Agency Runway CalculatorUK Cash Flow & Burn Rate Tool 2026

Aim for 6-12 months runway as a healthy target. Under 3 months is dangerous,you have limited options if you lose a major client or face unexpected costs. 3-6 months is acceptable but uncomfortable. 12+ months gives you maximum strategic flexibility and negotiating power. The right target depends on your revenue predictability and risk tolerance.

Yes, but be realistic about timing. Include outstanding invoices in your available cash calculation, but factor in your average payment days. If clients typically pay in 45 days, don't count that cash as immediately available. The calculator models this by spreading invoice collections based on your stated payment terms. For worst-case planning, you might only count 70-80% of outstanding invoices as collectible.

Accelerating invoice collection is usually the fastest lever. Offer 2% discount for 14-day payment instead of 30 days. Invoice immediately on project milestones rather than waiting for completion. Review payment terms with slow-paying clients. On the cost side, pause non-essential expenses, but avoid cutting talent in panic,that damages your ability to recover. Consider invoice factoring or credit facilities as short-term bridges.

The calculator models three scenarios: Worst case assumes revenue drops 30% and payment terms extend 50% (clients pay slower). Expected uses your inputs as-is. Best case assumes revenue increases 20% and payment terms improve 20% (faster collection). These scenarios help you understand your range of outcomes and plan accordingly. Always ensure you can survive the worst case scenario.

Include all costs you can't easily eliminate: salaries and wages (don't forget 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. The goal is to understand your minimum monthly outflow,what it costs to keep the lights on.

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. However, best-in-class agencies maintain 6-12 months (£300k-£600k for our example). The exact amount depends on revenue predictability,retainer-heavy agencies can operate with less reserve than project-based agencies with lumpy income. Factor in seasonality: if Q1 is typically slow, ensure you have extra buffer entering that period.

Gross burn rate is your total monthly spending regardless of revenue,if you spend £80k/month on salaries, rent, and operations, that's your gross burn. Net burn rate accounts for revenue: if you spend £80k but bring in £70k, your net burn is £10k/month. For runway calculations, net burn is what matters because it shows how fast you're actually depleting cash reserves. A profitable agency has negative net burn (making money), while a scaling agency might have positive net burn (spending more than earning) temporarily.

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. Fast-growing agencies are especially vulnerable: you hire staff to deliver work, pay them monthly, but wait 30-60 days for client payment. This timing gap can create a cash crisis even when your P&L shows profit. Always track cash position separately from profitability.

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 to watch: losing a major client (especially 15%+ of revenue), consistently slow collections, declining sales pipeline, or unexpected large expenses. Don't wait until cash is critical,it takes time to implement changes like renegotiating payment terms, reducing costs, or securing credit facilities. Check runway monthly and model scenarios quarterly to spot problems early.