A cash runway template projects how long available cash can support a business under stated receipt and payment assumptions. Start with a dated opening balance, put cash movements into the months they occur and record the first month that falls below your chosen minimum reserve. Use a constant-burn formula as a quick check, then inspect the monthly table before making a commitment.
This fictional example follows a small business from November 2026. It compares a steady plan, a proposed hire and lower customer collections. The numbers explain a method; they are not a forecast for your business or a recommended funding policy.
Collect the inputs before calculating months
Record the cash accounts included, their balance dates and any restriction affecting availability. Opening cash should be consistent with the period's starting point. An old balance copied from a dashboard is a weaker input than a reconciled, dated record.
Then list expected cash receipts and payments. Customer invoices are evidence of amounts due, but they are not already bank cash. Put expected collections into realistic months and retain the assumption behind each date. Distinguish recurring payments from one-time purchases, debt movements and owner transactions so the review is understandable.
Choose a minimum reserve and explain its purpose. In this article it is an owner-selected planning threshold, not a legal requirement or universal recommendation. If cash is already restricted or excluded from availability, do not subtract it again under another label without checking the overlap.
The SEC's cash-flow explanation distinguishes earnings from movements of cash. That distinction matters here: accounting profit is not a substitute for the dated receipts and payments your runway needs.
Understand gross burn, net burn and the quick formula
For the operating view in this example, gross burn is monthly operating cash payments. Net operating burn is those payments minus operating cash receipts. One-time equipment purchases and financing movements are shown separately in the monthly projection. Definitions vary between dashboards, so label what your version includes.
Stripe's burn-rate guide describes gross and net burn and the common cash-divided-by-net-burn runway estimate. When using that estimate for cash planning, compare actual collections and payments rather than substituting unpaid invoiced sales.
With constant positive net burn, estimated months to zero = opening available cash / monthly net burn. Months to a reserve threshold = (opening cash − reserve) / monthly net burn. If burn is zero or negative, division does not provide a finite depletion estimate under those constant assumptions. It does not prove cash can never run out; future receipts or payments can change.
Fill in a baseline with a visible reserve
Fictional business Harbor Studio starts November 1 with $60,000 of available cash. It expects $15,000 of customer collections and $23,000 of operating cash payments each month. It chooses a $12,000 reserve threshold. There are no additional cash movements in the baseline.
Net operating burn is $23,000 − $15,000 = $8,000 per month. The quick estimate to zero is $60,000 / $8,000 = 7.5 months. The estimate to the reserve is ($60,000 − $12,000) / $8,000 = 6 months. The threshold estimate assumes a smooth, unchanged rate; the table below shows month-end positions rather than an exact daily crossing date.
| Month | Opening cash | Customer collections | Operating payments | Net change | Closing cash |
|---|---|---|---|---|---|
| Nov 2026 | $60,000 | $15,000 | $23,000 | −$8,000 | $52,000 |
| Dec 2026 | $52,000 | $15,000 | $23,000 | −$8,000 | $44,000 |
| Jan 2027 | $44,000 | $15,000 | $23,000 | −$8,000 | $36,000 |
| Feb 2027 | $36,000 | $15,000 | $23,000 | −$8,000 | $28,000 |
| Mar 2027 | $28,000 | $15,000 | $23,000 | −$8,000 | $20,000 |
| Apr 2027 | $20,000 | $15,000 | $23,000 | −$8,000 | $12,000 |
| May 2027 | $12,000 | $15,000 | $23,000 | −$8,000 | $4,000 |
April ends exactly at the reserve; May is the first displayed month below it. The reserve is still cash, but the owner has chosen not to plan ordinary commitments against it. Label “at threshold” and “below threshold” separately. If your policy triggers at or below the threshold, April is the action month under that policy.
Closing cash = opening cash + receipts − payments + other cash inflows − other cash outflows. Next month's opening equals this month's closing. Check that roll-forward before trusting a chart.
A hire changes both the timing and the continuing burn
Harbor considers a hire starting in January. For this scenario, the total additional continuing cash cost is $4,000 per month, with a separate $2,000 setup payment in January. The example assumes no extra collections from the hire during the displayed period. In a real plan, include the employment costs and obligations relevant to your arrangement rather than assuming salary is the entire cost.
| Month | Baseline closing cash | Hire scenario closing cash | What changed |
|---|---|---|---|
| Nov 2026 | $52,000 | $52,000 | No change |
| Dec 2026 | $44,000 | $44,000 | No change |
| Jan 2027 | $36,000 | $30,000 | $4,000 continuing cost + $2,000 setup |
| Feb 2027 | $28,000 | $18,000 | Additional $4,000 payment |
| Mar 2027 | $20,000 | $6,000 | Additional $4,000 payment |
| Apr 2027 | $12,000 | −$6,000 | Additional $4,000 payment |
The first month-end below the $12,000 reserve becomes March, the fifth month, instead of May, the seventh. April's negative closing balance is a projected cash shortfall under these assumptions, not a bank balance you can actually spend below zero without an arrangement to cover it.
