Free Cash Position
Total cash minus tax obligations minus deferred revenue minus short-term payables. The cash you can actually deploy for operations.
Free Cash Position shows the cash you can actually deploy for operations.
What is Free Cash Position?
Free Cash Position is the money you can actually spend on operations. It starts with your total cash in Treasury and deducts everything you owe:
- Tax obligations (GST, payroll tax, advance tax due) - Deferred revenue (prepaid subscriptions, upfront payments for future work) - Short-term payables (vendor invoices, committed payments)
The result is Free Cash: the deployable capital that drives your runway calculation. Bank balance alone overstates this number because it includes money committed to obligations.
Why it matters
Most founders calculate runway from bank balance. But $500,000 in the bank with $80,000 in tax obligations, $60,000 in deferred revenue, and $40,000 in payables means only $320,000 is actually available. That's a 36% gap — often 2-5 months of runway difference.
Free Cash Position is the number that should drive every operational decision.
Formula
Free Cash Position = Total Cash - Tax Obligations - Deferred Revenue - Short-Term Payables
Example
Bank balance: $500,000. Tax obligations: $45,000. Deferred revenue: $60,000. Short-term payables: $35,000. Free Cash Position = $500,000 - $45,000 - $60,000 - $35,000 = $360,000.
How RunwayCal helps
RunwayCal computes Free Cash Position automatically by deducting tax obligations, deferred revenue, and payables from your Treasury balance. Mission Control displays True Cash Position prominently, and runway is calculated from this number, not raw bank balance.
Common mistakes
- 1Using bank balance instead of Free Cash Position for runway calculations
- 2Forgetting to deduct deferred revenue from prepaid customer payments
- 3Not including upcoming tax obligations in available cash assessments
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Know what you can actually spend
RunwayCal's Free Cash Position deducts obligations from bank balance to show your real deployable cash.
See Free Cash → Free