How many months runway should an agency have?

Most financial advisors recommend agencies maintain 3-6 months of runway at minimum, with 6-12 months being healthy. Under 3 months is considered the danger zone where you have limited ability to weather client losses or unexpected costs. Top-performing agencies often maintain 12+ months runway for maximum strategic flexibility.

How do you calculate cash runway for an agency?

Cash runway is calculated by dividing your available cash (plus collectible invoices) by your monthly net burn rate. Net burn rate equals your monthly fixed costs minus your monthly revenue. For example, if you have £150,000 cash and burn £10,000 net per month, your runway is 15 months. Include outstanding invoices by estimating collection timing based on average payment days.

What is a healthy burn rate for a marketing agency?

A healthy agency should aim for break-even or cash-flow positive operations. If you're burning cash (costs exceed revenue), aim to keep net burn under 5-10% of your monthly revenue. High-growth agencies may accept higher burn temporarily, but should have clear paths to profitability and sufficient runway to reach it.

How can UK agencies extend their runway quickly?

Agencies can extend runway by: accelerating invoice collection with early payment discounts (2% for 14-day payment), reducing non-essential costs, negotiating longer payment terms with suppliers, securing credit facilities as backup, improving project margins, and increasing retainer revenue for predictable income. The fastest lever is usually improving debtor collection times.

What's the difference between gross and net burn rate?

Gross burn rate is your total monthly expenditure regardless of revenue. Net burn rate is the difference between your monthly costs and monthly revenue - it's what you're actually depleting from cash reserves each month. Net burn is the relevant metric for runway calculations because it accounts for incoming revenue.

How much cash reserve should a marketing agency have?

Marketing agencies should hold cash reserves covering 3-6 months of operating costs at minimum. For a £50k/month operating cost agency, that's £150k-£300k in reserve. Best-in-class agencies maintain 6-12 months. The exact amount depends on revenue predictability,retainer-heavy agencies can operate with less reserve than project-based agencies.

Can my agency be profitable but still run out of cash?

Yes,this is one of the most common reasons agencies fail. Profit is an accounting concept (revenue minus costs), but cash flow is timing-based. If you invoice £100k in a month but clients pay in 60 days, you have £100k in receivables but potentially no cash. Meanwhile, you must pay salaries, rent, and suppliers immediately. Always track cash position separately from profitability.

When should I worry about my agency's runway?

Start taking action when runway drops below 6 months,this is the caution zone. Below 3 months is danger zone requiring immediate intervention. Warning signs include: losing a major client (especially 15%+ of revenue), consistently slow collections, declining sales pipeline, or unexpected large expenses. Check runway monthly and model scenarios quarterly.

What costs should I include when calculating agency burn rate?

Include all costs you can't easily eliminate: salaries and wages (including employer NI at 15% and pension contributions), office rent, essential software subscriptions, insurance, accounting fees, and core contractor costs. Variable costs like ad spend, freelancer fees for specific projects, and optional tools can often be reduced if needed.

Why do agencies fail from cash flow problems?

Agencies fail from cash flow problems because: profitability doesn't equal cash (you can be profitable but cash-poor), growth consumes cash (hiring ahead of revenue), client loss creates immediate shortfalls, long payment terms (UK average 45-60 days) mean financing client work, and poor forecasting hides problems until too late. 48% of UK agencies have less than 3 months runway.

What is cash runway and how do you calculate it for an agency?

Cash runway is the number of months your agency can continue operating before running out of cash. Calculate it by dividing your available cash (plus collectible invoices) by your monthly net burn rate. Net burn rate equals monthly fixed costs minus monthly revenue. For example, if you have £100,000 cash, £50,000 in collectible invoices, and burn £15,000 net per month, your runway is 10 months ((£100,000 + £50,000) / £15,000). Always model worst-case scenarios where revenue drops 30% and clients pay slower,this gives you a realistic safety buffer.

What is a healthy burn rate for a marketing agency?

A healthy agency should aim for break-even or cash-flow positive operations (zero or negative net burn). If you are burning cash, keep net burn under 5-10% of monthly revenue. For example, a £50,000/month revenue agency shouldn't burn more than £5,000/month net. Gross burn (total monthly costs) should typically be 65-85% of revenue to maintain healthy 15-35% net margins. High-growth agencies may accept temporary higher burn during scaling, but need sufficient runway (12+ months) and a clear path to profitability. Track burn rate monthly,if it's consistently above 10% of revenue without a growth strategy, you're depleting reserves unsustainably.

How can UK agencies extend their cash runway quickly?

The fastest ways for UK agencies to extend runway are: (1) Accelerate invoice collection,offer 2% discount for 14-day payment, reducing typical 45-day collection to 14 days. (2) Invoice on milestones rather than project completion,bill 30% upfront, 40% at midpoint, 30% on delivery. (3) Renegotiate payment terms with slow-paying clients to net-14 or net-21. (4) Secure invoice factoring or a business credit facility as backup (arrange when you don't need it). (5) Review subscriptions and pause non-essential software. (6) Delay discretionary spending like training or equipment upgrades. (7) Consider retainer models for new clients instead of project-based billing,this improves cash flow predictability. Avoid cutting talent in panic mode,that damages recovery capability.

