Demonstration · Monthly financial management
A financial dashboard to understand, then decide.
Here is what a monthly financial review can bring an owner: explain earnings, understand cash and prepare decisions. Six numerical demonstrations, with assumptions and questions to ask.
Fictional example illustrating our financial management method.
All figures and scenarios below are invented to explain the method. They are neither customer results nor a forecast for your business. The actual format depends on the agreed data and scope. Amounts are in euros; a Swiss engagement requires its own data and assumptions in CHF or by currency.
Fictional business · Month M · Amounts in EUR
The business generates positive EBITDA. Cash still falls.
The month generates €25,000 of EBITDA but ends with €30,000 less in the bank. The increase in working capital absorbs €40,000. The priority is to check expected collections and inventory before deciding on further spending.
Monthly revenue
€250,000
Assumption: sales excluding tax, with unchanged business scope.
Monthly EBITDA
€25,000
10% of revenue. This is neither net income nor available cash.
Closing cash balance
€90,000
€120,000 at the start of the month, a decrease of €30,000.
Fictional example illustrating our financial management method.
1. Revenue grows. Do earnings follow?
Comparing two months shows what growth leaves after costs. Here sales rise by €25,000, but EBITDA stays unchanged.
Scroll the table horizontally to see every column.
| Item | Previous month | Month M |
|---|---|---|
| Revenue | €225,000 | €250,000 |
| Variable costs | −€130,000 | −€150,000 |
| Contribution margin | €95,000 | €100,000 |
| Fixed costs excluding depreciation | −€70,000 | −€75,000 |
| EBITDA | €25,000 | €25,000 |
For month M, simplified net income after €5,000 depreciation, €1,000 interest and €2,000 tax: €25,000 − €5,000 − €1,000 − €2,000 = €17,000.
Variable and fixed costs are assumed to be allocated to the correct month. This teaching classification depends on the actual business. No exceptional items or other finance income. The tax amount is an assumption, not a tax rate.
What we discuss with the owner
The extra €25,000 of sales adds only €5,000 of contribution, absorbed by €5,000 of extra fixed costs. Before seeking more volume, we examine pricing, sales mix, costs and one off items.
Fictional example illustrating our financial management method.
2. Why profit does not appear in the bank
Net income is €17,000. Yet cash falls by €30,000. Here we start from EBITDA, before depreciation, interest and taxes, to reconcile each movement to the bank balance.
Scroll the table horizontally to see every column.
| Item | Balance or cash movement |
|---|---|
| Opening cash | €120,000 |
| EBITDA | €25,000 |
| Increase in customer receivables | −€35,000 |
| Increase in inventory | −€10,000 |
| Increase in supplier payables | €5,000 |
| Capital expenditure paid | −€8,000 |
| Loan principal repaid | −€4,000 |
| Interest paid | −€1,000 |
| Income tax paid | −€2,000 |
| Closing cash | €90,000 |
Other working capital items are constant. No net VAT effect, dividends, new loans, equity contributions or currency movements. Recognised interest and tax are paid this month. Capital expenditure reflects identified payments, not just a change in fixed assets. Actual company cash movements must replace these simplifications.
What we discuss with the owner
Working capital absorbs €40,000: €35,000 more receivables and €10,000 more inventory, offset by €5,000 more supplier payables. Check receipt dates and inventory needs before committing to new spending.
Fictional example illustrating our financial management method.
3. What level of activity covers your costs?
The threshold changes with margin even when fixed costs stay the same. This calculation shows the revenue needed to cover operating costs before depreciation, interest and taxes.
Scroll the table horizontally to see every column.
| Item | Initial assumption | Lower margin |
|---|---|---|
| Fixed costs excluding depreciation | €75,000 | €75,000 |
| Contribution margin rate | 40 % | 35 % |
| Revenue needed for zero EBITDA | €187,500 | €214,286 |
| Revenue | €250,000 | €250,000 |
| EBITDA | €25,000 | €12,500 |
Variable costs are assumed proportional to revenue, with fixed costs stable within this range. At 40%, the threshold is 75,000 / 0.40 = €187,500. At 35%, it is about €214,286. Zero EBITDA is neither net income break even nor a cash threshold.
What we discuss with the owner
A margin falling from 40% to 35% reduces EBITDA from €25,000 to €12,500 at the same sales level. We test discounts, service mix and direct costs before setting a revenue target.
Fictional example illustrating our financial management method.
4. Which invoices need your attention?
A large receivables balance is not automatically bad debt. This ageing schedule separates future due dates from overdue invoices to prepare useful actions.
