What Is Cash Runway And What Number Is Risky?
Cash runway estimates how long the business can continue operating if sales or collections slow down.
Who This Is For
- You do not know how long your current cash will last.
- You make spending decisions without a clear safety measure.
- You want an early warning before cash becomes urgent.
What To Do This Month
- Review the cash currently available to operate the business.
- Estimate the regular costs needed to keep the business running.
- Use the runway tracker and compare the result each month.
FAQ
Should I include cash kept in the profit account?
Only include cash that you are genuinely prepared to use for business operations.
What is a risky runway?
It depends on your business and how quickly cash can change. A continuing decline is an important warning sign.
Should I include inventory purchases?
Include essential purchases required for the business to continue operating.
Can I improve runway without increasing sales?
Yes. Faster collections, better payment timing and lower commitments can improve cash runway.
How often should I review it?
Review it during your monthly Money Day and whenever there is a major cash or cost change.