Every founder carries a vague feeling about how much time the company has left. The feeling is usually wrong in one of two ways: either you are more scared than the numbers justify, or the numbers are worse than the feeling. Both are expensive. Fear makes you cut too early and too deep. Optimism makes you discover the truth with six weeks left, which is not enough time to fix anything.
The fix is a date. Not a ratio, not a dashboard, a month written on a wall: "at the current pace, we are out of money in March."
You can compute it in 15 minutes with three numbers.
The three numbers
1. Cash you can actually spend. The balance across your bank accounts today. Not your revenue, not what customers owe you, not the invoice you are sure will get paid. Money you could wire tomorrow.
2. Money out per month. Everything that leaves, averaged over the last three months: salaries and employer taxes, contractors, rent, software, ads, cloud, insurance, the accountant. If it left the account, it counts.
3. Money in per month. Cash that actually arrived, averaged the same way. Signed contracts that have not paid yet do not count. A customer on annual prepay counts in the month the cash landed, not spread across twelve months. This is a cash forecast, not accrual accounting.
The math
Net burn is what the company loses each month:
net burn = money out per month - money in per month
Runway is how long the cash covers that loss:
runway (months) = cash today / net burn
If money in is bigger than money out, you have no burn. Your date is "never, at the current pace," and your job is to keep it that way.
If you would rather not do the division by hand, the free cash runway calculator takes the same three numbers and also shows what moving each one does to the date.
A worked example
| Amount | |
|---|---|
| Cash in bank | €184,000 |
| Money out per month | €56,500 |
| Money in per month | €41,000 |
| Net burn | €15,500 |
| Runway | 11.9 months |
Today is August. Twelve months of runway means the money runs out next August. Now the abstract dread has a name, and you can work backwards from it: if you want to raise, you start conversations by January, because a round takes six months and how much to raise is arithmetic you can do today. If you want to reach breakeven instead, you need €15,500 of new monthly revenue or cuts, and you can now ask which is realistic by spring.
Why your date is probably wrong
Four things quietly break this calculation, and they are all fixable:
Annual bills. Insurance, tax prepayments, yearly software renewals. They hit one month like a truck and are invisible in a three-month average. List everything that bills yearly, divide by twelve, and add it to your monthly out.
The next hire. Runway math describes the current team. If a signed offer starts in October, your burn goes up in October. Compute the date twice: with the team you have, and with the team you have committed to.
Churn you have not admitted. If a big customer is wobbling, your money in is not what the average says. Run the math once with them and once without. The second number is the one that should set your plans.
Founder salary games. If you are underpaying yourself to flatter the number, fine, but know that your real burn is higher, and the company owes you the truth even if it cannot yet owe you the salary.
Make it a habit, not a project
The 15-minute version is a snapshot. The habit is what saves you: every time money moves, the date should move with it, so a new hire, a lost customer, or a price raise immediately shows up as months gained or lost.
That is the whole idea behind Plainhub: you record money events in plain words and the runway date stays live, recomputed on every entry. If you are weighing up how to keep the date current — spreadsheet, accounting-connected tool, or direct entry — the cash forecasting software comparison walks through eight options honestly. But whether you use a tool or a whiteboard, have the date. The founders who get surprised are not the ones with bad companies. They are the ones who never looked.