What is Gross Burn vs. Net Burn?
Two views of cash burn - everything you spend versus what you spend after revenue comes in.
Gross Burn vs. Net Burn: definition
Both measure how fast a company consumes cash, but from different angles. Gross burn is total operating outflow regardless of revenue - useful for understanding your cost base. Net burn subtracts cash inflows, showing the real drain on the bank balance and driving runway. A business can have high gross burn yet modest net burn if revenue is strong, which is why runway is calculated from net burn.
Gross and net burn
Gross Burn = Total Cash Operating Costs · Net Burn = Gross Burn − Cash Revenue
Runway (months) = Cash Balance ÷ Net Burn. If net burn is zero or negative (cash-flow positive), runway is effectively unlimited.
How Fintra handles it
Fintra tracks both gross and net burn from actual cash flows and derives runway from net burn, so the number reflects reality rather than a manual estimate. Because spend and revenue sit on one model, you can see which costs drive gross burn and model how a revenue ramp or a cost cut extends runway.
- Gross and net burn computed from actual cash flows
- Runway derived from net burn and current cash
- Scenarios show how revenue ramps or cost cuts extend runway
Worked example
Frequently asked questions
What is the difference between gross burn and net burn?
Gross burn is total cash spent in a period regardless of revenue. Net burn subtracts cash revenue, showing the actual decline in the cash balance. Net burn drives runway; gross burn reveals the size of the cost base independent of revenue.
Which burn rate is used for runway?
Net burn. Runway is cash on hand divided by net burn, because net burn reflects the real monthly cash drain after revenue. Using gross burn would understate runway by ignoring the cash the business brings in.
Can net burn be negative?
Yes - if cash revenue exceeds cash spending, net burn is negative, meaning the business is cash-flow positive and growing its balance rather than depleting it. In that case runway is effectively unlimited from operations.
Why track gross burn if net burn drives runway?
Because gross burn shows your fixed cost commitment independent of revenue. If revenue dips, net burn rises toward gross burn, so a high gross burn signals vulnerability. Watching both reveals how exposed runway is to a revenue shortfall.
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