Why do agencies fail from cash flow problems?

Agencies fail from cash flow problems because: (1) Profitability doesn't equal cash,you can be profitable but cash-poor if clients pay slowly. (2) Growth consumes cash,hiring ahead of revenue creates temporary deficits. (3) Seasonality and client loss,losing a major client (especially one representing 20%+ of revenue) can immediately put you in danger zone. (4) Long payment terms,UK agency average is 45-60 days, meaning you finance client work for 2 months. (5) Under-pricing and scope creep erode margins. (6) Poor forecasting,not tracking leading indicators until it's too late. 48% of UK agencies have less than 3 months runway,this leaves no buffer for unexpected costs or client losses. Prevention requires: adequate runway (6-12 months), diverse client base (no client over 25% revenue), fast invoicing, and real-time cash flow visibility.

How many months of runway should a UK agency have?

UK agencies should maintain 6-12 months of cash runway for healthy operations, with 3-6 months being the minimum safe threshold. Less than 3 months runway puts your agency in the danger zone where a single client loss or unexpected cost could threaten operations. Top-performing agencies maintain 12+ months runway for maximum strategic flexibility, allowing them to make opportunistic hires, pursue larger projects requiring upfront investment, and weather market downturns without panic decisions. The exact target depends on your revenue predictability: agencies with stable retainer income can operate closer to 6 months, while project-based agencies with variable income should target 9-12 months. Calculate your runway by dividing available cash plus collectible invoices by your monthly net burn rate (fixed costs minus revenue). If you're burning cash, prioritise extending runway through improved collections, cost reduction, or securing credit facilities as backup.

Cash flow & burn rate tool

How long until the cash runs out?

Calculate your agency’s runway in months, model worst / expected / best case scenarios, see your burn rate, and get specific recommendations to extend it. 48% of UK agencies have less than three months — know your number.

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Runway gaugeDanger · Caution · Healthy · Strong

Months of cash left

What it shows you

Runway in three views

Most agencies fail from cash flow, not profit. Knowing your runway, your burn rate, and what to do about it is the foundation of building an agency that lasts.

Scenario modelling

Best, expected, and worst case scenarios based on revenue volatility and payment timing variations.

Depletion forecasting

Know exactly when your cash depletes under each scenario, accounting for outstanding invoices and collection timing.

Action recommendations

Get specific recommendations based on your situation to extend runway and improve cash position.

Built by Alto Accounting — ACCA Chartered Accountants specialising in UK agencies

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On the desk

Understanding Cash Runway for Agencies

1Why Runway Matters. Cash runway isn't just about survival,it's about strategic flexibility. Agencies with adequate runway can negotiate better client terms, make opportunistic hires when talent becomes available, pursue larger projects requiring upfront investment, and weather market downturns without panic decisions. Short runway forces reactive decisions: cutting too fast, accepting bad-fit clients, or underpricing to generate immediate cash. Every strategic decision you make is constrained by your runway. Understanding your number puts you in control.
2Calculating True Runway. Runway = (Available Cash + Collectable Invoices) / Monthly Net Burn. The key is being realistic about invoice collection timing. If your average payment days are 45, don't assume invoices will convert to cash in 30. Model worst case scenarios where clients pay late or revenue dips. Include all fixed costs: salaries (don't forget employer NI at 15% and pension), rent, software subscriptions, essential contractors. The number should be uncomfortable,that's how you avoid surprises.
3Extending Your Runway. The fastest lever is usually invoice collection. Offering 2% early payment discount for 14-day settlement can dramatically accelerate cash inflow. Review payment terms,if you're invoicing monthly in arrears with 30-day terms, you're effectively financing clients for 60+ days. Consider milestone billing for projects, upfront deposits for new clients, and retainer models for predictable income. On the cost side, identify non-essential expenses that can be paused if needed, but avoid cutting muscle (talent) in panic mode.
4Building Financial Resilience. Beyond runway, build backup systems: credit facilities (arrange these when you don't need them, not during a crisis), diverse revenue sources (retainers for stability, projects for growth), and client diversification (no single client over 25% of revenue). Track leading indicators: pipeline value, proposal win rate, client satisfaction scores. Cash crises rarely appear overnight,there are always warning signs if you're watching the right metrics.

Common questions

Cash runway questions

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Real-time visibility into runway, scenario forecasting, and early warning systems so cash crunches never come as a surprise.

Get cash flow clarity See pricing

Cash flow & burn rate tool

How long until the cash runs out?

Run the calculator Talk to a cash-flow specialist

Three scenarios · instant results

Outstanding invoice timing baked in

Action recommendations included

Runway gaugeDanger · Caution · Healthy · Strong

Months of cash left

What it shows you

Runway in three views

Most agencies fail from cash flow, not profit. Knowing your runway, your burn rate, and what to do about it is the foundation of building an agency that lasts.

