Often, New Sellers Don’t Understand How to Manage Finances on Marketplaces and Work with Financial Reports. They either do not keep comprehensive accounts and financial analyses, record metrics sporadically, or delegate this work to a manager. This often leads to a situation where a seller invests money in products, sales occur, but there is no profit. Together with financial expert Irina Permyakova from the “Fintablo” service, we discussed which metrics to pay attention to in order to always know your net profit.
What Reports Are Required to See Net Profit on Marketplaces?
The basic level of financial reporting for sellers includes three main forms:
- Profit and Loss Statement
- Cash Flow Statement
- Balance Sheet
A seller-entrepreneur, especially a newcomer, can maintain these reports in a simplified form, using relevant metrics from company reports, such as the cash flow statement (CFS). Over time, they can enhance their reporting with more detailed analytics.
Let’s take a closer look at each tool.
Profit and Loss Statement. This helps assess business performance: whether the owner is earning income or incurring losses. The report reflects revenue and expenses over a specific period—month, quarter, or year—to provide an overview of net profit for that period. Given the rapid evolution of trading on marketplaces, sellers should also track profits weekly.
Template for the Profit and Loss Statement.
The profit and loss statement helps sellers understand whether it is profitable for them to operate in a specific niche, on a particular marketplace, with a certain business model, and with the current sales volumes and cost of goods sold.
Cash Flow Statement (CFS). This shows the amounts of money movement across all accounts and cash transactions. The document records receipts and payments for the reporting period, along with the cash balance at the beginning and end of that period. In the report, sellers can always track who and how much they are paying, helping them maintain an optimal cash balance across all accounts to cover upcoming payments.
Balance Sheet. This is important for the retail sector, so some of its metrics should be tracked even by novice sellers, such as inventory levels from month to month and accounts payable levels to creditors or suppliers. The document shows what assets a seller has on a specific date, such as property, goods in transit, goods in their own warehouse, paid items at the supplier’s warehouse, and stock at the marketplace warehouse, as well as the resources from which they are derived—whether from loans and borrowings or from their own funds.
What Are Business Assets and What Types Are There?
The balance sheet also reflects the levels of business liabilities:
- Accounts Receivable, if the seller has already fulfilled their obligations to a partner or marketplace but has not yet received payment. For example, a seller pays for a batch of goods from a supplier who hasn’t delivered it yet. Or the seller has been trading on the marketplace for a week, and while it’s Sunday, the platform will only transfer money for that week on Tuesday. Accounts receivable also includes money lent to a partner or colleague for a specific period.
- Accounts Payable, if the business owes money to partners, employees, or the government. This includes payments for delivered goods, bank loans, and salaries owed to employees for work done during the previous month. For instance, if employees worked in July but their salaries are paid on August 10, the amount of their salaries becomes a liability for the employer.
Sellers need to monitor accounts receivable closely; otherwise, they may find themselves lacking funds for purchasing inventory. When accounts receivable arises, how it differs from accounts payable, and how to manage it are discussed in detail in a separate article.
Where Can Sellers Keep Financial Records?
Sellers can manage their financial records independently in:
- Excel Spreadsheets
- Google Sheets, which can now integrate with marketplace personal accounts via API
- 1C System
- Online Financial Accounting Services for Businesses, such as Fintablo
We recommend sellers use the convenient tool “Plan-Fact Weekly” for analyzing financial metrics. It helps:
- Quickly respond to changes on marketplaces
- See results from hypothesis testing over the week
- Understand at which stage of plan execution or goal fulfillment they are
This method provides a snapshot of planned versus actual metrics, highlighting the difference between results and expectations—essentially assessing how well the business performs compared to its initial plans.
To maintain such a plan-fact report, one must input the metrics or hypotheses to be tested into the table and set a plan for the week. Sellers should analyze the following metrics:
- Sales
- Expense items, such as commission, logistics, advertising, delivery, and payroll
- Planned net profit
For deeper analysis, additional metrics can be added: advertising efficiency, average check, redemption percentage.
The table should consist of three sections: plan, actual, and deviation from the plan. For example, if you planned a net profit of 1 million rubles, after a week, you can review the results—what was achieved according to each metric. In the following week, you can adjust your management decisions to align the month’s performance with the expected net profit.