To properly record and manage cross-border e-commerce financial data, it is necessary to establish an effective cross-border e-commerce sales cost-profit budget mechanism, clarify the various budget costs and expenses of the products sold or services provided, and make a reasonable estimate of the profitability of the business, and then consider the human, financial and time investment of the business; establish a financial data monitoring system for the entire process of cross-border e-commerce business to ensure that the expenditure of each expense can be accurately recorded and the occurrence of each cost can be accurately counted.
It is very necessary to analyze the business environment and the company’s own situation and make a good financial budget. It is necessary to make forecasts for each business link of the cross-border e-commerce company. All the budget details are ultimately for the purpose of achieving the target profit.
(1) Budget formula
Before conducting cross-border e-commerce business, cross-border e-commerce sellers do a lot of preparatory work, whether in product development, market research or marketing plans. The budget work of sales behavior is the most important part of the preliminary preparation. Due to the diversity of its products and the uncontrollability of the country or region where the buyers are located, cross-border e-commerce retail is prone to distortion when making budgets. And budgeting as accurately as possible is the first step to the success of cross-border store operations.
The following are some basic formulas for sales budgeting:
Gross profit – sales – purchase cost – international freight – platform transaction fee
Gross profit margin = gross profit – sales x 100%
Net profit = gross profit – promotion and marketing expenses – after-sales service expenses and costs – administrative expenses – company financial expenses
– company tax expenditure – other expenses
Net profit margin = net profit ÷ sales x 100%
(2) Financial budget template
In order to make a clear budget, sellers can allocate goals and resources for each link through budget planning. For example, if Amazon plans to have a sales target of 10 million yuan, then at what stage do we need to develop how many products, how much funds to allocate, who will develop, and who will sell? At this time, financial budget analysis can clarify the stage-by-stage inventory, personnel, cash and other plans. To this end, we can make a financial budget horizontal board (see Figure 5-16) to make it clear at a glance.
Each expense template will have a corresponding expense ratio, so it is very clear which link has a high ratio, and which department or personnel has a problem in operation, which is conducive to enterprise optimization management. For example, the advertising fee of Amazon’s general products does not exceed 5%. If it exceeds 5%, the company will ask the marketing department to stop the poorly performing ads of Acos (a key indicator used to measure the performance of users’ advertising investment in the Amazon market, which refers to the proportion of advertising expenditure to advertising sales). The corresponding personnel will analyze and find out the reasons, improve operational skills, and control the total budget at the same time to prevent the erosion of periodic profits. For example, in the planning of the number of employees, in the budget labor cost ratio section, combined with the sales target value, labor cost ratio and current personnel needs, it is concluded that the labor cost ratio of the company’s expenditure does not exceed 5%; if it exceeds 5%, the reason must be considered, whether some personnel are used as talent reserves, or the per capita output value has not increased, find out the reasons and do a good job in personnel optimization; if the ratio is low, you can consider expanding recruitment to replicate the existing operating model or develop new business.
It can be seen that a good financial budget can clearly understand the profitability of the store through data, and the goals can be subdivided and implemented to individuals. Everyone is clear about the goals and job responsibilities, and knows how to do a good job in performance appraisal of each department.
(3) Steps to prepare a budget table
First, calculate the cost and expense ratio of each data in the previous stage, then calculate the company’s current assets, including inventory and cash, then cooperate with the sales department to prepare the annual sales budget target in accordance with the company’s strategy, and finally communicate with relevant departments based on the budget target to determine the various costs and expenses and obtain the final budget table.