Xero Metric
Accounting
Net Burn Rate = Monthly Cash Outflows − Monthly Cash Inflows
Burn rate measures the net cash consumed by the business each month, calculated as the difference between cash outflows and cash inflows. Gross burn is total monthly spend; net burn is gross burn minus any revenue collected.
Full guide: definition, formula, and benchmarksXeroAccountingBurn Rate
Burn rate measures the net cash consumed by the business each month, calculated as the difference between cash outflows and cash inflows. Gross burn is total monthly spend; net burn is gross burn minus any revenue collected.
How to calculate burn rate
Why burn rate matters for Xero users
Burn rate and runway are two sides of the same coin. Managing burn is the primary lever any pre-profit business has to extend runway, and monthly burn is the only spend signal that survives the noise of timing differences and one-off payments.
Xero users tracking burn directly from bank feed data can distinguish structural spend (salaries, rent, software) from one-off items and spot the month a burn trend starts moving before it becomes a runway problem.
Understand and act on burn rate with KPI Tree
Pull Xero bank transaction and expense data through the MCP bank transactions and profit and loss tools, or from your warehouse replica, and let KPI Tree calculate a rolling three-month average net burn. Decompose burn into structural, marketing, and one-off categories so you can tell genuine burn changes from timing artefacts.
Assign ownership to the CFO and set alerts when rolling burn increases by more than a defined percentage versus the prior period baseline.
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MCPPull metrics from Xero directly through the Model Context Protocol.
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Our professional services team can build you turn-key AI foundations in a matter of weeks. Data warehouse on Snowflake/BigQuery, ELT with Fivetran, all modelled in dbt with a semantic layer.
Related Xero metrics
Cash Runway
AccountingMetric Definition
Cash Runway (months) = Cash Balance / Monthly Net Burn
Cash runway measures how many months the business can continue operating at its current net burn rate before cash runs out. It is the single most important survival metric for any business spending more than it earns.
Operating Cash Flow
AccountingMetric Definition
Operating cash flow measures the cash generated (or consumed) by the core trading activity of the business over a period. Unlike profit, it is not distorted by accruals, non-cash items, or timing of invoices.
Expense-to-Revenue Ratio
AccountingMetric Definition
Expense-to-Revenue Ratio = Operating Expenses / Total Revenue
Expense-to-revenue ratio measures total operating expenses as a percentage of total revenue over the same period. It is a single-number summary of how operationally efficient the business is at each level of revenue.
Gross Profit Margin
AccountingMetric Definition
Gross Profit Margin = (Revenue − COGS) / Revenue
Gross profit margin is the percentage of revenue left after subtracting the cost of goods sold. It shows how efficiently your business produces and delivers what it sells.
Explore burn rate across integrations
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