusion applies only to the constant-flow scenario entered.

Can positive working capital guarantee enough cash?

No. Working capital can include receivables and inventory that aren’t yet cash. The working capital calculator examines the balance-sheet position, while the cash conversion cycle calculator examines selected collection and inventory timing ratios.

Can I use the result for a personal emergency reserve?

The arithmetic can describe a personal cash scenario, but the emergency fund calculator directly connects essential monthly expenses with a selected number of reserve months. A business runway and a household emergency target answer different planning questions.