SaaS
Annual upfront payments make the bank balance look strongest around renewals. Runway should be based on sustainable burn, and on how usage-driven infrastructure costs scale with MRR.
Finance for SaaSManagement & Investor Reporting
A cash runway forecast you can actually rely on
Cash divided by average burn is a starting point, not a forecast. Real runway accounts for hires, annual costs, lumpy collections and what happens if revenue slows.
When you're not sure how much runway you really have
The P&L shows one loss, the bank balance falls by another. Payroll is growing, some costs are annual and revenue moves every month. A single runway number hides all of that until it's too late to act.
- P&L loss and cash burn don't match
- Runway ignores planned hires and annual payments
- No downside case if revenue slows
- Unsure when fundraising needs to start
How a proper runway model works
Runway should come from a cash forecast, not a ratio. Two horizons work best together.
- 1
13-week cash forecast
Week-by-week cash for payroll, suppliers and collections, so there are no surprises in the next quarter.
- 2
12 to 18 month runway
A monthly forecast with planned hires, growth and annual costs, showing the real cash-out date.
- 3
Downside case
What runway looks like if revenue grows slower or a large customer leaves.
- 4
Fundraising timeline
Work backward from the cash-out date to when a raise needs to start and how much it needs to cover.
Runway in tech business models
MSPs
Hardware bought before the customer pays can remove a lot of cash for weeks. Those timing gaps belong in the forecast.
Finance for MSPsIT services & agencies
Runway depends on receivables and how quickly projects are invoiced and paid, not just on monthly profit.
Finance for IT services & agenciesFrequently asked questions
How do I calculate cash runway?
Forecast cash month by month, including planned hires, annual costs and expected collections, and find the month it falls below your minimum. That is more reliable than cash divided by average burn.
What is the difference between gross burn and net burn?
Gross burn is total cash out each month. Net burn is cash out minus cash in. Runway is usually based on net burn.
Why does the bank balance fall faster than the P&L loss?
Timing: annual payments, receivables, prepayments, capital spend and loan repayments affect cash but not the P&L in the same month.
Can an accountant build a 13-week cash forecast?
Yes, and it pairs well with a 12 to 18 month forecast. The short one manages the next quarter, the long one shows strategic runway.
When should fundraising start?
Work back from the cash-out date: allow time for the raise itself plus a safety margin, often starting with 9 to 12 months of runway left.
How should SaaS runway treat annual prepayments?
Spread them over the months they cover when judging sustainable burn, so renewal-season cash doesn't overstate runway.
How should an MSP model hardware purchases in runway?
As a cash outflow when paid and an inflow when the customer pays, so the temporary gap is visible.
Your company has enough moving parts already.
Start with a clear look at where things stand and what should improve.