Keuangan dalam BisnisPresented for Sekolah Kewirausahaan IA IFby Muhamad Fajrin Rasyid23 March, 2013

Outline

Business Driver

Financial Statement - Snapshot vs. Time period

Invoicing

Tax

Managing Cash Flow

Getting Fund

Business Driver

Profit

Revenue

Number of

transaction

Basket size

Cost

Marketing cost

SalaryExample: Basic business driver for e-commerce

Business Driver (Cont’d)

Profit

Revenue

Number of download

Application price

Cost

Fixed cost (Rent fee

etc.)Variable

cost (Salary)Example: Basic business driver for

mobile application developer

What’s driver for your business?

Understand the driver for your business will help you better sense your business financial

condition and how to improve it

For example...

How to increase revenue of e-commerce?Either increase number of transaction, or increase basket size (or both!)

If we go deeper, how to increase number of transaction in your website?

Either increase number of website visitors, or increase conversion rate, i.e. % of people buying compare to all visitors (or both!)

And so on

Business

Driver

• Get better sense of your business? Cool!

Business

situation

• Now, can you explain current (as in today) condition of your business?

What’s after business driver?

Financial Statement - Snapshot vs. Time

periodIf we talk

about snapshot situation (e.g. as in 1 January 2013), we talk about Balance Sheet

If we talk about

situation during time

period (e.g.

during 2012), we talk about

Income Statement

Elements of Balance Sheet and Income

StatementBalance Sheet Income Statement

AssetLiabilityEquity

RevenueExpense

Any financial event will belong to any two of these buckets

(can be in the same buckets)

For example...

Secure a 100 million project revenue is increased by 100 million (in terms of project revenue), asset is increased by 100 million (in terms of account receivable)

First invoice of the project (30%) paid asset is increased by 30 million (bank account), asset is decreased by 30 million (account receivable)

Borrow 50 million from bank asset is increased by 50 million (bank account), liability is increased by 50 million (account payable)

Still example...

Pay 25 million for salary expense is realized by 25 million (salary cost), asset is decreased by 25 million (bank account)

Buy new desk for 2 million asset is increased by 2 million (fixtures), asset is decreased by 2 million (bank account)

New shareholder decided to put additional capital 50 million asset is increased by 50 million (bank account), capital is increased by 50 million

And so on

Categorization

Purely based on your business driver

E.g. in Suitmedia, revenue is categorized into

Web based project revenue

Mobile app based project revenue

Mobile app based product revenue

Social media based project revenue

Fee based revenue

Other revenue

Invoicing

Some tips on invoicing (1)

Many companies have 20-30 workdays policy regarding the payment -- always prepare for additional 20-30 workdays

This works for many mobile related products as well (i.e. Apple App Store, Google Play Store, BlackBerry World, Amazon Appstore)

Some companies require additional documents (e.g. purchase order, report, etc.) -- make sure to complete these

Always ask confirmation before we send the invoice, otherwise if it is not accepted yet it will cause problems in the future

Some tips on invoicing (2)

Carefully state payment policy in your agreement (perhaps in legal session will be addressed more), e.g.:

For project type For retainer type

• Invoice 1 (30%) is sent directly when the agreement is signed by both parties

• Invoice 2 (50%) is sent after the project phase xxx is completed, proven by project report

• Invoice 3 (20%) is sent after the project is completed, proven by UAT and project completion report

• Invoice to sent monthly at the first week of each month, along with activity report for the previous month

Tax

First thing first

Always good if you

have tax consultant,

especially since

regulation often

change

Four common taxes related with startup

PPN

PPh pasal

21

PPh pasal

23

PPh pasal 25/29

PPN (VAT)

Amount: 10% of gross value

When: Every month, related with invoice (regarding project or others) issued in that month

Hence, don’t issue invoice when client is not ready, as we will need to pay VAT even if we haven’t received the payment

VAT is burdened only by last party in value chain

1

VAT illustration1

ClientYour

companyVendor

Project value IDR 50 Mn

Some scope is

outsourced for IDR 20

MnIn this case, you send invoice of IDR 55 Mn (IDR 50 Mn + 5 Mn for VAT) to client

Vendor will send invoice of IDR 22 Mn (IDR 20 Mn + 2 Mn for VAT) to you

Thus, VAT that you have to pay is 5 Mn - 2 Mn = 3 Mn

Surprisingly...

This apply not only to project related expenses, but to all of your expenses

Suppose that in that particular month, you buy IDR 22 Mn laptop... if you use your company name, you can actually deduct your VAT (in this case, IDR 2 Mn)!

Therefore, using the example, VAT that you have to pay in that month is IDR 3 Mn - IDR 2 Mn = IDR 1 Mn

1

PPh pasal 21 (for employees)

Amount: 5% if (annual salary - non taxable income) <= IDR 50 Mn

15% if (annual salary - non taxable income) between IDR 50 Mn and IDR 250 Mn

25% if (annual salary - non taxable income) between IDR 250 Mn and IDR 500 Mn

30% if (annual salary - non taxable income) > 500 Mn

Example: Employee with IDR 6 Mn salary per month, how much tax regarding this (assuming non taxable income IDR 15 Mn, and no THR & bonus)?

