Forecast cash and runway before your Reg CF offering

Build the forecast around payment dates

A company can have growing sales and still run short of cash. Customers may pay after payroll is due. Inventory deposits can leave the bank account months before the related sale. A profitable contract may require cash the business does not yet have.

A monthly cash forecast shows those timing differences. Begin with available company cash, add expected receipts, subtract expected payments, and carry the ending balance into the next month. For a business close to a cash shortfall, also use a weekly view for the near term.

Use this model to decide how much financing you need and when. It also helps explain financial condition to investors. Rule 201(s) addresses liquidity, capital resources, and the effect of offering proceeds on the business.

Keep forecasts separate from financial statements

Historical financial statements report past periods under the applicable accounting requirements. A forecast describes management’s assumptions about future cash. A spreadsheet of expected sales does not replace the required financial statements, review, or audit.

Rule 201(t) requires financial statements prepared under U.S. generally accepted accounting principles. The financial statements guide explains the required assurance levels and periods.

Your CPA can help reconcile the starting forecast balances to the company’s records. Management remains responsible for commercial assumptions such as customer demand, hiring, pricing, and collection dates. An accountant’s work on historical statements does not automatically validate projected growth.

Use a monthly cash worksheet

This fictional company’s forecast starts with $180,000 of unrestricted cash. Amounts are illustrative business assumptions, not Issuance Express results or pricing. The company tentatively models an offering closing in month two. That is a planning assumption, not a standard launch or closing timetable.

Cash item	Month one	Month two	Month three
Opening available cash	$180,000	$145,000	$310,000
Customer cash receipts	$25,000	$30,000	$35,000
Operating cash payments	($60,000)	($65,000)	($70,000)
Equipment purchases	$0	$0	($25,000)
Assumed net offering cash received	$0	$200,000	$0
Ending available cash	$145,000	$310,000	$250,000

Parentheses represent cash outflows. Each ending balance equals opening cash plus receipts and financing, less payments. Month three begins with month two’s ending balance.

In your worksheet, split operating payments into payroll, suppliers, rent, taxes, debt service, professional work, and other material categories. Keep capital purchases separate so the team can see large discretionary commitments.

The offering line uses assumed net cash available at closing after the offering-related costs deducted in that scenario. Record costs paid before closing in the month actually paid and avoid deducting them again. Reconcile this line to your offering budget and use-of-proceeds plan.

Treat fundraising cash as conditional

Until a closing occurs, the offering cash remains an assumption. An expression of interest, a started investment, and a funded commitment are different stages. Cancellations and closing requirements can change the amount and timing ultimately received.

Issuance Express operates the Reg CF funding portal and coordinates escrow workflows and eligible closings. A qualified third-party escrow agent holds investor funds. Your company cannot spend those funds as ordinary operating cash while they remain in escrow.

Keep a forecast with no new offering proceeds beside the fundraising case. In the example, removing the assumed month-two receipt produces ending balances of $145,000, $110,000, and $50,000. The difference makes the company’s financing dependency visible.

If the plan requires a bridge loan, record it separately with its availability, conditions, repayment dates, and interest. A hoped-for facility is not cash already available.

Use runway as a check on the monthly model

Runway is a rough estimate of how long available cash lasts at a stated rate of cash consumption. If a company has $180,000 and consistently spends $35,000 more than it collects each month, the simple estimate is approximately 5.1 months.

That calculation assumes no new financing, no large one-time payments, and unchanged net cash consumption. It does not capture the equipment purchase or changing payments in the worksheet above.

Define your calculation when you discuss runway. State the cash balance date, what cash is available, which expenses are included, and the assumed monthly net outflow. A reserve management intends to preserve should have a clear treatment. Do not count restricted cash or customer funds that the business cannot use.

Test delays and define the response

Create scenarios by changing specific assumptions. A useful downside case names the change rather than reducing every number by an arbitrary percentage.

Changed assumption	What to inspect	Possible management response to evaluate
Closing occurs later	Lowest cash balance before proceeds arrive	Delay discretionary purchases or arrange confirmed interim financing.
Customers pay later	Collection dates and near-term obligations	Reduce inventory commitments and improve collection follow-up.
Only the minimum closes	Funded milestones and remaining financing gap	Use the minimum plan and defer expansion hiring.
Supplier costs increase	Purchase commitments and reserve needs	Requote the project and reassess its scope.
Sales take longer to develop	Payroll and recurring spending	Stage hires against observable customer demand.

Choose an action date before cash reaches zero. Include approval time, notice periods, and contractual commitments. A forecast is useful when management can act on it while choices remain.

Explain assumptions without promising results

If forecasts appear in public offering materials, identify them as forecasts, date them, and explain their material assumptions and risks. Separate signed customer orders from pipeline opportunities. Distinguish a planned hire from an employee already on staff.

Coordinate public presentations with Issuance Express and counsel so Form C, the offering page, and permitted communications agree. Your company leads outreach. Neither a forecast nor portal support promises investor demand or a fundraising outcome.

Refresh the operating model against actual cash movements while the offering runs. Escalate important changes to the offering team. Rule 203 requires amendments for material disclosure changes. Use the model to identify the issue early, then coordinate the appropriate public update rather than letting the published explanation become stale.

Related reading

• Reg CF financial statements: certification, review, or audit?
• What does a Reg CF offering cost?
• Build a Reg CF use-of-proceeds plan that works at the minimum