28 SEPTEMBER 2026 • 4 MIN READ
Extending your cash runway (or buffer)
You’ve probably heard the phrase “cash is king” a million times and that’s probably no truer than in business. While it might not look like physical bank notes in the pure sense of the word, having cash in the bank is what helps keep your business running.
This is why understanding your cash runway/buffer and the levers you can pull to extend them are important. Your cash runway is how long your business could survive on current cash reserves, assuming revenue and expenditure remain unchanged. Meanwhile, your cash buffer is the safety net of how long you could keep going if revenue stopped altogether.
Businesses that are facing challenging or uncertain times often consider extending their runway or buffer so they’re well-equipped for any hurdles that may come. There are three ways to do this: increase revenue, reduce expenses and/or inject capital. Most businesses look to do a combination of all three.
Increasing revenue (cash inflows)
Improving your cash inflow isn’t just about generating more sales. It can involve freeing up liquidity and exploring other opportunities to earn more income or change how you’re collecting that income.
To improve your cash inflow:
- Speed up your accounts receivable: This can be through early payment discounts, tightening payment terms or even improving follow-up on unpaid invoices.
- Reduce inventory: Sell off stock that’s collecting dust. Even if you sell it at cost, that’s cash that’s now in the bank rather than on a shelf.
- Sell redundant assets: If you have equipment or tools that aren’t needed for core operations, selling them can inject much-needed cash into the business. Consider it spring cleaning for your business.
- Increase prices: If costs keep climbing and you haven’t increased your prices in a while, it might be time to consider it.
- Drive more sales to existing customers: Upsell additional services, cross-sell complementary products or increase order frequency.
- Consider new business or payment models: Explore alternative revenue streams or pricing structures. This could be a subscription model instead of one-off sales, a service tier you didn’t have before, or finding ways to still generate sales during off-peak periods.
- Focus on high-margin offerings or markets: Not all revenue is equal, so consider letting go of revenue streams that aren’t pulling their weight and refocus on ones that are.
Reducing expenses (cash outflows)
Cutting costs to extend your runway or buffer doesn’t mean your business needs to suffer. It just means being more deliberate with what you’re cutting or adjusting.
To improve your cash outflow:
- Reduce nonessential spending: These are expenses that don’t directly affect operations. For example, travel, conferences, or team celebrations.
- Downgrade or cancel software subscriptions: Most businesses have software tools that are no longer being used or are costing them more than it should.
- Pause major hires: Hiring freezes or even a redundancy (which may be a difficult decision) can have a dramatic impact. While not always the easiest decision or conversation to have, these decisions are sometimes necessary.
- Renegotiate supplier terms: Extending payment terms by 15-30 days or negotiating volume discounts on fast-moving products can make a small but useful difference.
- Review fixed costs: Are you still paying the best rate possible for your insurance, internet, and power? In the same way you typically audit these in your personal life, it’s a good idea to periodically review these for your business too.
- Delay planned purchases: Postponing non-urgent purchases or equipment upgrades can free up some short-term cash and give you additional breathing room. You can always reassess priorities once your runway is more comfortable.
Injecting capital
Sometimes extending your runway or cash buffer requires external capital. This can include:
- Owner injection: If you’re able to, putting some of your own money back into the business can buy you some breathing room without the complexity of outside financing.
- Crowdfunding or capital raises: Consider getting additional funding via a crowdsourcing campaign or from angel or venture capital investors.
- Grants and subsidies: See what government or local support is available. Sometimes there is industry-specific funding available or grants for particular types of projects.
- Bank finance or alternative lending: Lines of credit or loans can help you in the interim while you focus on improving your runway through some of the other areas we’ve mentioned. You could also consider invoice financing (finance based on unpaid invoices) as a short-term measure.
Pulling it together
We won’t lie and say extending your runway or cash buffer is easy. It can take some serious effort and sometimes difficult conversations with team members, suppliers or creditors. However, the payoff can be significant. Any move that makes you feel less stressed about surviving the short-term and more confident that the business is ok and can weather any storm is a win in our books.
If you’re unsure which levers to pull, your accountant is a valuable resource to help. They can model different scenarios and provide advice on which actions will have the biggest impact.
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