Advisory · 5 min read

Burn Rate vs Cash Flow: Startup Finance Basics

Burn rate and cash flow are two important startup finance metrics, but they are not the same thing.

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Burn rate measures how quickly a startup is spending cash. Cash flow measures money moving in and out of the business over a period of time.

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A startup can have revenue and still burn cash if expenses are higher than income.

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Gross burn is total monthly spending. Net burn is monthly spending minus monthly revenue.

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For example:

Monthly expenses: $80,000
Monthly revenue: $30,000
Net burn: $50,000

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Cash flow gives a broader view of timing. It includes when money is collected and when bills are paid.

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Founders should track both numbers because they affect hiring, fundraising, pricing, expense control, and runway.

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A startup CPA or fractional CFO can help create reports that show burn rate, cash flow, runway, and financial trends clearly.

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