Gross burn = Σ payments in the month; Net burn = Σ payments − Σ receipts in the month
Burn rate is the amount of cash a company consumes each month. Gross burn is the month's total payments; net burn is payments minus receipts. Together with available cash, it determines runway.
How it is calculated
Gross burn = Σ payments in the month. Net burn = Σ payments − Σ receipts in the month. It is calculated on actual bank movements, not on the P&L, and is usually expressed as a 3-month average to avoid calendar distortions.
Example with numbers
May payments 200,000 (payroll 120,000, suppliers 60,000, taxes 20,000); receipts 150,000. Gross burn: 200,000. Net burn: 50,000. If in June a large customer's quarterly payment of 90,000 comes in, the month's net burn drops to −40,000, but the 3-month average stays around 40,000: that is the figure to plan with.
How Fibady does it
Burn is calculated from the direct cash flow, with each entity's bank movements classified by category, and is shown per entity and for the group. It is combined with available cash, including undrawn credit lines, to give the group's runway.