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Financial Glossary for Business Owners

Clear, no-jargon definitions of the financial terms every founder and business owner should understand. Written for operators, not accountants.

Runway Fundamentals

Cash Flow

The net movement of cash in and out of a business over a specific period, the difference between cash received and cash spent.

Cash Flow Positive

A state where a company's cash inflows exceed its outflows, more money is coming in than going out each month.

Cash-Out Date

The projected date when a company will run out of cash based on current spending and revenue patterns.

Default Alive

A startup that will become profitable before running out of cash at its current growth rate and expense level, without needing additional funding.

Default Dead

A startup that will run out of cash before reaching profitability unless it raises more money, cuts costs, or accelerates revenue growth.

Free Cash Position

Total cash minus tax obligations minus deferred revenue minus short-term payables. The cash you can actually deploy for operations.

Operational Runway

The number of months a company can continue operating based on true available cash (after obligations) divided by net burn rate.

Runway Compression

The phenomenon where effective runway decreases faster than expected due to hidden obligations, rising burn, delayed revenue, or unplanned expenses.

Runway Extension

Any action that increases the number of months a startup can operate before running out of cash, through cost cuts, revenue growth, or new funding.

Startup Runway

The number of months a startup can continue operating before it runs out of cash, based on its current burn rate and available capital.

True Cash Position

The cash actually available for operations after subtracting upcoming tax obligations, deferred revenue, and committed payroll from the bank balance.

Revenue Metrics

Annual Recurring Revenue (ARR)

The annualized value of recurring revenue from subscriptions, calculated as MRR multiplied by 12.

Churn Rate

The percentage of customers or revenue lost over a given period, a measure of how well a business retains its existing base.

Cohort Retention

The percentage of customers from a specific acquisition group who remain active or paying over time, measured by signup or contract month.

Collection Speed

The average number of days between marking a deal as Won and receiving the first payment. Calculated per client from actual receipt history.

Committed MRR

Monthly recurring revenue from signed contracts and active subscriptions, deals that are closed and generating predictable income.

Deal Risk Score

A composite rating (Low/Medium/High) combining payment speed, revenue concentration, and outstanding amount relative to monthly burn.

Insurance Reimbursement

Payment from insurance companies for services rendered, typically arriving 14 to 90 days after the procedure in dental and medical practices.

Milestone Billing

Invoicing clients at predetermined project milestones rather than on a recurring schedule, creating lumpy cash inflows.

Monthly Recurring Revenue (MRR)

The predictable, recurring revenue a company earns each month from active subscriptions or contracts.

Production vs Collection

The difference between revenue generated by performing services and cash actually collected, often creating a 30 to 90 day gap in healthcare practices.

Retainer

A recurring fee paid by a client to retain ongoing access to services, providing predictable revenue similar to subscriptions.

Revenue

The total income a business generates from its products or services before any expenses are deducted.

Revenue Concentration

The percentage of total revenue attributable to a single client or customer, a key indicator of dependency risk.

Revenue Model

A framework that defines how a business generates income, including pricing structure, customer segments, and revenue streams.

Stripe

A payment processing platform used by businesses to accept subscriptions, one-time payments, and manage billing infrastructure.

Subscription Revenue

Recurring revenue from customers who pay on a regular cycle (monthly or annual) for ongoing access to a product or service.

Weighted Pipeline

A forecast metric where Pipeline deals count at 50% probability and Won deals at 100%. Answers: if half your pipeline closes, how much revenue will you have?

Fundraising

Bridge Round

A smaller funding round designed to extend a startup's runway until it can raise a larger round or reach a specific milestone.

Cap Table

A capitalization table listing all of a company's shareholders, their ownership percentages, and the details of each equity round, the definitive record of who owns what.

Dilution

The reduction in existing shareholders' ownership percentage when new shares are issued, typically through fundraising or employee stock option grants.

Down Round

A funding round where a company raises capital at a lower valuation than its previous round, signaling that the company's value has decreased.

Investor Report

A structured summary of key financial metrics, runway, and business progress prepared for investors, board members, or advisors.

Post-Money Valuation

The value of a company immediately after receiving new investment, calculated as pre-money valuation plus the investment amount.

Pre-Money Valuation

The value of a company before receiving new investment, used to determine what percentage of the company investors will receive.

Seed Funding

The first significant round of external capital a startup raises, typically used to validate the product, build the initial team, and find product-market fit.

Series A

The first major institutional venture capital round, typically raised after a startup has demonstrated product-market fit and early traction.

Venture Debt

Debt financing for venture-backed startups that supplements equity fundraising, providing additional capital without the dilution of a traditional equity round.

Financial Planning

Advance Tax

Estimated tax payments made before the annual filing deadline, required when expected tax liability exceeds a threshold amount.

Board Deck / Investor Update

A regular presentation or report shared with the board of directors or investors, summarizing company performance, financial health, and strategic priorities.

Budget vs Actual

A comparison of planned financial targets against real results, revealing where spending and revenue deviated from expectations.

Capital Allocation

The process of deciding how to deploy available cash across hiring, tools, marketing, and reserves to maximize runway and strategic outcomes.

Cash Position Forecast

A day-by-day projection of your bank balance for the next 60 days, showing when cash will run out based on scheduled payroll, tool billing, tax deadlines, and expected client payments.

Change Order

A modification to the original construction contract scope, cost, or timeline that affects project profitability and cash flow timing.

Connected Cash Flow

RunwayCal's architecture where financial events flow through automatically. Recording a receipt increases bank balance, runway, and Mission Control, all from one action.

