Ensure the business is profitable.
Welcome to your new Cost Control Center.
Burning more cash should not be a problem when sales are raising accordingly. On the opposite, issues arises when
expenses jumps without sales' compensation, or we burn the same amount of cash while having less sales. The issue gets bigger when you burn more cash than your earn it.
Ready to control your burning rate?
Below the breakeven line, you are making profits. Your hard work pays off! You spend less cash than you earned. That extra cash may fuel your growth, or pay you.
Above, the breakeven line, you are burning your cash reserves. It's like you are paying to work. You spent more cash than your earned. It might not be an issue, but keep in mind that your bank account is not a bottomless pit.
## What's the burning rate?
Burning rate is your expenses to sales ratio. It highliths the operational performance of your activities.
We compute it based on the transaction issue date. For that reason, it might be different than your cash movements, since cash movement are based on paid dates.
🔴 Red means the burning rate is higher than last year.
- The company is making a profit. The burning rate is below the breakeven line.
- The company is breakeven. Activities requires the same amount of cash than they generate.
- The burning rate increases. The company draws cash from its reserves to meet the bills to be paid.
- The company tends to control the burning rate. The line stabilizes, and even drops a tiny bit. The company found a band-aid to plug the gap, either by cutting costs (which is likely) or by finding new sources of revenue.
🟡 Orange means the burning rate is really close to last year's performances.
- The breakeven line is not present, the company is highly profitable! We display only the breakeven when the burning rate is closed to - or above - the breakeven.
- Expenses-to-sales ratio is well managed. The burning rate is quite flat. This means either the business generates a lot of recurrence for both expenses and revenue, or the business is able to react really quickly to sales variations.
🔴 Red means that the burning rate is higher than last year.
- The company generates profits, but profits slows down over time.
- The company is breakeven. The burning rate is really closed to the breakeven line.
- The profitability increases as the burning rate decreases. There was some cost cutting done (the most likely) or some new revenues generated.
- The burning rate goes up again.
- Cost cutting is done again, or new revenue are generated.
What about yours? It's time to work!