Profit and Loss
Report(P&L) Reporting
The Budget Report can also be used as a Profit and Loss Report (generally referenced as the P&L Report) when you enter budgeted amounts and expenses for all Account Categories including Card processing fees, loan interests, depreciation of equipment, amortization, and EBITDA margin, in your Budget.
P&L Reports are more accurate than a Budget Report when tracking cash flow metrics.
Below are a few terms to help identify the differences between a Budget and a P&L report:
Profit - defined as the revenue including all Net sales and Service Fees
Loss - defined as all expenses including all Total Cost in COGS, payroll, rent, advertising, etc.
EBITDA margins report the revenue prior to deducting your loan interest, taxes, depreciation, and amortization. EBITDA is a proxy for a company's current operating profitability.
Amortization defined asan accounting technique used to periodically lower the book value of a loan or intangible asset over a set period of time. In relation to a loan, amortization focuses on spreading out loan payments over time. When applied to an asset, amortization is similar to depreciation.
Depreciation - defined as the process of deducting the total cost of something expensive you bought for your business. For example, the IRS might require that a piece of computer equipment be depreciated for five years, but if you know it will be useless in three years, you can depreciate the equipment over a shorter time.
Some clients will opt to build their P&L directly from their accounting platforms, such as Sage or Quickbooks. This is because all AP and AR journal entries are typically tracked there and the P&L is a preloaded reporting option that does not require you to build it.
If you want to build your P&L in Decision Logic, this can be done by converting the Budget report. Please reach out to your Account Manager to discuss how to build a P&L Report versus a Budget Report.
⚠ Typically bank loans applications and IRS audits will require a P&L report, and they will not require a budget report.
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