Adding $2,000 only once is important. Including the setup cost in every month would overstate continuing burn. Conversely, adding only the setup cost would hide the larger recurring commitment. Do not assign future revenue to the hire merely to make the scenario pass; state the evidence and timing if you model an upside.
Test a downside in customer collections
Now keep baseline payments unchanged but reduce expected collections from $15,000 to $12,000 each month. Net operating burn becomes $11,000. Closing balances for November through April become $49,000, $38,000, $27,000, $16,000, $5,000 and −$6,000. The first month-end below reserve is March.
The quick reserve estimate is ($60,000 − $12,000) / $11,000 = about 4.36 months. It suggests a threshold inside the fifth month under a smooth-rate assumption; it does not identify the actual payment date that creates the problem. For that, use the 13-week cash forecast and dated obligations.
Distinguish lower collections from delayed collections. If $10,000 moves from December to January, baseline closing cash is $34,000 in December and $36,000 in January once the delayed amount arrives. The temporary dip matters even though the later balance returns to baseline. Do not count the delayed amount in both months.
Copy a template that keeps other movements separate
| Month | Opening available cash | Operating receipts | Operating payments | One-time purchases | Financing inflows | Other movements | Closing cash | Reserve gap |
|---|---|---|---|---|---|---|---|---|
| Enter month | Enter | Enter | Enter | Enter | Enter | Describe and sign each item | Calculate | Closing − reserve |
Add a source, expected date and confidence note for material entries. A proposed loan, grant or investment should remain a separate conditional scenario until the receipt is sufficiently supported. A financing inflow increases cash when received, but it does not improve the underlying operating burn. Include its associated future payments where applicable.
Use one consistent currency. If balances exist in several currencies, document your conversion source and date outside this simple example. A display-symbol change does not convert the underlying amounts. Keep one-time purchases separate so you can see whether a short month results from operating burn or a specific commitment.
Set a review trigger with an owner and an action
Harbor's owner selects a practical review date before the projected reserve crossing, leaving time to collect information and change uncommitted spending. The action record might say: “By December 15, confirm January collections, inspect the hire's full cost and review whether the current cash plan supports the start date.” That is a decision process; it does not predetermine the outcome.
Useful actions include checking overdue invoices, verifying recurring expenses, comparing a purchase's timing and testing a smaller service commitment. For each, distinguish a reversible planning assumption from an agreement already made. Keep the source evidence and the decision date.
Do not combine every optimistic improvement into one baseline. First show the current supported plan, then individual alternatives. If two scenarios use the same new customer receipts, they cannot both claim those receipts when combined unless the assumption is deliberately reconciled.
Review actuals and preserve the old forecast
At the month-end review, replace elapsed-month estimates with actual cash movements. Explain material variances by amount and date. Keep the prior forecast so you can learn which assumptions were consistently late or incomplete. Recheck account dates, duplicated receipts, credit-card payment timing and one-time entries assigned to the wrong month.
The small-business budget example helps explain planned versus actual expenses. The SaaS business-plan example adds subscription and acquisition assumptions for that specific business model. This runway article owns the general reserve-and-cash-timing workflow, so those other guides keep their distinct purposes.
Business Runway & Burn Rate OS describes dated balances, recurring and one-time flows, scenarios, milestones and a projection up to 36 months. Its currency selector changes formatting without converting saved amounts; alerts appear while the app is open and do not send automatic messages. Check the preview and documented rules, use fictional demo data and keep JSON backups of your own local workspace.
Questions before using the forecast
Is cash runway the same as profitability?
No. Runway depends on cash available and when cash moves. Profitability describes revenue and expenses under the period's accounting policy. A business can report profit and still face a payment shortfall.
Does a 36-month display mean more than three years of guaranteed runway?
No. A model horizon is the length of the display. If no threshold crossing occurs inside it, report that result within the modeled horizon and retain the assumptions.
What if opening cash is already below my reserve?
Show the condition at the start rather than calculating positive time until a threshold already crossed. Reconcile the balance and review the near-term payment schedule.