Liquidity / base / 1 to 3 months
Total spending is climbing meaningfully faster than net cash burn, which means growing revenue is currently hiding a rising cost base. Gross burn is everything going out the door; net burn is what is left after the money coming in. Comparing the start and end of the period, gross burn has climbed faster than net burn, so the gap between the two has widened across the window. That divergence means costs are decoupling from revenue. The danger is that the calm headline net number masks spending that is not calm at all.
A business in this state is only healthy for as long as revenue keeps rising fast enough to cover the cost growth. The moment sales soften even slightly, the full weight of the cost base becomes visible all at once, and runway compresses faster than anyone expected. A small gap between the two is ordinary noise; a wide divergence by the end of the window is a structural sign that spending has gotten ahead of the business.
Revenue is up and morale is good, yet across the period the total amount leaving the bank has climbed faster than the net figure suggests. New hires, tools, and contractors get added on the strength of a strong quarter. The cost growth is easy to rationalize while revenue is cooperating.
Separate your spending into what scales with revenue and what is fixed overhead, and watch whether the overhead is growing on its own. Pressure-test what your cash position looks like if revenue simply held flat for a couple of quarters. Slow the additions that are not directly tied to winning or delivering revenue until the two lines move together again.
Beacon Software, an illustrative company, saw gross monthly spending climb from about 300,000 to about 410,000 over a couple of months while its net burn barely moved, hovering near 85,000.
Gross burn grew sharply, but a large new client's revenue arrived at the same time and absorbed almost all of it, so the net figure looked flat and calm. The flat net number hid the fact that the underlying cost base had grown sharply. If that one client softens or leaves, the revenue that was masking the higher spending disappears and net burn jumps toward the full gross figure.
Beacon concludes its net burn is being propped up by a single revenue stream and that its true cost base is far higher than the headline suggests.
Exact thresholds, formulas, and severity bands are omitted from this public view. The full methodology, with every figure, is available in the authenticated app.
Any revenue softening directly exposes the underlying cost base. Runway compresses faster than the headline implies.
The exact thresholds, the formula, and your own figures are in the authenticated app. See it against a real, simulated dataset for Integra Executive Services, our public demo company, or connect your own QuickBooks Online account.