# 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.

## Key takeaways

- Runway (months) = (cash + collectible receivables) ÷ monthly burn.
- Burn is cash out minus cash in, using real deposits and payments, not invoices sent or P&L profit.
- Three months of expenses in the bank is a common cushion for seasonal trades; less than one is an emergency.
- Break-even needs either more collected per month or less paid out. The calculator shows the gap.

> **Estimate, not financial advice**
>
> The projection assumes a steady burn rate, receivables collected over the next two months, and a constant growth rate. Real months are lumpy: tax payments, insurance renewals and payroll weeks land unevenly. Treat the result as a planning number and review it with your bookkeeper or CPA before borrowing or cutting staff.

## 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.

**Formula**

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

Where:
- Cash = what's in the business bank accounts today
- Receivables due = invoices you expect to collect in the next 60 days
- Cash out = average monthly payments: payroll, materials, rent, loans, insurance, owner draw, taxes
- Cash in = average monthly deposits

1. **Check the bank balance.** All operating accounts. Leave out money already set aside for payroll taxes or sales tax you owe.
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. **Add receivables you'll really collect.** Use the A/R aging report and discount anything over 90 days. The [DSO calculator](https://www.brix.so/tools/dso-calculator) shows how long your customers take.
4. **Add your unused credit line.** It extends the runway but it's borrowed time; the calculator shows runway with and without it.
5. **Set the growth rate.** Heading into busy season, collections rise; into winter, they fall. The projection shows the month cash bottoms out.

> **Worked example**
>
> A landscaping company has $48,000 in the bank, collects about $62,000 a month and pays out $74,000, so it burns **$12,000 a month**. It expects $18,000 of invoices to come in over the next 60 days.
>
> Runway = ($48,000 + $18,000) ÷ $12,000 = **5.5 months**, so cash runs out around March 2027 (month 6 of the projection is the first negative balance). The $25,000 credit line stretches it to 7.6 months.
>
> To break even the company needs $12,000 more collected each month, or the same cut from spending. If collections grow 5% a month, it breaks even in month 5 with cash bottoming out near $37,228.

## 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.

**Reading your runway**

| Runway | What it means | What to do |
| --- | --- | --- |
| Cash-flow positive | You collect more than you spend | Build the cushion toward three months; set aside taxes monthly |
| 6+ months | Time to fix the model | Raise prices, tighten collections, trim overhead before it's urgent |
| 3–6 months | Needs a plan this quarter | Collect receivables, pause hiring and big purchases, line up credit while you still qualify |
| Under 3 months | Urgent | Daily cash tracking; call every open invoice; cut spending that doesn't produce revenue; talk to your lender now |

_General planning guidance, not a benchmark. Your trade's seasonality and payment terms change the comfort level._

## 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](https://www.brix.so/learn/cash-flow-for-contractors).
- **Materials are paid before the customer pays.** On big jobs, deposits and [progress billing](https://www.brix.so/learn/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](https://www.brix.so/tools/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](https://www.brix.so/tools/job-pricing-calculator).
5. **Arrange credit before you need it.** Lenders, including [SBA-backed lenders](https://www.sba.gov/funding-programs/loans), approve healthier businesses, so apply while the numbers still look good.

BRIX invoices when the job closes, chases unpaid invoices automatically and syncs every payment to QuickBooks, so the collections side of your runway improves without more office time.

- [Invoicing and payments](https://www.brix.so/features/invoicing-payments): Turns finished jobs into invoices and politely chases unpaid ones until the money is in your account.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.

## Frequently asked questions

### What is cash runway?

Cash runway is the number of months a business can keep operating before it runs out of money, assuming the current rate of cash coming in and going out. It's cash on hand divided by monthly net burn.

### What's the difference between burn rate and runway?

Burn rate is how much cash you lose each month (cash out minus cash in). Runway is how many months your cash lasts at that burn rate. Cut the burn or add cash and the runway grows.

### Should I count my line of credit in my runway?

Show it separately, as the calculator does. It genuinely extends the time you have, but it's debt that has to be repaid with interest, and a lender can reduce or freeze a line when your numbers weaken.

### Why is my P&L profitable but my cash is falling?

Profit counts invoices when sent; cash counts money when it arrives. Growing receivables, inventory, loan principal payments, equipment purchases and owner draws all use cash without showing up as expenses on the P&L.

### How often should I update the runway?

Monthly when you're cash-flow positive, weekly when runway is under six months, and daily when it's under three. Use actual bank figures each time, not estimates.

### Does the calculator include taxes?

Only what you enter in monthly cash out. Include your quarterly estimated tax payments and sales tax remittances in that average, because they're cash that leaves the account even if they land in lumps.

## Related

- [Cash Flow for Contractors: Why Profitable Shops Run Out of Money](https://www.brix.so/learn/cash-flow-for-contractors)
- [Days Sales Outstanding (DSO) Calculator for Contractors](https://www.brix.so/tools/dso-calculator)
- [What Is Accounts Receivable?](https://www.brix.so/learn/accounts-receivable)
- [How to Get Paid Faster as a Contractor](https://www.brix.so/learn/how-to-get-paid-faster-as-a-contractor)
- [Break-Even Calculator for Service Businesses](https://www.brix.so/tools/break-even-calculator)
- [Quarterly Estimated Tax Calculator for Self-Employed Contractors (2026)](https://www.brix.so/tools/quarterly-estimated-tax-calculator)
- [How to Read a Profit and Loss Statement (Contractor's Guide)](https://www.brix.so/learn/profit-and-loss-statement)
- [Contractor invoicing software that sends the invoice and chases the money](https://www.brix.so/features/invoicing-payments)
- [Bookkeeping for contractors that keeps your books tax-ready all year](https://www.brix.so/features/bookkeeping-taxes)
- [QuickBooks for contractors: the right version, real job costing and a sync that keeps the books matched to the jobs](https://www.brix.so/integrations/quickbooks)

## Sources

- [U.S. Small Business Administration, Manage your finances](https://www.sba.gov/business-guide/manage-your-business/manage-your-finances) (checked 2026-10-12)
- [U.S. Small Business Administration, Loans](https://www.sba.gov/funding-programs/loans) (checked 2026-10-12)

---
Written by BRIX Editorial Team. Last updated 2026-10-12. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/tools/cash-flow-runway-calculator