How do I manage cashflow so my startup doesn't run out of money?

Question

Accepted Answer

Quick answer. Cash and profit are not the same thing. Watch two numbers — how much cash you burn each month, and how many months you have left — plan them 12 to 18 months ahead, and start raising while you still have six months in the bank. The mistake most founders make. They look at a healthy-looking P&L and assume the bank account is fine. But revenue you've booked isn't cash you've collected — and a growing order book can drain cash faster than a shrinking one if customers pay you slowly. Founders often notice this at two months of runway, when the only choices left are bad ones. The two numbers to live by. burn = cash going out – cash coming in, each month. runway = cash in the bank ÷ monthly burn. Say you have ₹1.2 Cr, spend ₹22 L a month and collect ₹7 L. Your burn is ₹15 L, so your runway is 8 months. Check every hire, ad spend and stock order against that number. Keep two views of cash. A 13-week view catches short-term crunches — a big payment slipping, a tax bill landing. A 12–18 month view links to your raise: it should show exactly how much you need, to hit which milestone, with a cushion. Also watch the gap between when you pay suppliers and when customers pay you — that gap is where growth quietly eats your cash. Our honest take. Most startups don't die because of a bad product. They die because they run out of cash at the wrong time. Raising with under three months left means negotiating from a weak spot — that's when founders sign things they later regret. A raise takes 3 to 6 months to close, so start at six-plus months, not at empty.