Burn Rate Calculator — Gross and Net Monthly Cash Burn

Background.

Burn rate is the speed at which a company consumes cash, and it is the single number that determines how long a business gets to keep making decisions. This calculator takes the cash flows of one reporting period — what went out, what customers actually paid in — and returns both burn figures that matter: gross burn, the total cash leaving the bank each month, and net burn, what is left after customer collections. Enter a quarter with $900,000 of cash operating costs, $30,000 of capital expenditure and $450,000 collected from customers, and the tool reports gross burn of $310,000 a month, net burn of $160,000 a month, and cash coverage of 48.39%.

The gross-versus-net distinction is not pedantry, and confusing the two is the most common error in startup financial reporting. Andreessen Horowitz's "16 Startup Metrics" states it precisely: gross burn "only looks at your monthly expenses + any other cash outlays", while net burn is "the true measure of amount of cash your company is burning every month" once incoming cash is netted off. Gross burn is your exposure — the number that survives if every customer cancels tomorrow. Net burn is your consumption — the number a runway calculation divides into. A company with $310,000 of gross burn and $150,000 of monthly collections is a very different business from one with $160,000 of gross burn and no revenue at all, even though both burn $160,000 net.

One sign convention needs stating before you read the result. a16z writes the formula as revenue minus gross burn, which produces a negative number while a company is burning. Every board deck and every operator says the opposite — "we burn $160k a month" — so this calculator uses the operator convention: net burn = gross burn − cash collected, with a positive number meaning cash is being consumed and a negative number meaning the business generated cash. The status line spells out which side of zero you are on so the sign can never be misread.

The second thing to get right is the input labelled cash collected from customers. It is not revenue, and it is not bookings. Under ASC 606 a SaaS company recognises subscription revenue ratably over the service term, but the cash for an annual contract usually arrives in a single lump on day one. A company can therefore collect $1.2 million in January and recognise only $100,000 of it as revenue that month. Burn rate is a bank-account measure, so this calculator wants the $1.2 million, in January. Equally, revenue recognised on an invoice a customer has not yet paid does nothing for your burn until the money clears.

What this page deliberately does not do is tell you how long the cash lasts. Runway is a stock divided by a flow, and the flow is what you are computing here; enter your cash balance in the runway calculator instead, using the net burn figure this page produces. Nor does burn rate say anything about whether the burn is productive. A company burning $160,000 a month to add $500,000 of new ARR per quarter is in a completely different position from one burning the same amount and growing nothing — that is what David Sacks' burn multiple and the sales-efficiency ratios measure, and burn rate alone cannot distinguish them.

Finally, choose the period honestly. A single month is noisy: annual insurance premiums, quarterly payroll-tax settlements, a hardware purchase and a legal bill all land in one month and vanish from the next. A quarter is the shortest period most boards will accept as representative, and a trailing three-month average is the convention. Two horizons make burn rate a formal reporting matter rather than a management nicety: SEC Regulation S-K Item 303(b)(1) requires registrants to discuss liquidity separately for "the next 12 months" and "beyond the next 12 months", and FASB ASC 205-40 requires management to evaluate, every reporting period, whether substantial doubt exists about the entity's ability to meet its obligations within one year of the financial statements being issued. Both of those assessments start with a defensible burn rate.

What is burn rate calculator?

Burn rate is the amount of cash a company consumes per unit of time, conventionally stated per month. It exists in two forms. Gross burn is the total cash paid out over a period — payroll, rent, cloud and software, marketing, contractors, capital expenditure and any other cash outflow — divided by the number of months in that period; it ignores all incoming cash. Net burn subtracts the cash collected from customers over the same period, giving the amount by which the bank balance actually falls each month from operations. Burn rate is a cash-flow measure, not an accounting one: it is computed from money that moved, so it excludes non-cash charges such as depreciation, amortisation and stock-based compensation, and it counts capital expenditure in full in the month it is paid rather than spreading it over an asset's useful life. It is not a GAAP or IFRS measure and no standard-setter defines it, which is precisely why the SEC's 2020 interpretive guidance on key performance indicators requires a registrant presenting a metric like burn rate to disclose how it is calculated and to flag any change in that calculation. Financing inflows — a venture round, a loan drawdown, a grant — are excluded by convention, because including them would make a company look like it had stopped burning cash on the day it raised money.

How to use this calculator.

