You have cash in the bank, a small team, a few large invoices outstanding, and a plan to raise again sometime next year.
Then someone asks a simple question:
“How many months of runway do you actually have if cash does not arrive when expected?”
You open an old spreadsheet. The headcount has changed. Costs have moved. A large customer is paying late.
The “18 months of runway” you mentioned a few months ago suddenly feels like a guess.
This is where many early-stage founders operate. The business is too complex for a back-of-the-envelope calculation, but not yet ready for a full finance team.
You do not need a CFO yet to get a solid runway forecast. But a clear definition, sensible inputs, and a simple model you keep alive.
1. Get clear on what you mean by “runway”
In practice, runway almost always means cash runway.
It answers one question:
How many months until your cash balance reaches a minimum safe level, based on expected cash in and cash out.
Two ideas sit underneath that definition.
Gross cash outflow
This is the total cash leaving the business each month, including:
Salaries, employer taxes, pensions, and benefits
Founder pay or drawings
Rent or coworking
SaaS tools and infrastructure
Contractors and agencies
Insurance, accounting, and payroll services
Tax payments
Debt repayments, both interest and principal
Capital expenditure such as hardware or equipment
Net cash burn
This is gross cash outflow minus cash collected in the same month from customers and other reliable sources.
If collections exceed outflows, net burn becomes net cash inflow.
A simple sanity-check formula looks like this:
Runway (months) ≈ Available cash ÷ average monthly net cash burn
This ratio is useful as a headline. It only works when costs and collections are relatively stable. The real answer always comes from a month-by-month cash forecast, especially once hiring, taxes, renewals, or funding timing enter the picture.
2. Start from real, “available” cash
The balance you last saw in your banking app is rarely the right starting point for the runway.
A more defensible approach works like this.
Use reconciled balances
Pull the closing bank balance from your accounting system for the last fully reconciled month. Memory is not a control.
Add all cash locations
Include:
Main operating accounts
Foreign currency accounts
Payment wallets where cash actually sits, such as Stripe or PayPal
Subtract money that is not truly yours
Strip out:
VAT or sales tax collected but not yet paid
Payroll taxes due
Corporation tax owed for closed periods
Client deposits or funds held on behalf of others
Restricted cash, security deposits, or escrow balances
Minimum liquidity required by debt agreements, where applicable
Write one number at the top of your model and label it clearly:
Opening available cash (after tax, restrictions, and commitments). A lower, well-supported number is always better than a higher, vague one.
SYSTEM INSIGHT / NEXT STEP
Make the next move with clarity.
If this issue is already showing up in reporting, runway, or team decisions, the next move is usually clearer with a structured finance view.
3. Map your true monthly burn
Founders often underestimate burn by focusing only on salaries and rent. Runway forecasting works best when you accept how sticky your cost base really is.
Build your baseline monthly gross cash outflow in three layers.
Non-negotiables
Costs that continue unless you actively change them:
Net payroll plus employer taxes and benefits
Founder compensation
Office or coworking
Core SaaS tools
Insurance, accounting, payroll, and compliance
Predictable time-based costs
Annual or quarterly expenses spread across the year:
Annual software licences
Insurance renewals
Retainers for advisers, agencies, or contractors
Tax and compliance cash flows
Approximate if needed, but do not ignore:
Regular VAT or GST payments if you are typically payable
Payroll taxes
Corporation tax when applicable
Keep major one-off projects separate. Large marketing pushes, office fit-outs, or hardware purchases belong in specific months later.
At this stage, you should be able to say:
“If we change nothing, our baseline gross cash outflow is £X per month.”
This number anchors every runway discussion.
4. Build a realistic picture of cash coming in
Runway is about collections, not revenue on paper.
Think about inflows in four parts.
Recurring versus one-off
Subscriptions and retainers
Usage-based revenue
One-off projects, implementation fees, grants, or credits
Payment timing
Contracted payment terms, such as 30, 60, or 90 days
Actual customer behaviour, including late payments
Delays from payment processors or marketplaces
History
Look at the last three to six months:
Average monthly cash collected
Seasonality
Unusually large items that should be treated as one-offs
Pipeline with evidence only
Include forecasted cash when:
Contracts are signed
Start dates and invoicing dates are agreed
Deals still in negotiation belong in an upside scenario.
5. Build a simple 12-18 month cash model
You do not need a complex three-statement model. You need something honest, structured, and easy to update.
Practical layout
Columns
One column per month for the next 12-18 months.
Rows
Opening cash balance
Customer cash collected
Other cash in, such as grants or highly likely credits
Baseline operating cash outflow
Variable spend
One-off items
Tax payments
Net cash movement
Closing cash balance
Define runway as the number of months until cash reaches your minimum operating buffer.
Run at least two scenarios:
Base case with honest expectations
Prudence case with slower collections or 20-30% less new revenue on the same cost base
This usually reveals whether the pressure comes from revenue, costs, or timing.
6. Layer in hiring and major decisions
The decisions that shorten the runway fastest often feel reasonable in isolation.
Hiring ahead of revenue. Signing a larger office. Approving a major brand or marketing push.
Each adds a fixed monthly commitment, hidden costs, and a lag before benefits appear.
In your model:
Add hires in the month offers are signed, at fully loaded cost
Add large non-recurring spend in the exact month cash leaves the bank
Then re-run scenarios and ask: “What does this do to our runway in a downside case?”
7. Stress-test timing risk
Even a solid base case can fail on timing alone.
Simple stress tests include:
Cash inflows slipping by 3-6 months
Collections slowing by 15-30 days
Baseline costs drifting up by around 10%
These are not predictions. They show how resilient the plan really is. If small shifts create danger, the issue is structural, not spreadsheet-related.
8. Turn the model into decisions and routines
A runway model only helps if it changes behaviour.
Common founder heuristics:
18-24 months gives room to experiment, with discipline
12-18 months demands tighter execution and focus
9-12 months shifts decisions toward critical priorities
Under 9 months puts cash preservation and milestones first
The exact thresholds depend on sales cycles, burn flexibility, and market conditions.
To keep the model useful:
Update it monthly with actuals versus forecast
Move to fortnightly reviews during periods of volatility
The goal is simple. When someone asks about a runway, you can give a number, a range, and the assumptions behind it.
9. You may not need a CFO yet, but you do need a finance engine
For most early-stage teams, the real gap is the absence of a basic finance stack or engine that keeps numbers clean, forecasts realistic, and decisions grounded in cash.
If you:
Know your true available cash
Understand gross cash outflow and net cash burn
Maintain a 12-18 month cash forecast with a downside case
Stress-test hiring, timing, and collections
Update the model on a clear cadence
You are already operating with a level of financial clarity that supports better decisions, even without a full finance team.
How Accountup can help you get there faster
Many founders build this first manually in a spreadsheet. That works, until the business grows and the questions become more frequent.
Accountup supports early-stage, pre-CFO teams when:
The numbers start driving decisions
The same data needs to answer multiple questions
Manual spreadsheets become fragile and time-consuming
Accountup helps by:
Connecting bookkeeping, reporting, and forecasting in one place
Providing consistent views of burn, runway, and operating metrics
Using structured templates so every decision relies on the same numbers
If your current runway number does not feel solid, reviewing your setup through this lens is a practical next step.
From there, you can decide what to keep in-house and where a dedicated finance engine can give you more clarity, more time, and more control over the months you have left to execute.
