Burn rate analyst

Founders ask "how long do we have?"; the honest answer has three numbers and shows its work. This skill turns an accounting export into a burn table, three runway scenarios, and the three line items that moved. It is written for a board pack, so every headline number sits next to the inputs that produced it and every convention is labelled as a convention.

When to use

Monthly close, on the P&L and the closing cash balance.
Before a board update, a fundraising conversation, or a hiring decision that adds fixed cost.
After a month with an unusual payment, to see what it did to run-rate.
Not for revenue forecasting, not for valuation, not for a 13-week cash flow. Those need a different model.

Input

Monthly P&L, 6 to 12 months, with revenue and costs broken out by category. Cash basis if available; accrual if not, and say which.
Closing cash balance for the latest month, with the date and currency.
Opening cash balance for the first month in the table. Needed for the reconciliation in step 6.
Known one-offs, if the team keeps a list: a legal bill, an annual insurance payment, a recruiting fee.
Annual or multi-year prepayments still being consumed, with the amount and term.
Stress assumptions, if the board uses its own. Absent that, the defaults in Definitions apply and are named as defaults.

Definitions (state them in the output, every time)

Gross burn = total cash costs in the month.
Net burn = gross burn − revenue collected in the month.
Run-rate gross = gross burn − one-offs paid this month − annual items paid this month + (annual items ÷ term in months). This is the recurring monthly cost, not the cash that left.
Run-rate net = run-rate gross − revenue.
Runway (months) = cash ÷ run-rate net burn, reported under three scenarios:
- Flat — the latest month's run-rate net burn, held constant. cash ÷ latest run-rate net.
- Trend — ordinary least squares fit through the last 3 run-rate net burn figures, projected forward one month at a time, consuming cash until it is exhausted. Report the fitted slope and the final partial month. Needs at least 3 months; with fewer, the fit is undefined and the scenario is refused, not approximated.
- Stress — revenue −20%, costs +10%, applied to the latest run-rate month. These two percentages are a house convention, not a forecast and not derived from this company's history. They exist so every ledgerline report stresses the same way. If the board uses different ones, use theirs and say so.

Thresholds above are defaults; report the thresholds you used.

Process

Separate one-offs. Use the supplied list first. Then screen every category: any month where a line is more than 3× its own 6-month median is flagged as a probable one-off. [judgment — no accounting standard sets this; it is a screen, chosen wide enough that ordinary opex variance does not trip it. It flags for a human; it never reclassifies on its own.] A flagged line with no confirmation stays in run-rate and is marked unconfirmed one-off, with the effect of removing it stated.
Spread annual items over their term. Show the amount removed and the amount added back, per month.
Build the table: gross burn, revenue, net burn, run-rate net, per month, with the one-off adjustment named in the row.
Runway under all three scenarios, with the formula and the inputs beside each number.
Movers: the three cost categories with the largest absolute change from the first to the last month of the window, each with direction, the two values, and its share of the latest run-rate gross. Revenue is reported separately; it is not a cost mover.
Reconcile: opening cash − sum of net burn over the window = closing cash. Report the gap. A gap over 1% of closing cash [house rule] is a stop, not a footnote.
Read: one paragraph, plain words, what the numbers say. No advice.

Rules

Show the arithmetic. Every headline number carries its inputs inline.
Never mix accrual revenue with cash burn without saying so. Accrual-only input is labelled cash approximation on every affected figure.
No recommendations. Not "cut contractors", not "raise sooner". Facts, trends, and the questions they raise. The board decides.
Currency and unit on every number. Round to whole thousands in tables; keep one decimal on runway months.
A negative run-rate net burn (a profitable month) makes runway undefined. Write runway not applicable — run-rate net burn is negative (−14 k). Do not print a large number or an infinity symbol.
Never fill a missing month by interpolation. A gap in the P&L is reported as a gap.

Output format

## August 2026 — closing cash €1 240 k (cash basis)

| month | gross burn | revenue | net burn | run-rate adjustment | run-rate net |
| Jun | 212 k | 88 k | 124 k | legal bill 6 k removed (on team list); insurance spread +2 k | 120 k |
| Jul | 231 k | 91 k | 140 k | annual insurance 24 k removed, spread +2 k | 118 k |
| Aug | 226 k | 97 k | 129 k | insurance spread +2 k; recruiting fee 11 k left in (unconfirmed) | 131 k |

**Flagged by the 3× screen**
- Jul, insurance €24 k vs 6-month median €2 k = 12.0× → confirmed one-off on the team's list, removed and spread over 12 months.
- Aug, recruiting €11 k vs 6-month median €2 k = 5.5× → no one-offs list supplied for August. Left in run-rate, marked `unconfirmed one-off`. If confirmed, Aug run-rate gross falls 228 k → 217 k, run-rate net 131 k → 120 k, and flat runway rises to 10.3 mo.
- Aug, contractors €37 k vs 6-month median €20 k = 1.85× → under the screen, not flagged.

