How to Calculate Your Cash Runway, and 5 Ways to Extend It

Sudhir Singal · 14 Oct 2026

Ask a founder how much money is in the bank and they'll tell you in seconds. Ask how many months that money will last and the answer often gets vague. That number is your cash runway. It decides when you have to raise money, how hard you can push growth, and how much room you have to negotiate with investors.

What cash runway means

Cash runway is the number of months your business can keep running before the cash runs out, assuming nothing changes.

Runway (months) = Cash in bank ÷ Net monthly burn

Net monthly burn is the cash going out each month minus the cash coming in. If you have ₹6 crore in the bank, spend ₹80 lakh a month and collect ₹30 lakh a month, your net burn is ₹50 lakh and your runway is 12 months.

Where founders get it wrong

• Using profit instead of cash. Your P&L can show a profit while the bank balance shrinks. Unpaid customer invoices, inventory and advance payments all eat cash without showing up as costs.
• Using one "good" month. Take an average of the last three to six months, and adjust for anything already committed, like new hires, a price increase or an annual payment that's coming up.
• Forgetting the lumpy items. GST, TDS, annual licence fees and loan repayments don't arrive evenly. Put them in the month they actually fall due.
• Counting money you don't have yet. A term sheet isn't cash, and neither is a large invoice your customer hasn't paid. Plan on what's actually in the bank.

Five ways to extend your runway

1. Collect from customers faster

For many SMEs this is the fastest way to free up cash. Tighten your credit terms, send invoices on the day the work is delivered, follow up on overdue payments every week, and offer a small discount for paying early. In one of our engagements, the business cut its average collection time from 60 days to under 40 in six months, and that freed up money that had been stuck with customers.

2. Find cost leaks, don't just cut costs

Cutting every budget by the same percentage usually hurts growth. Go through spending line by line instead: software nobody uses, vendor contracts that renewed without anyone checking, and marketing that doesn't bring in customers. Then decide what really moves the business forward.

3. Fix the business model, not only the expenses

Sometimes the cash problem is built into how you make money: pricing that doesn't cover what it costs to serve a customer, payment terms that work against you, or products that lose money. Changing how you charge can do more than any cost cut.

4. Use the right kind of debt

Equity isn't the only way to fund a business. Working capital loans, invoice discounting, supply chain financing and venture debt can bridge cash gaps without giving away ownership, as long as they're matched to how cash actually comes into your business.

5. Forecast every month

A 13-week cash forecast, combined with a rolling 12-month view, shows a shortfall months before it hits your bank account. That gives you time to act while you still have choices.

From 24 months of runway to cash-profitable

We worked with a startup that was losing cash every month. By restructuring its costs and building a culture of careful spending, it became cash-profitable within a year. Runway stopped being a countdown, and fundraising became something the founders chose to do, not something they had to do.

When to bring in a CFO

If you can't say with confidence how many months of runway you have, or what would change that number, it's time for financial leadership. A fractional CFO gives you that clarity without the cost of a full-time hire.