CSV (Comma-Separated Values)

A plain-text file format for tabular data, commonly used to export and import financial records, team lists, and transaction history.

Data Extraction

The automated process of reading structured or semi-structured data from uploaded documents such as bank statements to reduce manual entry.

Deterministic Finance

A financial systems approach where every computed metric traces directly to user-defined or system-synced inputs. No probabilistic forecasting, no AI-generated projections.

Draw Schedule

A predetermined payment schedule for construction projects where contractors submit periodic draw requests based on work completed.

Financial Alert

An automated notification triggered when a financial metric crosses a defined threshold, such as runway dropping below a target or a shortfall appearing in the cash forecast.

Financial Insight

A computed observation about your financial position that highlights a pattern, risk, or opportunity requiring attention, derived from your defined inputs.

Financial Model

A structured representation of a company's financial performance, combining revenue, expenses, and cash flow projections to forecast the future.

Financial Operating System

An integrated platform that connects cash, runway, burn, revenue, and planning into one operational layer for day-to-day financial decisions.

Financial Snapshot

A point-in-time summary of key financial metrics such as cash balance, runway, burn rate, and revenue, used for quick status checks and reporting.

Forecast Accuracy

A measure of how closely financial projections match actual results, indicating how well a company understands its own financial dynamics.

FP&A (Financial Planning & Analysis)

The discipline of budgeting, forecasting, variance analysis, and scenario modeling to support business planning and decision-making.

Freight Factoring

Selling unpaid freight invoices to a factoring company for immediate cash at a discount, typically 2 to 5%.

GST (Goods and Services Tax)

A value-added tax levied on goods and services in many countries, collected by businesses and remitted to tax authorities on a defined schedule.

Headcount Planning

The process of determining how many people to hire, when to hire them, and how each hire impacts the budget and runway.

Hiring Plan

A schedule of planned hires with roles, start dates, and compensation, used to model payroll growth and runway impact before offers are made.

Key Performance Indicator (KPI)

A measurable metric that indicates how well a company is performing against its most important objectives, the numbers that actually drive decisions.

Payment Terms

Conditions under which a seller expects payment, such as Net 15, Net 30, or Net 60, directly affecting cash collection and disbursement timing.

PDF (Portable Document Format)

A fixed-layout document format commonly used for bank statements, invoices, and financial reports that preserves formatting across systems.

Progress Billing

Invoicing based on percentage of work completed rather than fixed milestones, common in construction and large service projects.

Retainage

A percentage of contract value withheld from each payment until project completion, typically 5 to 10%, creating a gap between earned revenue and available cash.

Scenario Analysis

A financial planning technique where you model different possible futures to understand how decisions affect outcomes like runway and cash flow.

Scenario Planning

The practice of modeling multiple future financial outcomes based on different assumptions about hiring, revenue, and spending.

Shortfall Detection

An alert triggered when RunwayCal's cash forecast projects your bank balance dropping below zero on a specific future date. Includes the cause and suggested mitigation.

Statement of Work

A document defining project scope, deliverables, timeline, and payment terms between a service provider and client.

Tax Obligation

Any amount owed to tax authorities on a future date, including income tax, GST, payroll taxes, and withholding remittances.

TDS (Tax Deducted at Source)

Tax withheld at the point of payment on certain transactions, remitted to authorities by the payer on behalf of the recipient.

What-If Analysis

A targeted financial modeling technique that changes one input at a time to measure its effect on runway, burn, or cash position.

Financial Statements

Accounts Payable

Money owed by a business to suppliers and vendors, representing committed cash outflows that reduce true cash position.

Accounts Receivable Aging

Categorization of outstanding receivables by how long they have been unpaid, typically in 0-30, 31-60, 61-90, and 90+ day buckets.

Bank Statement

A periodic record from your bank listing account activity, opening balance, closing balance, and transactions over a statement period.

Bill of Materials

A list of raw materials, components, and quantities needed to manufacture a product, representing cash committed before revenue.

Cash Conversion Cycle

The number of days between paying for inputs and receiving customer payment, typically 60 to 120 days in manufacturing.

Cash Flow Statement

A financial statement that tracks the actual movement of cash in and out of a business over a period, organized by operating, investing, and financing activities.

Cost of Goods Sold

Direct costs of producing goods sold, including raw materials, direct labor, and manufacturing overhead, determining gross margin.

Cost of Goods Sold (COGS)

The direct costs attributable to delivering your product or service, for SaaS, this typically includes hosting, infrastructure, and payment processing.

Deferred Revenue

Cash collected from customers for services not yet delivered, recorded as a liability until the revenue is earned.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of operating profitability that strips out non-operational costs.

Financial Consolidation

The process of combining financial data from multiple entities or locations into a single group-level view, eliminating intercompany transactions.

Gross Margin

The percentage of revenue remaining after subtracting the direct cost of delivering your product or service, a measure of fundamental business efficiency.

Multi-Entity

Operating or holding more than one legal business entity, such as separate companies, subsidiaries, or regional branches under a parent organization.

Net Income

The total profit (or loss) after all expenses, taxes, and costs have been subtracted from revenue, the "bottom line" of the P&L.

P&L (Profit and Loss)

A financial statement summarizing revenue, costs, and profit over a period, showing whether the business earned or lost money on an accrual basis.

Profit and Loss Statement (P&L)

A financial statement that summarizes revenue, costs, and expenses over a period, showing whether the company made or lost money.

Work in Progress

Partially completed goods on the production floor, representing cash spent on materials and labor not yet converted to revenue.

Working Capital

The difference between current assets and current liabilities, a measure of a company's short-term financial health and ability to cover near-term obligations.

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