Scroll the table horizontally to see every column.
| Item | Amount | Next check |
|---|---|---|
| Not yet due | €90,000 | Confirm dates and billing documentation. |
| 1 to 30 days overdue | €15,000 | Check invoice receipt and the promised payment date. |
| 31 to 60 days overdue | €10,000 | Identify disputes and assign each resolution action. |
| More than 60 days overdue | €5,000 | Review collection risk with the appropriate advisers. |
| Total customer receivables | €120,000 | Including €30,000 overdue, with no assumption about recoverability. |
Opening receivables of €85,000 and closing receivables of €120,000 mean a €35,000 increase, consistent with the cash bridge. With €250,000 of new credit sales and no other movements, customer receipts would be €215,000. No identified disputed debt or recognised loss is included; VAT has no net effect in this simulation.
What we discuss with the owner
Of €120,000 receivables, €30,000 are overdue. We prepare a list with the amount, reason for delay, owner and confirmed payment date. Moving a €20,000 receipt to the following month lowers this month’s cash by the same amount without automatically reducing revenue.
Fictional example illustrating our financial management method.
5. Can you hire before the receipts arrive?
Starting with month M’s €90,000 cash balance, we compare three paths. This fictional hire costs €6,000 a month, plus €6,000 of initial spending. These are assumed total costs, not a salary benchmark.
Scroll the table horizontally to see every column.
| Item | Month M+1 | Month M+2 | Month M+3 |
|---|---|---|---|
| Closing cash without hiring | €70,000 | €85,000 | €105,000 |
| Closing cash with hiring | €58,000 | €70,000 | €90,000 |
| Closing cash if contribution starts later | €58,000 | €67,000 | €84,000 |
Without hiring: receipts of €210,000, €240,000 and €245,000; payments of €230,000, €225,000 and €225,000. With hiring: incremental cash contribution of €0, €3,000 and €6,000, after other variable costs but before employee cost. The delayed scenario uses €0, €0 and €3,000. The €6,000 initial cost is paid in M+1, in addition to monthly cost. Customer payment delays and ramp up costs need separate testing in a real case.
What we discuss with the owner
Hiring reduces closing cash in M+1 to €58,000. Before deciding, we check the lowest balance within the month, the buffer required by commitments and genuinely secured receipts. Three positive closing balances do not establish that hiring is affordable.
Fictional example illustrating our financial management method.
6. The monthly review leads to specific actions
This meeting note template shows how numbers connect to decisions. It does not reproduce a customer meeting. Actions still need confirmation by the owner and the people involved.
Scroll the table horizontally to see every column.
| Observation to verify | Action or decision to approve | Proposed owner | Proposed deadline |
|---|---|---|---|
| €30,000 overdue receivables | Confirm payment dates and update the forecast. | Owner and sales administration | Before the next cash review |
| €10,000 additional inventory | Separate stock for confirmed sales from slow moving stock before reordering. | Operations lead | Before the next supplier order |
| Planned hire, uncertain receipts | Validate assumptions and the required buffer before committing. | Owner, supported by Mercova analysis | Before the hiring decision |
The next review returns to each action: completed, deferred or requiring revision, with its observed effect. Delivery dates, review frequency and responsibilities are agreed at the start based on available data.
What we discuss with the owner
Annual support means returning to the same questions with updated figures: what changed, what remains uncertain and what needs deciding. The report prepares the conversation; follow up checks what actually happened.
Work from a financial reporting engagement
What we actually delivered for a business owner
During a recurring engagement, Mercova produced several reports bringing together the company’s results, cost structure and cash flows. These are the analyses included in those deliverables, with no information that could identify the client.
Understanding profitability
The income statement, fixed and variable costs, and break even revenue are presented in one report.
The question to examine: what revenue is needed to cover costs and generate a profit?
Understanding cash movements
The reports present cash flows alongside receivables, liabilities and borrowings.
The question to examine: why are profit and the bank balance moving differently?
Reports across several periods
Successive reports cover the same categories of analysis, giving the owner a regular basis for understanding the numbers.
The question to examine: what has changed since the last period and needs a closer look?
This account describes work delivered. It does not claim a financial gain attributable to the engagement. The demonstration tables on this site use fictional data that is separate from client reports.
Ongoing financial support, decisions every month
A dashboard is a starting point. We propose annual support around your results, cash and upcoming decisions, with a retainer billed monthly according to the agreed scope.
01
Understand your need
In a free initial 20 minute call, we discuss your business, available figures and a specific decision that concerns you.
02
Agree a clear annual scope
If there is a fit, the proposal sets out deliverables, meetings, data requirements, monthly fees and duration terms. You decide before committing.
03
Analyse, decide and review actions
Each month brings an interpretation of the figures and a discussion of decisions. Cash reviews can be more frequent when the need, data and scope support it.
For owners of SMEs and startups with an established business, typically around 1 to 30 million in annual revenue. The need for recurring analysis, data quality and your involvement matter as much as size.
20 minutes to discuss your situation. No obligation.