Accounting Finance

Accounting & Finance

> Not tax, legal, or audit advice. This skill encodes general operator practice and standard frameworks (US GAAP, IFRS, ASC 606/IFRS 15, EU VAT). Rates, thresholds, registration triggers, and filing rules change and are jurisdiction-specific. Before filing anything or relying on a number for a board, lender, investor, or tax authority, have it reviewed by a qualified accountant/tax advisor licensed in the relevant jurisdiction. Route any edge case — multi-state US nexus, cross-border digital services, equity/SAFE accounting, R&D capitalization, transfer pricing, M&A, or revenue-recognition judgment calls — to a professional. Treat every concrete rate/threshold below as "verify before use."

> Sibling skills (don't duplicate — cross-link): country-level tax depth → eu-tax-accounting (all 27 EU member states: corporate, VAT, payroll, deadlines). Billing/dunning/usage metering implementation → saas-billing (Express/Node) or stripe-billing (Next.js). Pricing/packaging → pricing-optimization. GTM funnel/forecasting → revenue-operations. Churn/retention cohort analysis → retention-analytics. EU regulatory (GDPR, contracts, entity) → eu-legal-compliance.

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1. P&L Structure (GAAP / IFRS)

Standard multi-step income statement. Key rule: define what OpEx contains so D&A is counted exactly once. Below, operating expenses are stated excluding depreciation & amortization (the "ex-D&A" convention common in SaaS reporting); D&A is its own line. EBITDA then equals operating income + D&A with no double-count. If your accounting system buckets D&A inside OpEx, drop the separate D&A line and compute EBITDA = operating income + D&A (added back), not by re-subtracting it.

| # | Line item | Calculation | Watch for | |---|-----------|-------------|-----------| | 1 | Revenue (net) | Recognized per ASC 606/IFRS 15 (§6), net of refunds/credits | Recognized ≠ billed ≠ cash collected. Don't book deferred revenue as revenue. | | 2 | COGS / Cost of revenue | Hosting/infra, third-party API/usage fees, payment processing, customer support & success delivery, onboarding/implementation labor | SaaS COGS typically 15–30% of revenue. Keep R&D and S&M out of COGS. | | 3 | Gross profit | Revenue − COGS | SaaS target gross margin 70–85%. | | 4 | Operating expenses (ex-D&A) | Sales & Marketing + Research & Development + General & Administrative | Allocate fully-loaded headcount (salary + employer taxes + benefits) to the right function. | | 5 | EBITDA | Gross profit − OpEx(ex-D&A) | Proxy for operating cash generation; ignores capex, financing, tax. | | 6 | Depreciation & amortization | Capitalized assets + capitalized software/intangibles amortization | Pure non-cash; never in COGS and here. | | 7 | Operating income (EBIT) | EBITDA − D&A | GAAP operating result. | | 8 | Net interest | Interest expense − interest income | | | 9 | Pre-tax income (EBT) | EBIT − net interest ± other | | | 10 | Income tax expense | Current + deferred tax | Tax expense (accrual) ≠ tax paid (cash). | | 11 | Net income | EBT − income tax | Bottom line. |

> EBITDA vs Adjusted EBITDA: "Adjusted EBITDA" further adds back stock-based compensation, one-time/restructuring items, and M&A costs. Always label which one you're showing and footnote the add-backs — investors discount unexplained adjustments. Rule of 40 (growth % + FCF or EBITDA margin % ≥ 40) is a common SaaS health check, not a GAAP metric.

Monthly P&L review checklist

• [ ] Recognized revenue reconciles to the billing system and the deferred-revenue roll-forward (§6), not just to cash.
• [ ] COGS contains only cost-of-delivery; S&M/R&D/G&A are not leaking into it.
• [ ] Headcount fully loaded (salary + employer payroll tax + benefits) and allocated to the correct function.
• [ ] One-time/non-recurring items flagged and excluded from run-rate and from EBITDA→Adjusted EBITDA.
• [ ] D&A counted once (per the convention you chose above).
• [ ] MoM and YoY comparatives included; material variances explained (§8).
• [ ] Accruals booked for incurred-but-unbilled expenses (the close, §5).

