The Cash Burn ratio shows how long the available funds will last if cash outflow stays the same, based on the average monthly spending of recent months.
It serves as an early warning system so that you can react to shortfalls or funding gaps in time.
COMMITLY distinguishes three variants:
Gross Cash Burn = all operating outflows without taking income into account (e.g. rent, personnel, marketing)
Net Cash Burn = operating income minus operating outflows (shows how much money the operating business generates)
Total Cash Burn = change in cash, i.e. all inflows and outflows (incl. cash flow from investing and financing, e.g. debt service)
In addition, the Runway is calculated:
How many months will liquidity last if the current cash outflow continues at the same pace?
Four perspectives that help you keep track:
Avg last 6 months – for stable long-term trends
Avg last 3 months – for current developments
Last month – the reality of the most recent past
Avg next 3 months – based on the Forecast
Net Cash Burn and Runway show how quickly cash is being used up and how long the existing liquidity is expected to last. They are key indicators of the financial viability of the business model.
Note: If the account balance is negative, the burn rate widget is only shown if an overdraft facility (limit) is defined and available funds therefore exist.
Runway development
The Runway shows how many months your company is expected to have before cash runs out.
COMMITLY calculates three different Runway values, depending on which cash flows are taken into account.
The values are shown monthly, which makes it possible to spot shortfalls early and make well-founded financial decisions.
Gross Runway: How long will the money last if operating outflows have to be covered and no inflows come in (anymore)?
Net Runway: How long will the money last if operating inflows and operating outflows are taken into account?
Total Runway: How long will the money last based on all inflows and outflows (incl. cash flow from investing and financing, e.g. debt service)?
The chart shows month by month how stable your liquidity is and how changes in planning, contracts or loans have a direct effect.
Cash flow visualization
The cash flow visualization shows at a glance where your funds come from (source of funds) and what they are used for (use of funds).
It is displayed as a Sankey diagram and shows how cash flows in the selected period move through your company.
This lets you quickly see which categories have the greatest impact on your liquidity.