Good e-commerce management capable of producing performance demonstrations such as the P&L statement can make your online store take off towards success
"Profit & Loss" (P&L) is a statement that accounts for revenues, expenses, as well as net profit or loss, making it possible to verify whether a company is sustainable in the medium and long term. Fundamental in e-commerce management, its implementation is considered one of the best practices in B2B e-commerce.
For example, if you've ever watched the TV series "The Profit," you'll see that the protagonist, Marcus Lemonis, always presents a profit and loss statement (P&L) before closing any deal. Besides helping to determine how much to invest, this statement shows whether or not the business has a promising future.
Other advantages of working with P&L in e-commerce management
Through a P&L demo you can:
– Find out if your e-commerce is having losses or profits at the current moment;
– Understand the financial health of your e-commerce as a whole;
– Know if the tendency of your e-commerce in the medium and long term is to have profit or loss;
– Understanding and interpreting the ups and downs of your e-commerce business over time;
– Use such document as a basis for the preparation of the Income Tax;
– Use such document to close partnerships and seek investments;
– Use the data to align the KPIs of your e-commerce strategy ;
– Identify where the biggest losses are occurring and thus optimize the business's value chain.
Detailed P&L reports make it easier for anyone who is managing e-commerce to make decisions. And even more likely to make the right decisions. With this, it is possible to guarantee not only the survival of e-commerce in the market but also its growth.
How to produce a P&L statement
A basic P&L statement is a sheet of paper that should contain:
– Header with company name;
– Coverage period (start and end date);
– Revenues obtained within the stipulated period;
– Expenses incurred within the stipulated period;
– Calculation of income minus expenses, which is equal to net income.
If you report monthly, then you can generate graphs of expenses, income and net income annually. This will surely show you when, how and what went up or down. The interpretation of these graphs alone will help you to discover many things and have many insights to improve your e-commerce.
It is good to be aware, however, that Individual Microentrepreneurs who own virtual stores can produce simple P&L statements. However, larger companies need accurate and comprehensive P&L statements, which in this case should be done with the help of a good accountant.
