Which cash balance should you use to calculate startup runway?

Use a cash snapshot with the same cutoff across bank accounts and currencies. Reconcile it to the ledger, then identify which balances are available to fund ordinary operations. A balance shown by a payment processor may be pending, held in reserve, or scheduled for a later payout rather than available in the bank today.

Keep restricted or otherwise unavailable funds separate. Also distinguish committed financing from money actually received. A signed term sheet or expected investor wire may belong in a scenario, but it should not quietly increase the cash available in the base calculation.

Consider an illustrative company with $900,000 across bank accounts, including $50,000 that cannot be used for operations. Its starting available cash is $850,000. If a separate $40,000 processor balance is not yet settled, show when it is expected to arrive rather than treating it as immediately spendable cash.

There is no universal rule that every near-term bill must be subtracted from the numerator. The right treatment depends on the forecast. If next month's payroll and supplier payments already appear in projected cash outflows, subtracting them again from starting cash would count them twice.

A simple runway ratio divides available cash by monthly net cash use. It is useful when activity is fairly steady and the inputs are clearly defined. It becomes misleading when historical burn excludes upcoming hires, includes a one-time expense, or ignores a large annual renewal.

Separate operating cash use from financing receipts and show major one-time payments explicitly. A month in which a loan arrives should not appear to have negative burn merely because total bank inflows exceeded outflows. Keep the operating calculation and financing movement visible.

A monthly or weekly forecast can reveal a low cash point that an average hides. Inventory deposits, tax payments, annual contracts, and delayed customer collections can all cluster before revenue arrives. Put those events on their expected payment dates and test a delayed-collection scenario.

Record the minimum cash buffer the business chooses to maintain, who approved it, and what happens when the forecast approaches it. The date the company reaches that buffer can be a more useful planning signal than the date the spreadsheet reaches zero.

An investor update or board report should identify the cash date, available-cash adjustments, burn period, and treatment of planned financing. Explain material changes from the previous report, such as a reserve release or a postponed hire.

Refresh the calculation after the next close and compare the forecast with actual cash movement. Fix repeated forecast misses at their source, whether that is optimistic collection dates, incomplete vendor commitments, or a bank balance that includes funds the business cannot use.