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2. Cash Flow Forecasting

13-week rolling direct cash forecast (the operator standard)

Forecast cash in/out, not accruals. Rebuild weekly from the bank balance.

Week | Start cash | + AR collected | + Other in | − Payroll | − Vendors/AP | − Tax/VAT | − Debt svc | = End cash
1    | 150,000    | 45,000         | 0          | 30,000    | 8,000        | 0         | 0          | 157,000
2    | 157,000    | 12,000         | 0          | 0         | 5,000        | 0         | 2,500      | 161,500
3    | 161,500    | 28,000         | 5,000      | 30,000    | 9,000        | 14,000    | 0          | 141,500
...
13   | ...

Rules

• Use cash collected (apply realistic AR collection lag: e.g. net-30 invoices land in week 5–6, with a haircut for late payers), not revenue recognized.
• Payroll on actual pay dates (semi-monthly/biweekly/monthly) including employer taxes; biweekly = 26 pay runs/yr (two 3-paycheck months).
• VAT/sales-tax remittances and corporate-tax instalments on statutory due dates — these are large, lumpy, and easy to forget.
• Model AP on actual vendor terms; don't assume everything clears in the booking week.
• Flag any week where ending cash dips below a defined floor (e.g. ≥ 2 months of operating burn or a debt covenant minimum).
• Keep a low/base/high collections scenario for any week with concentrated customer risk.

Burn & runway

Gross burn   = total operating cash OUT in the month (exclude one-offs / financing)
Net burn     = gross burn − cash revenue collected      (the number that actually depletes the bank)
Runway (mo)  = current cash balance / average forward NET burn   (use a 3-month trailing avg, not a single noisy month)

> Runway is a trigger to plan, not a script. A short runway with predictable recurring revenue, an open credit line, and a near-term profitability path is very different from a short runway with lumpy revenue and no debt access. Weigh: revenue predictability & retention (§3), fundraising-market conditions, debt availability and covenants, the path/time-to-default-or-breakeven, dilution at the current valuation, and the owners'/board's risk tolerance. Generally start serious fundraising 9–12 months before zero cash (a raise commonly takes 3–6 months), and pre-model the cost-cut lever you'd pull if a round slips — but the right move is situational; pressure-test it with the board/CFO.

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3. SaaS / Subscription Unit Economics

MRR / ARR movement schedule (single source of truth for "growth quality")

                         Month
Beginning MRR            100,000
+ New (new logos)         12,000
+ Expansion (upsell)       6,000
+ Reactivation             1,000
− Contraction (downsell)  (3,000)
− Churned (lost logos)    (5,000)
= Ending MRR             111,000
ARR = Ending MRR × 12 =  1,332,000

• Quick Ratio = (New + Expansion + Reactivation) / (Contraction + Churned). > 4 is strong; 110% = healthy expansion engine; > 120% = elite. |

| Logo retention | 1 − logo churn | High logo churn + high NRR ⇒ a few big accounts carry you (concentration risk). |

CAC, LTV, payback — state your assumptions or the numbers lie

| Metric | Formula | Notes / pitfalls | |--------|---------|------------------| | Blended CAC | All S&M / all new customers (incl. organic) | Flatters efficiency; use for company-level view. | | Paid CAC | Paid S&M / customers from paid channels | The number that matters for scaling spend. | | CAC payback (months) | CAC / (new MRR per customer × gross margin %) | Use gross-margin-adjusted MRR, not raw price. 0.75 efficient; account for sales-cycle lag (spend in Q1 closes in Q2). |

> Common mistakes: mixing gross vs net churn; forgetting gross-margin adjustment in payback/LTV; counting organic logos in paid CAC; ignoring the S&M→revenue timing lag; using a single month's churn (annualize a multi-month cohort). For deep cohort/retention curves see retention-analytics.

