Gross and net cash burn per month, and the runway it leaves.
Net burn per month
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Enter your figures to see the burn rate.
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Your burn rate is how fast a business uses up its cash while it spends more than it brings in. Enter what went out of and came into the account over a month, a quarter or a year, or simply the cash at the start and the end of the period. You get the gross and net burn per month, rounded to the penny, and, if you give the cash in the bank, the runway: how many months that cash lasts at the current net burn.
"Spending and income" starts from your bank statements or cash flow forecast: everything paid out, and everything received from customers. It gives both the gross and the net burn. "Two cash balances" only needs what was in the account at the start and at the end of the period, and gives the net burn, which is what runs the cash down. If you have no forecast yet, GOV.UK points to a free cash flow forecast template from Start Up Loans.
Money from investors, new loans and grants is not income from trading: counting it would hide the burn. Leave it out of cash received or, with the balances method, enter it under "Money raised or borrowed" so that it is taken back out. Repayments on loans you already have do leave the account, so they belong in cash paid out.
One month can mislead: an annual insurance premium, a VAT payment or a customer who pays late makes months uneven. Enter the totals for three or twelve months with the number of months, and the calculator gives the monthly average.
Gross and net burn are rounded to the nearest penny, with halves rounded away from zero. The runway is worked out before that rounding and rounded down to a tenth of a month, so that it never overstates the time left. Copy the workings in one click, export them as a CSV file or save them to Priostack.
Gross burn = cash paid out ÷ number of months.
Net burn = (cash paid out − cash received) ÷ number of months.
From two balances: net burn = (cash at start + money raised − cash at end) ÷ number of months.
Runway = cash in the bank ÷ net burn, in months.
Over July, August and September, a start-up paid out £90,000.00 and received £30,000.00 from customers. Its gross burn is £90,000.00 ÷ 3 = £30,000.00 a month, and its net burn (£90,000.00 − £30,000.00) ÷ 3 = £20,000.00 a month. With £150,000.00 in the bank, its runway is £150,000.00 ÷ £20,000.00 = 7.5 months. Working from balances instead, £210,000.00 on 1 July and £150,000.00 on 30 September give the same net burn of (£210,000.00 − £150,000.00) ÷ 3 = £20,000.00 a month, and the same runway of 7.5 months on the £150,000.00 left.
Gross burn is everything the business pays out in a month. Net burn takes away the cash received from customers, so it is what actually runs the bank balance down. A business paying out £62,500.00 a month and receiving £20,000.00 has a gross burn of £62,500.00 and a net burn of £42,500.00.
No. Equity raised, new borrowing and grants are financing: they lengthen the runway but say nothing about how fast the business itself uses cash. Leave them out of cash received, or enter them under "Money raised or borrowed" with the balances method. Repayments on existing loans, on the other hand, are cash paid out.
That cash came in faster than it went out over the period: the business generated cash rather than burning it. The calculator shows the figure with a minus sign and gives no runway, since the cash is not running down.
It assumes the net burn stays where it is. Hiring, a price rise, a lost customer or a large annual bill all move it, so work it out again whenever your figures change. It is rounded down to a tenth of a month so that it never overstates the time left.
A company that cannot pay its debts as they fall due can be found unable to pay its debts: in England, Wales and Scotland under section 123 of the Insolvency Act 1986, and in Northern Ireland under article 103 of the Insolvency (Northern Ireland) Order 1989. Once a company is insolvent, its creditors’ interests legally come before those of its directors and shareholders. Speak to an accountant or an insolvency practitioner well before the runway reaches zero.
This calculator gives general information, not legal, tax, financial or accounting advice. Its result is only as good as the figures you enter: before a decision about funding or the future of a company, speak to an accountant.
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