Formula
net burn = cash out − cash in gross burn = total cash out
Burn rate
Burn rate is the pace at which a company spends its cash reserves, usually expressed as a monthly figure.
Worked example
A company spending €52,000 a month while collecting €28,000 has a gross burn of €52,000 and a net burn of €24,000.
Two numbers share the name, and confusing them is the most common mistake. Gross burn is everything leaving the account. Net burn subtracts the cash coming in, and it is the one that determines runway.
Gross burn still matters, because it is the number you control directly. Revenue can fall; your rent cannot be renegotiated the same month. Investors usually ask for both, and a company that quotes only net burn during a good quarter is describing its best case.
Related terms
Keep this number live
Plainhub computes burn rate from money you record in plain words, so it is current when you need it rather than the night before a board meeting.
Build your model