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4. Bookkeeping Automation, Chart of Accounts & the Monthly Close

The body's biggest leverage point: a clean chart of accounts (COA) + a repeatable close + automated bank feeds + approval controls. (Implements the "bookkeeping automation" promise.)

4a. Chart of accounts (SMB/SaaS starter — numeric ranges)

Group by the P&L/balance-sheet line it rolls into so reporting is automatic.

| Range | Type | Example accounts | |-------|------|------------------| | 1000–1999 | Assets | 1000 Operating bank · 1010 Savings/reserve · 1100 Accounts receivable · 1200 Prepaid expenses · 1500 Fixed assets · 1510 Accumulated depreciation (contra) · 1600 Capitalized software | | 2000–2999 | Liabilities | 2000 Accounts payable · 2100 Credit cards · 2200 Accrued expenses · 2300 Deferred revenue · 2400 Sales-tax/VAT payable · 2500 Payroll liabilities · 2700 Loans/notes payable | | 3000–3999 | Equity | 3000 Common stock/share capital · 3100 Additional paid-in capital · 3200 Retained earnings | | 4000–4999 | Revenue | 4000 Subscription revenue · 4100 Usage/overage revenue · 4200 Services/onboarding · 4900 Refunds & credits (contra) | | 5000–5999 | COGS | 5000 Hosting/infrastructure · 5100 Third-party API/usage · 5200 Payment processing fees · 5300 Support & success (delivery) · 5400 Implementation labor | | 6000–7999 | Operating expenses | 6000 Salaries & wages · 6010 Employer payroll taxes · 6020 Benefits · 6100 Sales & marketing · 6200 R&D/software dev (non-capitalized) · 6300 Rent & facilities · 6400 SaaS tools/subscriptions · 6500 Professional fees (legal/accounting) · 6600 Travel · 6700 Depreciation & amortization | | 8000–9999 | Other | 8000 Interest income · 9000 Interest expense · 9500 Income tax expense |

Rules: keep it shallow (use classes/tags/departments for dimensions, not 200 accounts); never expense to a bank/AP account; reserve a contra account for refunds; reconcile 2300 Deferred revenue to the §6 roll-forward and 2400 Sales-tax/VAT payable to filed returns.

4b. Bank-feed reconciliation workflow

1. Connect bank/credit-card feeds (Plaid/native) into the ledger (QuickBooks Online, Xero, NetSuite, Wave).
2. Set bank rules to auto-categorize recurring lines (payroll provider → 6000/6010; Stripe payout → split fee 5200 vs gross; AWS → 5000).
3. Match feed transactions to existing invoices/bills; create from rules only when unmatched.
4. Clear the bank rec so ledger balance = bank statement balance every month; investigate any unreconciled item — never "plug" it.
5. Reconcile the Stripe/PSP payout: gross charges − processing fees − refunds = net deposit; book fees to 5200, not as a revenue contra.

4c. Monthly close checklist (target: business-day +5)

• [ ] All bank & credit-card accounts reconciled to statements (4b).
• [ ] AR aging reviewed; bad-debt reserve assessed.
• [ ] AP complete; accruals booked for incurred-but-unbilled costs (cut-off).
• [ ] Prepaids amortized (insurance, annual SaaS tools).
• [ ] Depreciation/amortization run for the period.
• [ ] Deferred-revenue roll-forward posted; revenue recognized per ASC 606/IFRS 15 (§6).
• [ ] Payroll fully recorded incl. employer taxes and PTO accrual.
• [ ] Sales-tax/VAT liability reconciled to returns/registers.
• [ ] Intercompany/owner transactions cleared (no personal expenses in the company ledger).
• [ ] Flux/variance review vs prior month, budget, and forecast (§8); lock the period.

