The Difference Between Gross Burn and Net Burn

Gross burn rate measures the total cash a company spends in a month, ignoring any incoming cash. Net burn rate subtracts cash inflows—such as revenue or grant receipts—from those outflows. A company with high gross burn may still have a low net burn if revenue is strong. For runway projections, net burn is the correct metric because it captures the actual rate at which cash reserves are being consumed. The distinction is covered in the FFI Standard glossary and is applied in cash management frameworks at the Foundation Layer.