Runway is a cash timing problem
Teams go out of business because cash runs out, not because dashboards look bad. Runway depends on net burn (cash outflows minus inflows) and on timing effects like receivables, payables, and prepaid revenue.
Gross burn vs net burn
- Gross burn: total cash outflows (how much you spend).
- Net burn: outflows minus inflows (how much cash you actually lose).
- Runway uses net burn; use gross burn to understand cost structure.
Why profit != cash
- Working capital: AR/AP timing shifts cash even if revenue/profit is stable.
- Deferred revenue: annual prepay can boost cash today while revenue is recognized later.
- Capex and debt service: cash outflows that don't show up as operating profit.
Fast levers to extend runway (without fantasy)
- Collections: tighten billing terms and reduce days outstanding (AR).
- Spend: cut low-ROI programs, negotiate vendors, pause non-critical hires.
- Pricing: increases can help, but watch churn and collections risk.
- Prepay: offer annual incentives if your customer base supports it (track retention impact).