1. 01Pick a period and stick to it. A quarter is the usual choice; a single month is too noisy because annual insurance, tax settlements and hardware purchases all land unevenly. Enter the number of months in the first field.
2. 02Enter every operating dollar that left the bank account during that period — payroll and payroll taxes, rent, cloud hosting, software subscriptions, advertising, contractors, travel. Take these from the cash side, not the accrual side: exclude depreciation, amortisation and stock-based compensation, because no cash moved.
3. 03Enter capital expenditure separately. Servers, laptops, leasehold improvements and capitalised internal software never appear as operating expenses, but they drain the account, so gross burn must include them.
4. 04Enter any other cash outflows: debt principal and interest, tax settlements, legal settlements. Do not enter money you raised — financing inflows are deliberately excluded so a fundraise does not make your burn look better than it is.
5. 05Enter the cash you actually collected from customers over the period. Not bookings, not billings, not recognised revenue — the money that cleared. An annual prepayment counts in full in the period it arrived.
6. 06Read the two burn figures together. Gross burn is your cost of existing; net burn is what the bank balance actually loses each month. Take the net burn figure to the runway calculator with your cash balance to find out how long you have.

The formula.

Two sums and two divisions. Gross burn for the period is the sum of cash operating costs, capital expenditure and other cash outflows; dividing by the number of months gives gross burn per month. Net burn for the period is that same gross figure minus the cash collected from customers; dividing by the month count gives net burn per month. Cash coverage is collections divided by gross burn, expressed as a percentage. Rounding happens only at the return boundary — every intermediate value is carried at full arbitrary decimal precision and no figure is rounded before being divided by the month count, so a three-month period of $930,000 of outflows gives exactly $310,000 per month rather than an artefact of an intermediate rounding step. Currency outputs round to two decimal places and the coverage percentage rounds to two decimal places. That last rounding has one consequence worth knowing: a company collecting $99,999.99 against $100,000 of gross burn displays coverage of 100.00% while still burning a cent a month, so the coverage percentage must never be read as a break-even flag. The net burn figure and the status line carry the sign and are authoritative. The sign convention itself is a choice: net burn is returned as gross burn minus collections, so a positive result means cash is being consumed. a16z's published formula is the reverse subtraction and therefore reports the same situation as a negative number; the magnitudes are identical.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Jordan, J., Hariharan, A., Chen, F., & Kasireddy, P. (21 August 2015). "16 Startup Metrics." Andreessen Horowitz. Independent primary source for the gross-burn and net-burn definitions quoted on this page, and for the caution that ARR "should exclude one-time (non-recurring) fees and professional service fees". Retrieved 29 July 2026; page loads and contains the quoted definitions verbatim.
2. [2]Financial Accounting Standards Board (August 2014). Accounting Standards Update No. 2014-15, "Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." Establishes the one-year-after-issuance look-forward period for the substantial-doubt evaluation. Authoritative PDF; URL verified live 29 July 2026 (binary PDF, text cross-checked against PwC Viewpoint's ASC 205-40 chapter).
3. [3]17 CFR § 229.303(b)(1) (Regulation S-K, Item 303 — Management's Discussion and Analysis; as amended by SEC Release 33-10890). Requires liquidity and capital resources to be described "short-term (i.e., the next 12 months from the most recent fiscal period end required to be presented) and separately in the long-term (i.e., beyond the next 12 months)". Text verified 29 July 2026 via the Cornell LII mirror of the eCFR; sec.gov returns HTTP 403 to automated fetchers but is browser-accessible.
4. [4]Sacks, D. (23 April 2020). "The Burn Multiple." Craft Ventures. Source for Burn Multiple = Net Burn ÷ Net New ARR and its benchmark bands. Independent of a16z; consulted specifically to cross-check the net-burn definition. Retrieved 29 July 2026.
5. [5]Graham, P. (October 2015). "Default Alive or Default Dead?" Source for the default-alive framing — whether current growth reaches profitability before the cash runs out. Retrieved 29 July 2026.
6. [6]U.S. Securities and Exchange Commission (30 January 2020). Release No. 33-10751, "Commission Guidance on Management's Discussion and Analysis of Financial Condition and Results of Operations" — guidance on disclosing key performance indicators and metrics, including the definition and method of calculation. Effective 25 February 2020. sec.gov blocks automated fetchers (HTTP 403); citation verified against the SEC's published release number, title and dates.