Scenario modelling

Best, expected, and worst case scenarios based on revenue volatility and payment timing variations.

Depletion forecasting

Know exactly when your cash depletes under each scenario, accounting for outstanding invoices and collection timing.

Action recommendations

Get specific recommendations based on your situation to extend runway and improve cash position.

Built by Alto Accounting — ACCA Chartered Accountants specialising in UK agencies

Instant Results

3 Scenarios

Agency Focused

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Current Cash Balance

Available cash in bank accounts

Monthly Fixed Costs

£/mo

Salaries, rent, subscriptions, etc.

Monthly Revenue

£/mo

Expected monthly income (average)

Outstanding Invoices

Total unpaid invoices owed to you

Average Payment Days

days

Average time clients take to pay invoices

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On the desk

Understanding Cash Runway for Agencies

1Why Runway Matters. Cash runway isn't just about survival,it's about strategic flexibility. Agencies with adequate runway can negotiate better client terms, make opportunistic hires when talent becomes available, pursue larger projects requiring upfront investment, and weather market downturns without panic decisions. Short runway forces reactive decisions: cutting too fast, accepting bad-fit clients, or underpricing to generate immediate cash. Every strategic decision you make is constrained by your runway. Understanding your number puts you in control.
2Calculating True Runway. Runway = (Available Cash + Collectable Invoices) / Monthly Net Burn. The key is being realistic about invoice collection timing. If your average payment days are 45, don't assume invoices will convert to cash in 30. Model worst case scenarios where clients pay late or revenue dips. Include all fixed costs: salaries (don't forget employer NI at 15% and pension), rent, software subscriptions, essential contractors. The number should be uncomfortable,that's how you avoid surprises.
3Extending Your Runway. The fastest lever is usually invoice collection. Offering 2% early payment discount for 14-day settlement can dramatically accelerate cash inflow. Review payment terms,if you're invoicing monthly in arrears with 30-day terms, you're effectively financing clients for 60+ days. Consider milestone billing for projects, upfront deposits for new clients, and retainer models for predictable income. On the cost side, identify non-essential expenses that can be paused if needed, but avoid cutting muscle (talent) in panic mode.
4Building Financial Resilience. Beyond runway, build backup systems: credit facilities (arrange these when you don't need them, not during a crisis), diverse revenue sources (retainers for stability, projects for growth), and client diversification (no single client over 25% of revenue). Track leading indicators: pipeline value, proposal win rate, client satisfaction scores. Cash crises rarely appear overnight,there are always warning signs if you're watching the right metrics.

Common questions

Cash runway questions

Keep going

Need help managing cash flow?

Cash flow systems for agencies that scale.

Real-time visibility into runway, scenario forecasting, and early warning systems so cash crunches never come as a surprise.

Get cash flow clarity See pricing

How we close your books

Why a specialist?

The agency cash-flow guide

Autumn Budget 2025

How long until the cash runs out?

Runway in three views

Scenario modelling

Depletion forecasting

Action recommendations

Cash runway questions

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Profitability calculator

Salary & dividend calculator

VAT registration calculator

Cash flow systems for agencies that scale.

How we close your books

Why a specialist?

The agency cash-flow guide

Autumn Budget 2025

How long until the cash runs out?

Runway in three views

Scenario modelling

Depletion forecasting

Action recommendations

Select Your Agency Type

Growing Agency

Established Agency

Boutique Agency

Startup Agency

Cash runway questions

Related tools

Profitability calculator

Salary & dividend calculator

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Cash flow systems for agencies that scale.

Select Your Agency Type

Growing Agency

Established Agency

Boutique Agency

Startup Agency

How long until the cash runs out?

Runway in three views

Scenario modelling

Depletion forecasting

Action recommendations

TL;DR

Cash runway questions

How many months of runway should my agency have?

Should I include outstanding invoices in my runway calculation?

What's the fastest way to extend runway?

How do the scenario models work?

What costs should I include in monthly fixed costs?

How much cash reserve should a marketing agency have?

What is gross burn vs net burn rate for agencies?

Can my agency be profitable but still run out of cash?

When should I worry about my agency's runway?

Related tools

Profitability calculator

Salary & dividend calculator

VAT registration calculator

Cash flow systems for agencies that scale.

How long until the cash runs out?

Runway in three views

Scenario modelling

Depletion forecasting

Action recommendations

TL;DR

Select Your Agency Type

Growing Agency

Established Agency

Boutique Agency

Startup Agency

Cash runway questions

How many months of runway should my agency have?

Should I include outstanding invoices in my runway calculation?

What's the fastest way to extend runway?

How do the scenario models work?

What costs should I include in monthly fixed costs?

How much cash reserve should a marketing agency have?

What is gross burn vs net burn rate for agencies?

Can my agency be profitable but still run out of cash?

When should I worry about my agency's runway?

Related tools

Profitability calculator

Salary & dividend calculator

VAT registration calculator

Cash flow systems for agencies that scale.

Select Your Agency Type

Growing Agency

Established Agency

Boutique Agency

Startup Agency