True Cash Position
The cash actually available for operations after subtracting upcoming tax obligations, deferred revenue, and committed payroll from the bank balance.
True Cash Position shows available cash after deducting obligations from your bank balance.
What is True Cash Position?
True Cash Position is the cash actually available for operations after subtracting upcoming tax obligations, deferred revenue, and committed payroll from the bank balance.
True Cash Position = Bank Balance - Tax Obligations - Deferred Revenue - Committed Payroll.
This gives founders a realistic view of what cash they can actually deploy, rather than the misleading number shown by their bank account. A company might show $500,000 in the bank but only have $280,000 available after accounting for next quarter's tax payment, customer prepayments not yet earned, and this month's committed payroll.
Why it matters
Most founders look at their bank balance and believe that is how much money they have. It is not. Tax obligations accumulate silently. Deferred revenue belongs to customers until the service is delivered. Committed payroll is a liability, not discretionary cash.
Decisions made on bank balance alone can lead to hiring when you cannot actually afford it, delaying fundraising because you think you have more runway than you do, or committing to expenses that push you into a cash crisis.
Formula
True Cash Position = Bank Balance - Tax Obligations - Deferred Revenue - Committed Payroll
Example
A startup has $500,000 in the bank. Upcoming quarterly tax obligation: $45,000. Deferred revenue from annual contracts: $120,000. This month committed payroll: $55,000. True Cash Position = $500,000 - $45,000 - $120,000 - $55,000 = $280,000. The founder has 44% less available cash than the bank balance suggests.
How RunwayCal helps
RunwayCal computes True Cash Position automatically by subtracting tax obligations, deferred revenue, and committed payroll from your bank balance. Mission Control shows this number alongside your bank balance so you always see both.
Common mistakes
- 1Treating bank balance as available cash without deducting obligations
- 2Ignoring deferred revenue as a liability (it represents undelivered service)
- 3Forgetting that payroll is committed even if it has not been paid yet
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RunwayCal computes your True Cash Position automatically, accounting for tax obligations, deferred revenue, and committed payroll.
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