Startup burn rate: computation, runway and 90-day action plan (2026)

Direct answer. Burn rate is a startup's net cash consumption, expressed in euros per month. Runway is the number of months of cash left at constant burn. Below 9 months of runway, a founder must trigger a 90-day action plan combining three levers: cost cuts, working-capital optimisation and non-dilutive financing (R&D tax credit, JEI status, bank debt, BPI, customer prepayments). This article details the methodology and the trade-offs.

1.1. Gross burn#

Total monthly operating cash outflows (payroll + employer contributions, rent, hosting, vendors, marketing, etc.).

1.2. Net burn#

$$ \text{Net burn} = \text{Gross burn} - \text{Operating cash inflows} $$

The net cash consumption. A negative net burn means the startup is cash-flow positive.

1.3. Runway#

$$ \text{Runway (months)} = \frac{\text{Cash available}}{\text{Monthly net burn}} $$

1.4. Default alive vs default dead#

A startup is default alive if, at unchanged plan, growth leads to break-even before cash runs out. Otherwise it is default dead: dependent on fundraising to survive. The default-alive test should be re-run every quarter.

2.1. Outflow perimeter#

Include:

• net wages + URSSAF social charges (URSSAF rate grid);
• VAT cash-out (isolated because not an expense);
• corporate tax actually paid;
• interest and debt repayments;
• cloud / SaaS / external service fees.

2.2. Smoothing and seasonality#

A burn computed on a single month can mislead. 3-month rolling is the norm. Identify recurring spikes (quarterly VAT, annual insurance payments, corporate tax).

2.3. Accounting vs cash#

Cash burn is the only metric opposable to runway. Accounting burn can diverge sharply due to deferred revenue and prepaid expenses.

Below 6 months, mandat ad hoc or conciliation procedures (French Commercial Code art. L.611-4 et seq.) should be seriously considered with counsel. They remain confidential and allow renegotiation with creditors.

Three parallel tracks, all launched the same week.

4.1. Track 1 — Costs (weeks 1–4)#

Methodology:

1. List the 30 largest monthly cash outflows.
2. For each: nature (fixed / variable), criticality (mission / non-mission), lever (renegotiation / cancellation / pause).
3. Target: 15 – 25% gross burn reduction over 90 days.

Items to challenge:

4.2. Track 2 — Working capital (weeks 1–6)#

1. Shorten DSO: invoice on signature, prepayment, contractual late penalties.
2. Lengthen DPO (without damaging the relationship).
3. Mobilise factoring or Dailly assignment for eligible B2B receivables.
4. Consider payment delegation to secure critical inflows.

4.3. Track 3 — Non-dilutive financing (weeks 2–12)#

See our 2026 CIR guide, our JEI status article and our CIR/JEI startup simulator for cash-impact estimates.

5.1. CIR#

The Crédit d'Impôt Recherche (CIR) is a French corporate income-tax credit equal to 30% of eligible R&D spend (different rate above €100m, irrelevant for startups). For loss-making startups, CIR is refunded in cash after 4 years — except for JEI or EU-defined SMEs (immediate refund). Bank or BPI prefinancing is available.

5.2. JEI#

The Jeune Entreprise Innovante status grants partial relief of employer social contributions on R&D staff, subject to conditions (less than 8 years old, R&D spend ≥ 15% of charges, etc., see BOFiP). Cash effect is immediate once registered with URSSAF.

5.3. Bank debt and BPI#

BPI guarantee (creation / development): supports a bank loan by covering up to 70% of the bank's risk. See our Innovation financing service.

Five recurring mistakes in our outsourced CFO engagements:

1. Burn computed on a single month: unsmoothed, it hides VAT, corporate tax and annual payments.
2. Runway computed without deferred social charges: forgets ongoing URSSAF debts.
3. CIR booked as recurring revenue: CIR is not operating revenue. Including it in burn distorts steering.
4. Working capital underestimated: young SaaS underestimate B2B billing cycles (60 days end-of-month).
5. Implicit plan B: "we'll raise" is not a plan B. A documented plan B combines costs, working capital, debt and JEI/CIR.

This is the heart of our outsourced CFO service for startups and SMEs.

The under-estimated risk is not the absence of fundraising — it is a poorly calibrated round.

Raising at < 9 months runway is raising from weakness. Valuation drops, terms harden (liquidation preferences, anti-dilution, drag-along). Founders accept terms they would refuse at 18 months runway.

Steering rule: raise 18 months ahead of need, not 6 months. See our article Pre-seed: founder fundraising.

• The stress-test scenario: burn × 1.3, growth × 0.7, fundraising delayed by 6 months.
• The action trigger: at what runway level is the 90-day plan launched (recommendation: 12 months).
• The dilution vs cuts trade-off: cut 15% of costs or take 10% more dilution?
• The sequence: costs first, working capital next, debt in parallel, fundraising if needed.
• The governance: who validates each decision and at what cadence.

• Cost of capital: debt remains more expensive than pre-2022. Model total cost before drawing.
• BPI conditions: programmes evolve; check current criteria on bpifrance.fr.
• Banque de France rating: late vendor payments degrade the rating and block credit access.
• CIR audits: CIR controls are frequent. Document spend at the moment of commitment.

• 3-month rolling cash burn computed monthly
• Runway recomputed monthly, including VAT, corporate tax, social debts
• Stress-test refreshed quarterly
• Formal 90-day plan trigger (recommendation: 12 months runway)
• Top 30 cash-outflow items reviewed
• CIR estimated and prefinancing studied
• JEI status reviewed if eligible
• DSO, DPO, DIO tracked monthly
• Plan B documented and board-approved
• Amicable procedure considered below 6 months runway