Runway, calculated honestly
Net burn = cash out minus cash in, per month. Runway = cash in bank ÷ net burn. Simple — and almost everyone calculates it wrong, because they use last month's burn as if it were constant. Real burn is lumpy: VAT quarters, annual insurance, corporation tax nine months after year-end, that hire starting in September. The honest version projects burn forward month by month, with the lumps in.
The difference between “we have about eight months” and “our zero-cash date is 14 March” is the difference between anxiety and management. Fundraising takes 3–6 months; the founders who start raising six months out do it from strength, not desperation.
The full guide builds the two forecasts every startup needs, lists the assumptions investors test hardest, and gives five runway levers that don't involve firing anyone.
The two-forecast rhythm
1. The 13-week cashflow (weekly, tactical)
Every expected receipt and payment, week by week, 13 weeks out. This is the tool that catches “we're fine on paper but payroll lands three days before that big invoice clears”. Update it in 20 minutes each Monday from your bank feed. When cash is tight this forecast is the difference between managing and hoping.
2. The 18-month monthly model (strategic)
Monthly P&L and cashflow, built on stated assumptions, with the tax lumps in (VAT quarters, corporation tax, payroll costs at their true loaded rate — salary × roughly 1.15+ once employer NI and pension join). This is the model that answers “when do we need to raise, and how much?” — and the one investors will pull apart.
The assumptions that get interrogated
- Revenue timing, not just amount. Sales aren't cash — a deal signed in March at 60-day terms is May's cash, later if the customer pays like a plc.
- Growth rate vs evidence. A hockey stick needs a mechanism (pipeline, conversion data), not vibes. Show the downside case unprompted; it builds more confidence than the upside one.
- Hiring dates. The single biggest burn lever. Every hire in the model should have a start month and a loaded cost.
- Churn/repeat rates if you're recurring-revenue. Investors test this line first.
Rule A forecast no one compares to actuals is decoration. Each month, put actuals beside the forecast, explain the three biggest gaps in one sentence each, and re-forecast the zero-cash date. That habit — not the spreadsheet — is the skill.
Five runway levers (before anything painful)
- Collect faster. Invoice on signature not month-end, take card/direct debit, automate reminders (FreeAgent does this), ask for deposits. Days matter.
- Time your VAT position. Cash accounting for VAT, a separate tax pot, and reclaiming everything you're entitled to — see our VAT guide.
- Turn capex into opex. Asset finance on equipment instead of cash purchases keeps months of runway in the bank — see funding routes.
- Claim what you're owed. R&D relief for genuine innovation can return a meaningful percentage of dev spend; grants don't dilute. Both take months — start early.
- Arrange credit before you need it. Lenders fund businesses with six months of runway, not six weeks. Our portal shows what you'd qualify for today, soft-search only.
What good looks like monthly
A one-page pack: cash position, zero-cash date, actual vs forecast with three variance notes, and one decision to make. That's what our management-accounts clients get — and for founders raising, it's the difference between an investor update that builds confidence and one that burns it. From £375 + VAT per cycle on top of any compliance band.