Taxable income = 6 Mn x 12 - 15 Mn = 57 Mn. Thus, their tax is (5% * 50 Mn + 15 % * 7 Mn) = IDR 3.55 Mn

When: Every month and every year (for the remaining)

2

PPh pasal 23 (for company)

Amount: 2% of gross value

When: Every time invoice is paid (done by the client)

Hence, the correct one regarding invoice payment is, if the project value is IDR 50 Mn, we send the invoice of IDR 55 Mn, but what we will get is IDR 54 Mn

How will this appear in financial statement?Cash is increased by IDR 54 Mn

Nothing change in revenue (assuming project is realized beforehand)

Account receivables is decreased IDR 50 Mn (assuming project is realized beforehand)

Tax payable is increased by IDR 5 Mn (for VAT)

Tax is realized by IDR 1 Mn (for PPh pasal 23)

3

Change regarding invoice payment

Cash is increased by IDR 54 Mn

Nothing change in revenue (assuming project is realized beforehand)

Account receivables is decreased by IDR 50 Mn (assuming project is realized beforehand)

For VAT, tax payable is increased by IDR 5 Mn OR tax receivables is decreased by IDR 5 Mn

For PPh pasal 23, tax expense is realized by IDR 1 Mn

For PPh pasal 23, tax payable is decreased by IDR 1 Mn

3

PPh pasal 25/29 (for company)

Amount: 25% of profit if revenue is >= IDR 50 Bn

12.5% of profit if revenue is <= IDR 4.8 Bn

Weighted average for in between

Example: A company having revenue of IDR 6 Bn and profit of IDR 1 Bn. How much taxes they have to pay? [12.5% x (4.8 Bn / 6 Bn) x 1 Bn] + [25% x ((6 Bn - 4.8 Bn) / 6 Bn) x 1 Bn] = 100 Mn + 50 Mn = 150 Mn

When: Every month and every year (for the remaining)

Note: Profit equals revenue minus any expense (including other taxes)

4

Exercise

Cash flow

Sales is vanity...

....profit is sanity...

....but cash flow is

reality

Some tips on cash flow

Ideal amount on working capital equals 3-6 months expense

Budget your expense as close as possible to reality, then project cash-in to cover that expense

Working backward (e.g. if I need to get IDR 50 Mn on June, then I need to send invoice on April, then I need to finish this project by March)

What if expense is still bigger? Then you need to cut your expense... or get funding!

Why do we need fund?

This lowest deficit is the fund we need to operate the

business

Where to get partner for funding?

Personal (Bootstrapping)

3F (Friend, Family, Fool)

Bank

Angel Investor

Yet remember, there is no angel!

Even when they said that they didn’t really care whether they

can get their money back or not, you have to always keep in

mind that you have obligation to return it

How to attract funding partner?

Ideas are cheap, unless they are executed

Investors need to be convinced that plans can actually work

Who are your customers? Will customers really use your product/service?What is the risk? How are you going to tackle that?Why we need to invest in you instead of your competitors?

Bank loan vs Investor

Get loan from bank if...

Get invested if...

• You just need cash, no need for anything else

• Your projected revenue (and hence, profit) is more certain

• Unlike for you to share ownership

• You need other things which investor can provide (e.g. expertise, network, access to market)

• Your projected revenue is less certain

• Investor is committed

How to value the business?

There is no exact

calculation. It is

combination of art

and science

Also depends on your business objective

Some end goals

IPO

Sell to other partiesKeep private

First method: PER

Price Earning Ratio (PER) is ratio of price compared to earning/profit of the company

e.g. Microsoft PER is around 15, so if its profit is USD 15 Bn, to acquire Microsoft we need USD 225 Bn

Facebook PER is 1700

Higher PER means the company is perceived to have higher profit in the future

How to use PER to value our company

Look around!

Especially company

in same industry or

in same location --

use as benchmark

However, don’t use only PER

How is your profit is close to zero or negative? If we use only PER then your company is worthless

PER usually works if the company is quite stable already and look for growths

Second method: Cost

Project your next 12-18

months expense

Trade that for minority stake in your

company

You shouldn’t accept fund if it is just for less than 6 months

expense

Again, no exact calculation

Open to any discussion (with NDA if needed)

Consider intangible benefits to your business brought by investors

Also consider your business objectives (e.g. if you want to go IPO, best not to give big stakes to each funding as many funding will be required)

Example in Bukalapak case

Suitmedia

Bukalapak

GREEBatavia

Incubator

Questions?

Can also be addressed to:Muhamad Fajrin RasyidSuitmediaGrha Prawira Lantai 2, Jalan Mampang Prapatan Raya Nomor 18 Jakarta 12790fajrin@suitmedia.com