What is Burn Rate?
How fast you are spending cash each month - the number that, with your balance, sets your runway.
Burn Rate: definition
For any business operating at a loss - especially startups - burn rate is a survival metric. Net burn (cash out minus cash in) tells you how much your bank balance shrinks each month; divided into your cash on hand, it gives your runway. Watching burn and its drivers is how founders avoid the cliff of running out of cash.
- Gross burn: total monthly cash operating costs
- Net burn: gross burn minus monthly revenue (the real drawdown)
- Burn multiple: net burn ÷ net new ARR (capital efficiency of growth)
- Burn plus cash balance determines runway
How Fintra handles it
Fintra tracks gross and net burn live from actual cash movement on the ledger, not a manual month-end tally, and pairs them with runway. Scenario forecasts show how a hiring plan or revenue miss changes burn and the cash-out date, and AI variance alerts flag when burn drifts above plan so it can be corrected early.
Worked example
Frequently asked questions
What is the difference between gross and net burn?
Gross burn is your total monthly cash operating spend. Net burn subtracts monthly revenue, showing the actual reduction in your cash balance. Net burn drives runway; gross burn shows the size of the cost base you could cut in a downturn.
What is a healthy burn rate?
There is no universal number - it depends on your cash balance, growth, and how efficiently that spend produces revenue. The burn multiple (net burn ÷ net new ARR) is a common efficiency gauge; under ~1.5x is generally considered strong for a growing startup.
How does burn rate relate to runway?
Runway = cash on hand ÷ net burn. If you have $1.6M and burn $160,000/month net, you have 10 months. Cutting burn or growing revenue extends runway. Fintra keeps both live so the relationship is always current.
Does Fintra track burn rate automatically?
Yes. Fintra computes gross and net burn from live cash flow, pairs them with runway, and models how plan changes affect the cash-out date - with alerts when burn exceeds plan.
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