How to calculate your business cash runway

Start-ups talk about runway constantly. Established small businesses rarely do, and that is a mistake. Runway is the most useful single number for a business owner during a tight patch, because it turns a vague worry into a date.

The basic formula

Runway (in weeks) = available cash / net weekly outflow

• Available cash is what is in the business accounts today, plus any undrawn facility you could use straight away.
• Net weekly outflow is average money out per week minus average money in per week.

If money in exceeds money out, the business is cash flow positive and the runway is not shrinking. If money out exceeds money in, the runway tells you how many weeks until the account cannot cover what is due.

Getting the inputs right

Use bank statements, not budgets. Take the last three months, total the deposits and the withdrawals, and divide by thirteen to get weekly averages. Make sure money out includes:

• Wages, super and PAYG withholding.
• Rent, utilities, insurance and subscriptions.
• Supplier payments and loan repayments.
• GST paid to the ATO and any income tax instalments.
• Your own drawings or salary.

Leave out one-off transfers between your own accounts, which can make the numbers look better or worse than they are.

Curious where you would stand? Ask us directly. Enquiring leaves your credit file untouched, and you will hear back from someone who has actually read what you wrote.

Adjust for lumps

Averages hide spikes. The quarterly BAS, annual insurance renewals and registration fees can knock weeks off your runway in one go. Add each known lump to the week it falls due and track the balance week by week. The cash runway calculator does this for a quarter and shows the week your balance drops below the minimum you want to keep.

An illustrative example

A cafe has $48,000 in the bank. Over the last quarter, deposits averaged $21,200 a week and withdrawals $23,300 a week, so the net outflow is about $2,100 a week. On averages alone, that is around 23 weeks of runway. But a $22,000 BAS payment is due in five weeks. After that, the balance sits around $15,500, and runway falls to about seven weeks. The averages said six months; the real picture is closer to two.

What to do with the number

Runway	What it means	Sensible response
More than six months	Comfortable	Keep a standby facility for surprises
Three to six months	Watch closely	Forecast weekly, trim costs, chase debtors
Six to twelve weeks	Act now	Talk to suppliers and the ATO, line up funding
Under six weeks	Urgent	Prioritise wages and tax, get advice, secure funding fast

Ways to extend runway

1. Collect faster: invoice the day work is done and follow up the day after it is due.
2. Pay smarter: negotiate supplier terms and avoid paying earlier than you need to.
3. Cut what does not earn: subscriptions, underused vehicles, slow stock.
4. Arrange funding early: a standby facility set up while trading is steady is far easier to get than one arranged in a crisis.
5. Use payment plans: the ATO offers payment plans, and debts of $200,000 or less can usually be set up online.

When borrowing will not help

If the business loses money every week with no turnaround in sight, funding only delays the outcome and adds repayments. Our guide on when not to borrow covers the warning signs. For a more detailed view, build a 13-week cash flow forecast.

Read next

• How to build a 13-week cash flow forecast: A 13-week cash flow forecast shows exactly when cash gets tight. A step-by-step guide to building one from your bank statements and keeping it up to date.
• At call business funding: At call business funding means capital you can reach the moment the business needs it. How standby facilities work and how to set one up before you need it.
• When not to borrow: Borrowing is not always the answer. The warning signs that a business loan would make things worse, and the alternatives worth considering first.
• BAS bill due and short on cash: Can’t pay your BAS on time? Lodge anyway, then weigh a payment plan, a short loan or a line of credit, and learn how to avoid the next squeeze.

Words worth knowing

• Line of credit: an approved limit the business can draw, repay and draw again, usually paying interest only on the drawn balance.
• BAS: the business activity statement used to report and pay GST, PAYG withholding and other amounts to the ATO.
• PAYG withholding: tax withheld from wages and other payments, which the business passes on to the ATO.
• Cash runway: how long the business can keep paying its bills from available cash at the current rate of spending.

Five things to confirm with any lender

• How much lands in my account after any fees are deducted?
• What is the total repayable, and over what period?
• Is the repayment schedule weekly, fortnightly or monthly?
• What property or assets will be secured?
• What are my options if trading dips during the term?

Where your accountant fits in

Your accountant knows your numbers better than anyone, so involve them early. They can confirm figures for the enquiry, flag tax effects of different structures, and tell you whether the timing of a loan suits your BAS and tax cycle. A lender’s job is to assess whether funding fits; your accountant’s job is to make sure the business is set up to carry it well. The two work best together.

Quick recap

• Runway = available cash divided by net weekly outflow
• Include lump-sum bills such as BAS, PAYG and insurance
• Use bank statements, not budgets, for the inputs
• A short runway gives you time to act if you catch it early

How Capital At Call handles it

One enquiry, one team, one clear answer. That is the whole approach. We read what you send, call you, ask for the documents that matter and lay out the options in plain English with the total cost attached. Your details are not shopped around, and your credit file is only checked if you choose to accept an offer. If the answer is no, you will hear it quickly and with a reason, so you can plan your next move.

A quick test before you borrow

Funding works best when three things are true: the need is specific, it is temporary or it pays for itself, and there is a clear source of repayment. If all three hold, the right loan can take real pressure off the business. If the business is losing money month after month with no change in sight, borrowing only postpones a harder decision, and we would rather say so than arrange a loan that makes things worse.

Paperwork worth gathering

A little preparation makes the first conversation far more useful, and it means the person who calls you can talk about options rather than chasing basic details:

• Your ABN and the legal name of the business.
• Online banking access, so recent statements can be shared through a secure read-only link.
• A rough figure for monthly turnover and the amount you need.
• A list of current loans and repayments, including any ATO payment plan.
• If property is involved, the address and roughly what is owed on it.

Getting the enquiry right

Every question on the form is there for a reason: it changes which funding fits. Describe the business as it stands today rather than the version you expect in six months. Mention any default, tax debt or recent decline in the notes. We look at those situations all the time, and knowing early lets us head straight for options that can actually work.

Your next step

It costs nothing to find out. Check your eligibility in about a minute, with no credit check and no obligation. One team handles your enquiry from start to finish, and you will hear from a person, not an automated system. Fill the form in as accurately as you can; a careful minute now saves days later.