What a BWA shows — and what it does not
The management report summarises one month of bookkeeping: turnover, cost of goods, expenses, preliminary result. It is built from the posted receipts and is therefore only as good as the books behind it. A missing receipt is missing here too.
What the standard BWA lacks: monthly depreciation, provisions, accruals for insurance or annual premiums. A result that drops by €40,000 in December because the annual invoices are posted was not suddenly bad — it was too optimistic all year. That is why we post monthly accruals so that the curve is right.
Number one: gross profit
Turnover minus cost of goods and subcontracted services gives gross profit — what your business actually earns before staff and fixed costs. Worked example, trades business: €1,200,000 turnover, €480,000 materials and subcontractors, gross profit €720,000, gross margin 60 percent.
What matters is not the absolute figure but the ratio compared with previous months. If it slips from 60 to 54 percent, either purchase prices have risen or the pricing no longer holds. Nowhere else do you see either so early.
Numbers two and three: staff-cost ratio and operating result
Staff costs divided by gross profit gives the staff-cost ratio. For service businesses it is often between 55 and 70 percent, lower in retail. If it rises for several months while turnover is stable, the business is working less productively — or overtime was paid out that you should know about.
The operating result is gross profit minus all operating costs. It is the figure the bank reads and from which tax prepayments are derived. Whoever knows it monthly is never surprised by a tax assessment.
Number four: liquidity
Result and bank balance are two different things. A profitable month can empty the account if customers pay late or an investment was due. We add a line for open receivables and payables to the BWA — then you can see whether the result has reached the account yet.
Ten minutes of reading a month: gross margin, staff-cost ratio, operating result, open items. If one of the four deviates from plan, the commentary is already in the report you receive from us.
How this looks in your business is quickest to clarify in the initial consultation. Book an initial consultation.
