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How much cash do I need in the bank to survive three months without sales?

Take the cash costs that keep running when sales stop, multiply them by the number of months you want to cover, then subtract the money already on its way in: that is the cash you need in the bank. Costs that keep running are your fixed costs plus the slice of variable costs you cannot switch off. With no sales at all, your cash balance divided by that monthly burn is your runway in months. Many advisers suggest holding three to six months of operating costs, so three months is the floor, not the target.

Updated on 22 September 2026

Run it with your own numbers

Monthly fixed cash costs (rent, permanent wages, insurance, loan payments) currency Monthly variable cash costs at normal trading (stock, shipping, commissions) currency Share of variable costs you still pay with no sales % Months you want to cover with no sales months Cash still arriving in that period (unpaid invoices, deposits already agreed) currency Cash in the bank today, available to spend currency

Monthly cash burn with no sales6,600.00 currency

Cash you need in the bank to cover those months15,800.00 currency

Amount you are short today6,800.00 currency

Months your current cash actually lasts1.97 months

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How it is calculated

List every cash cost that leaves the bank each month, split into fixed and variable.
Decide what share of the variable costs you would still pay if sales went to zero, and enter it as a percentage.
Add the fixed costs to that share of variable costs: this is your monthly burn with no sales.
Multiply the monthly burn by the number of months you want to cover.
Subtract the cash you are still certain to collect in that period, such as invoices already issued.
The result is the cash you need sitting in the bank; compare it with what you hold today to see the gap.
Divide your available cash plus expected collections by the monthly burn to see how many months you really have.

Monthly cash burn with no sales = Monthly fixed cash costs (rent, permanent wages, insurance, loan payments) + Monthly variable cash costs at normal trading (stock, shipping, commissions) × Share of variable costs you still pay with no sales ÷ 100
Cash you need in the bank to cover those months = Monthly cash burn with no sales × Months you want to cover with no sales - Cash still arriving in that period (unpaid invoices, deposits already agreed)
Amount you are short today = max(0, Cash you need in the bank to cover those months - Cash in the bank today, available to spend)
Months your current cash actually lasts = (Cash in the bank today, available to spend + Cash still arriving in that period (unpaid invoices, deposits already agreed)) ÷ Monthly cash burn with no sales

An example

Monthly fixed cash costs (rent, permanent wages, insurance, loan payments): 6,000 currency · Monthly variable cash costs at normal trading (stock, shipping, commissions): 3,000 currency · Share of variable costs you still pay with no sales: 20 % · Months you want to cover with no sales: 3 months · Cash still arriving in that period (unpaid invoices, deposits already agreed): 4,000 currency · Cash in the bank today, available to spend: 9,000 currency.

Result: Monthly cash burn with no sales: 6,600.00 currency · Cash you need in the bank to cover those months: 15,800.00 currency · Amount you are short today: 6,800.00 currency · Months your current cash actually lasts: 1.97 months.

Worth keeping in mind

Use cash out of the bank, not accounting profit: depreciation and unpaid invoices do not move cash.
The share of variable costs you keep paying is a judgement call; test it at 0%, 20% and 50% to see the range.
Money owed to you is not cash until it lands; only count what you are confident will be paid on time.
Three months is a common floor, but seasonal or slow-paying trades usually need six.
If tax or duty payments fall inside the period, add them to fixed costs at the rate that applies to you.

Sources

Text drafted with the assistance of artificial intelligence, from the sources listed, and checked against the worked example. It is a tool for orientation: for tax or contractual decisions, your accountant has the last word.

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