4d. Approval controls, receipt capture & audit trail (segregation of duties)

• Separate who requests, approves, and pays — no single person initiates and disburses (fraud control). In tiny teams compensate with owner review of the bank feed + dual sign-off above a threshold.
• Spend authorization matrix: e.g. €5k founder/CFO · > €25k board. Document and enforce in the AP/expense tool.
• Receipt capture: require an itemized receipt per expense (Ramp/Brex/Pleo/Expensify auto-OCR and attach); enforce a per-transaction documentation rule for tax substantiation.
• Audit trail: keep an immutable, time-stamped log of who entered/edited/approved each transaction; restrict ledger admin; never share logins. Retain records per jurisdiction (commonly 7–10 years; verify locally).
• Month-end lock: close the prior period so posted entries can't be silently altered; corrections go through dated adjusting entries.

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5. Invoicing & Accounts Receivable

Invoice/dunning workflow

1. Contract signed → create invoice/subscription record.
2. Invoice issued → send on billing date with a payment link.
3. Track aging by terms (net 15/30/60).
4. Overdue dunning sequence (tune by segment; soften for strategic accounts):

• Day 1 past due: friendly reminder + link.
• Day 7: second notice.
• Day 14: escalate to account owner.
• Day 30: final notice; assess late fee (if contractually allowed) and collections.

> For automated dunning, retries, and payment-failure recovery on Stripe, use saas-billing/stripe-billing — don't hand-roll it.

What a compliant invoice contains

Exact mandatory fields are jurisdiction- and transaction-specific (and differ for a full VAT invoice vs a simplified receipt below a local threshold). General good practice:

• Unique sequential invoice number; issue date (and tax point/supply date if different); due date.
• Supplier legal name, address, and tax/VAT/company registration number where the supplier is registered.
• Customer name and address.
• Line items: description, quantity, unit price; subtotal; tax rate(s) and tax amount per rate; total payable; currency.
• Payment terms and remittance/bank details.

> The customer's VAT number is NOT universally required. It is required (and must be valid) when you apply the EU B2B reverse charge / intra-Community supply — without a verified buyer VAT ID you generally cannot zero-rate (validate via VIES). But many customers (consumers, non-VAT-registered small businesses, non-EU buyers) have no VAT number, and that is fine. Likewise, your VAT number only appears if you are VAT-registered. Don't block invoicing on a VAT field that doesn't apply. Confirm the exact field set for your country with eu-tax-accounting or a local accountant.

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6. Revenue Recognition (ASC 606 / IFRS 15)

5-step model: (1) identify the contract → (2) identify distinct performance obligations → (3) determine the transaction price → (4) allocate price to obligations (by standalone selling price) → (5) recognize revenue as/when each obligation is satisfied.

SaaS patterns

| Arrangement | Recognition | |-------------|-------------| | Monthly subscription | Ratably as service is delivered (each month). | | Annual prepaid (e.g. €12,000 upfront) | €1,000/mo recognized; remainder sits in deferred revenue (2300). | | Multi-element (license + implementation + support) | Allocate price across distinct obligations by standalone selling price; recognize each on its own pattern. | | Setup/onboarding fee | Defer and recognize over the period it relates to (often the contract/expected-life) unless it's a distinct obligation delivered upfront. | | Usage/consumption | Recognize as usage occurs. |

Deferred-revenue roll-forward (must tie to the balance sheet and §3)

Beginning deferred revenue        80,000
+ Billings (new + renewals)       30,000
− Revenue recognized this period  (26,000)
= Ending deferred revenue         84,000

> Multi-element allocation, contract modifications, variable consideration, and capitalized contract costs (ASC 340-40) involve judgment — get auditor/accountant sign-off before relying on the policy externally.

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7. Tax Compliance Checklists

> **All rat

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Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

• Author: san-npm
• Source: san-npm/skills-ws
• License: MIT
• Homepage: https://skills-ws.vercel.app

Install and usage instructions live in the source repository linked above.