P&L lines

The Profit and Loss (P&L) report typically follows a specific structure:

Revenue

All company income (T&M provided services, FP projects with outsourced budget, etc.)

Cost of sales

Expenses for engineers’ and PMs’ salaries, i.e., all payments received from clients. This section does not include recruitment or HR expenses

Sales Commission

Amounts of sales commissions. This figure is usually negative (all negative figures in reports are displayed in parentheses)

Sales Margin (Cross profit)

Income before deducting expenses, is calculated as Revenue — Cost of Sales. The formula is set in the settings

Sales Margin, %

Sales Margin / Revenue

Delivery Overheads

Company expenses for developer salaries that are not reimbursed by clients. This section may also include expenses for licenses required for a project or business trips to clients. If travel expenses are reimbursed, the amount goes to Revenue

Bad Debts

The amount invoiced to a client but not paid. When the invoice is issued, the amount is added to revenue, but if it remains unpaid, it moves to Bad Debts as a negative figure in the P&L report.

Contribution Margin

The company’s margin

Cost of Operational Expenses

Administrative expenses and employee benefit costs

Cost of Administration

HR, recruitment, finance department salaries, bank fees, legal services, system administrators, paid service fees, office maintenance, internet, rent, cleaning, etc.

Cost of Sales & Marketing

Marketing expenses, payment for advertising tools

Cost of Executive Management

Salaries and bonuses of executives

Cost of Company Expenses

Expenses borne by the company related to currency losses or cash transactions

EBITDA

Earnings before interest, taxes, depreciation, and amortization

Depreciation & Amortization

Depreciation amount

EBIT

Earnings before taxes

Income Tax

Taxes

Net Profit

Net income

In the section Settings > P&L lines, we can create lines and select the rules by which transactions will be included in the report.

There are two rules for setting up report lines:

Analytics rule involves data collection. In the line settings, we define which data should be retrieved from the general ledger. This means specifying from which account and with what filtering criteria we want to add data to this line. For example, in the “Revenue — Fixed Price” line, we see that the data comes from account 70.001.001 but only for Fixed Price projects.

Calculation rule is used for computational operations. In the line editing settings, we configure the calculation formula itself. For example, the “Sales Margin (T&M)” is calculated using the following formula: Sales Margin (T&M) = Revenue – Cost of Sales (T&M).

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