Cash Flow Runway Calculator for Trades Businesses

Cash runway is how many months a business can keep paying its bills before the bank account hits zero. Divide cash on hand (plus invoices about to be collected) by monthly burn, which is cash out minus cash in. A shop with $48,000 in the bank burning $12,000 a month has about 5.5 months.

How do you calculate cash runway?

Add the cash you have to the invoices you'll realistically collect soon, then divide by how much more goes out than comes in each month. If more comes in than goes out, you don't have a runway problem; you have a cushion, measured in months of expenses in the bank.

Runway = (Cash + Receivables due) ÷ (Cash out per month − Cash in per month)

1. 1

   Check the bank balance.

   All operating accounts. Leave out money already set aside for payroll taxes or sales tax you owe.

2. 2

   Average three months of deposits and payments.

   Use the bank statements, not the P&L. Depreciation isn't cash; loan principal and owner draws are.

3. 3

   Add receivables you'll really collect.

   Use the A/R aging report and discount anything over 90 days. The DSO calculator shows how long your customers take.

4. 4

   Add your unused credit line.

   It extends the runway but it's borrowed time; the calculator shows runway with and without it.

5. 5

   Set the growth rate.

   Heading into busy season, collections rise; into winter, they fall. The projection shows the month cash bottoms out.

How much cash should a contractor keep in the bank?

There's no single right number, but the calculator's "months of expenses in the bank" line is the one to watch. Many owners of seasonal businesses aim for three months of operating expenses going into the slow season, because that's roughly how long a winter lull or a slow-paying GC can last. Under one month means a single late payment can bounce payroll.

Why profitable contractors run out of cash

• Receivables grow faster than sales. You're profitable on paper but the money is in customers' accounts. See cash flow for contractors.
• Materials are paid before the customer pays. On big jobs, deposits and progress billing close the gap.
• Growth eats cash. Each new crew needs a truck, tools and two weeks of payroll before its first invoice is paid.
• Taxes come due in lumps. Quarterly estimates and sales tax feel like surprises if they aren't set aside monthly. See the quarterly estimated tax calculator.
• Owner draws aren't on the P&L. They're real cash out and belong in the burn.

Ways to extend your runway

1. Collect what you're owed. Call every invoice over 30 days this week. That's usually the fastest cash available.
2. Bill faster and take deposits. Invoice the day the job closes; take a deposit on anything with material cost.
3. Cut spending that doesn't produce revenue. Subscriptions, idle vehicles, slow-moving inventory.
4. Raise prices on new quotes. Margin fixes burn permanently; see the job pricing calculator.
5. Arrange credit before you need it. Lenders, including SBA-backed lenders, approve healthier businesses, so apply while the numbers still look good.