Klair › SoloSuite › Cash runway

How to calculate your freelance cash runway

Runway is the number of months you can keep going before the money runs out, counting what you hold today plus income that is already contracted. For a freelancer it is a more honest number than revenue, because it accounts for the invoices that have not actually been paid yet.

Last reviewed 31 October 2026

The short answer. Runway is the number of months before your money runs out. The simple formula is cash on hand ÷ net monthly burn. For freelance income, which is lumpy, project month by month instead: start with cash on hand, add the income contracted for that month, subtract the month's costs, and carry the balance forward. Your runway ends in the month that running balance first goes below zero.

The three inputs

1. Cash on hand

Money you could spend today. Exclude anything reserved for tax — that is not yours to spend, and including it is the most common way a runway number is quietly inflated.

2. Monthly burn

Everything that leaves the account in a typical month: rent, food, loan payments, subscriptions, subcontractors, insurance, and the tax you are provisioning. Annual costs belong here too, divided by twelve. Freelancers routinely underestimate burn by excluding their own living costs, which makes the resulting figure meaningless — the business exists to pay for those.

3. Contracted income, by month

Only money that is already committed:

Not proposals, not verbal agreements, not "they always renew". A projection built on hoped-for income tells you what you want to hear, which is the opposite of what the exercise is for.

A worked example

Cash on hand ₹1,50,000. Monthly burn ₹2,60,000. Contracted income: ₹2,85,000 of overdue invoices expected this month, ₹1,45,000 next month, then an ₹85,000 retainer with four months left to run.

MonthIncomeBurnNetBalance
Start———₹1,50,000
Month 1₹2,85,000₹2,60,000+₹25,000₹1,75,000
Month 2₹1,45,000₹2,60,000−₹1,15,000₹60,000
Month 3₹85,000₹2,60,000−₹1,75,000−₹1,15,000

The balance crosses zero partway through month 3, so the runway is roughly 2.5 months — despite month 1 looking healthy. That is the entire argument for projecting by month rather than dividing: a single average would have hidden the cliff behind one good month.

Why the warning line sits at three months

Three months is approximately how long it takes to find a lead, pitch it, win it, deliver enough to bill, and actually get paid. Below three months of runway you are making decisions inside that cycle rather than ahead of it, which in practice means accepting work at rates and terms you would otherwise decline. The number is a prompt to act while you still have options, not a prediction of disaster.

The optimism built into every freelance runway

Any projection that counts an overdue invoice as income is assuming you collect it. Sometimes you will not. Run the number twice:

The distance between those two numbers is your collections risk expressed in months. If it is large, the highest-leverage thing you can do for your runway is not cutting costs — it is chasing the overdue invoices.

Cutting costs is slower than collecting. Reducing burn by ₹20,000 adds a fraction of a month, gradually. Collecting one ₹85,000 invoice adds the same money immediately. When runway is short, collections come first.

Project it instead of spreadsheeting it

SoloSuite charts your contracted income against a burn rate you drag with a slider, and warns when the projection crosses three months. Free, no signup, and your figures never leave your browser.

Open the runway projection

Frequently asked questions

What is cash runway for a freelancer?

Cash runway is how many months you can cover your costs using the money you hold now plus income that is already contracted. It differs from a startup's runway in one important way: a freelancer's incoming money arrives as invoices that may be paid late, so a runway figure that assumes every invoice is collected on time is optimistic by exactly the amount of your overdue receivables.

What is the formula for cash runway?

In the simple form, runway in months = cash on hand divided by net monthly burn, where net burn is monthly costs minus monthly income. When income is uneven, which it usually is for freelancers, the better method is to project month by month: start with cash on hand, add that month's contracted income, subtract that month's burn, and carry the balance forward. Runway ends in the month the running balance first goes below zero.

How many months of runway should a freelancer have?

Three months is the usual warning line, because three months is roughly the time it takes to find, pitch, win and get paid by a new client. Below that, you are likely to accept work on worse terms because you cannot afford to wait. Six months is comfortable; twelve means you can turn down work that is not right.

Should I count unpaid invoices in my runway?

Count them, but know you are being optimistic. An invoice already past its due date is money you are owed, not money you have, and treating it as certain is how a runway projection quietly misleads. A useful habit is to run the number twice: once counting all receivables, and once excluding anything more than 60 days overdue. The gap between those two figures is your collections risk.

Does runway include tax?

It must. Tax set aside is not available to spend, so the right treatment is to include your expected tax provision in monthly burn and exclude the reserved amount from cash on hand. A runway figure that quietly spends the tax money is the most common way freelancers overestimate how long they have.

Related