**Runway**
- Flat: **9.5 mo** — 1 240 ÷ 131.
- Trend: **8.1 mo** — OLS through run-rate net 120, 118, 131 gives slope +5.5 k/mo and a fitted Aug of 128.5 k. Projected months: 134.0, 139.5, 145.0, 150.5, 156.0, 161.5, 167.0, 172.5 → cumulative 1 226.0 k after 8 months; the remaining 14.0 k covers 14.0 ÷ 178.0 = 0.08 of month 9.
- Stress: **7.2 mo** — revenue 97 × 0.80 = 77.6 k; costs 228 × 1.10 = 250.8 k; net 173.2 k; 1 240 ÷ 173.2 = 7.16. (House stress convention: revenue −20%, costs +10%.)

**Movers (run-rate cost, Jun → Aug, absolute)**
| category | Jun | Aug | change | share of Aug run-rate gross (228 k) |
| contractors | 22 k | 37 k | +15 k | 16% |
| recruiting | 0 k | 11 k | +11 k | 5% |
| marketing | 13 k | 4 k | −9 k | 2% |
| cloud | 21 k | 28 k | +7 k | 12% |
| other | 8 k | 2 k | −6 k | 1% |
| payroll | 132 k | 134 k | +2 k | 59% |
| tools | 12 k | 12 k | — | 5% |
| travel | 0 k | 0 k | no recorded activity | 0% |

Revenue (reported separately, not a cost mover): 88 k → 97 k, +9 k (+10.2%).

**Reconciliation:** opening cash 1 Jun €1 633 k − net burn (124 + 140 + 129 = 393 k) = €1 240 k = stated closing balance. Gap €0 k.

**Read:** run-rate net burn fell in July and rose 13 k in August. The rise is contractors and a recruiting fee that may not repeat; marketing fell 9 k over the same period. Revenue grew 9 k across three months while run-rate net burn grew 11 k. Runway is under a year in all three scenarios and under nine months on the trend fit. The August recruiting fee is unconfirmed and moves flat runway by 0.8 months on its own.

The refusal, when the export does not reconcile

## August 2026 — NOT REPORTED

Reconciliation fails. Opening cash 1 Jun €1 611 k − net burn (124 + 140 + 129 = 393 k)
= €1 218 k. Stated closing balance is €1 240 k. Gap €22 k, which is 1.8% of closing
cash, over the 1% tolerance.

No runway figure is issued. A €22 k gap moves flat runway between 9.3 and 9.5 months,
and the gap's sign is unexplained: it is consistent with a receipt outside the P&L,
a transfer between accounts, or a missing cost line.

Reconcile the export against the bank statements for Jun–Aug, or state what the €22 k is,
and re-run. Handed to the finance owner.

Edge cases

Fewer than 6 months of history. Report the table and flat runway. Refuse the 3× one-off screen (a median over fewer than 6 points is not the stated screen) and say so. With fewer than 3 months, refuse trend as well: trend not computed — OLS needs 3 points, 2 supplied.
Fewer than 3 months. Flat runway only, plainly labelled as one month's figure held constant.
No one-offs list. Run the 3× screen, report every flag as unconfirmed one-off, leave them all in run-rate, and state the runway effect of removing them together.
Accrual-only P&L. Every figure is labelled cash approximation. Say explicitly that revenue recognised is not revenue collected, and that runway computed this way is optimistic when receivables are growing.
Multiple currencies in the export. Do not convert. Report per currency and stop; the rate and the date are a finance decision.
A missing month. Report the gap, exclude the month from the trend fit, and say the fit used n points, not 3.
Categories change name or split mid-window. Movers compare like to like. If a category cannot be traced across the window, report it as not comparable — renamed or split and exclude it from movers.
Revenue exceeds costs in the latest month. Runway is not applicable; see Rules. Still report the table, movers and reconciliation.
Export larger than ~40 categories. Aggregate to the top 12 by latest-month value plus an other line, and say which categories are inside other.
Cash balance is a single number with no date. Ask for the date. A balance from a different day than the P&L close makes the reconciliation meaningless.

Stop and hand back

Halt and name the owner. Do not issue a runway figure through any of these.

The export does not reconcile to the stated cash balance within 1% of closing cash. Report the gap and both sides of the arithmetic. Reconcile before reporting. Finance owner decides.
The cash balance includes restricted, escrowed, or customer-held funds, or counts an undrawn credit facility as cash. Report the components you were given and ask which are spendable. CFO or finance owner decides.
An accrued but unpaid liability appears in the input — deferred payroll, unremitted VAT or sales tax, an unpaid tax bill. It is not in gross burn but it is a claim on the cash. Name it and stop.
Flat runway under 3 months [house rule; below one quarter the monthly figures stop being the useful unit and a weekly cash plan is]. Report the numbers, do not model scenarios, hand to the founders and the board.
Financing in flight — a term sheet, a bridge, a facility being negotiated. Runway under one balance and runway under another are different documents. A human states which one the report assumes.
The one-off flags change runway by more than one month and none is confirmed. The classification is now the story. Get the list confirmed first.
You are asked what to cut, whether to hire, or when to raise. Out of scope by the third rule. Report the facts and hand back.

License

MIT

burn-rate-analyst