What term describes the monthly net cash outflow of a business?

The term that describes the monthly net cash outflow of a business is known as the Burn Rate. This metric is crucial for startups, particularly those that rely on external funding, as it indicates how quickly a company is spending its available capital. Understanding the Burn Rate helps entrepreneurs manage their finances and make informed decisions regarding their spending and operational efficiency.

Monitoring the Burn Rate allows businesses to forecast how long they can operate before needing additional financing or achieving profitability. A high Burn Rate might raise concerns among investors, as it could suggest that the company will run out of cash before reaching key milestones or generating sufficient revenue.

In contrast, other terms mentioned, such as Budget and Revenue Multiple, do not specifically address monthly cash outflows. A Budget refers to a financial plan that outlines expected revenues and expenditures over a specific period, while Revenue Multiple is a valuation metric that relates a company's revenue to its market valuation. Runway, although it relates to the time a company can operate before needing more funding, is derived from the Burn Rate and doesn’t specifically detail the outflow per month. Therefore, Burn Rate is the most accurate term for referring to a business's monthly net cash outflow.