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Guide to Initial Capital, Fixed Costs, Assets & Break-Even Setup

The Operating Finance & Management Accounting module provides business owners with complete financial visibility: managing initial equity capital, tracking recurring fixed costs, automating asset depreciation, and establishing Break-Even Points and Financial Runway.

I. Financial Management Workflow Overview​

II. Detailed Setup Guide for Each Module​

1. Initial Capital Setup (Initial Capital)​

  • Purpose: Records owner equity injections and shareholder contributions for working capital.
  • Path: Finance ➔ Cash Flow Setup ➔ Initial Capital (path /initial-capital).

Setup Steps:​

  1. Click + Create Initial Capital Entry.
  2. Select Payment Method: Bank Transfer or Cash.
  3. Choose Receiving Account/Fund: e.g., Company Main Bank Account or Cash Vault.
  4. Enter Contribution Amount (USD/THB/LAK/VND).
  5. Enter Accounting Note: (e.g., Founder initial working capital injection).
  6. Click Confirm to credit the account balance immediately.

[!TIP] Initial capital is recorded as financing cash flow and equity capital, never as commercial sales revenue.

2. Opening Balance Setup (Opening Balances)​

  • Purpose: Synchronizes real-world cash and bank balances upon switching to the system.
  • Path: Finance ➔ Cash Flow Setup ➔ Opening Balances.

Setup Steps:​

  1. Select the account (e.g., POS Cash Drawer, Corporate Bank Account).
  2. Enter Starting Available Balance as of the cut-off date.
  3. Click Save Configuration.

3. Categories & Recurring Cash Flows (Recurring Costs)​

3.1. Expense & Revenue Categorization​

  • Path: Finance ➔ Cash Flow Categories.
  • Split into two fundamental classifications:
    • Variable Costs: Vary directly with sales volume (COGS, Ads spend, Shipping fees, Marketplace commissions).
    • Fixed Costs: Incurred regardless of sales volume (Rent, Utilities, Software subscriptions, Base salaries).

3.2. Automated Scheduling for Recurring Fixed Costs​

  • Path: Finance ➔ Cash Flow Setup ➔ Recurring Expenses.
┌────────────────────────────────────────────────────────────────────────┐
│ ADD RECURRING EXPENSE SCHEDULE                                         │
├────────────────────────────────────────────────────────────────────────┤
│ Expense Name:        Office Lease - Building Floor 4                   │
│ Transaction Type:    [ Payment Voucher                               ▼]│
│ Category:            [ Property Lease & Rent                         ▼]│
│ Recurring Amount:    $1,200.00                                         │
│ Recurrence Cycle:    [ Monthly                                       ▼]│
│ Due Date:            Day 05 of each month                              │
│ Source Account:      [ Corporate Checking Account                    ▼]│
│ Status:              [x] Active Automated Generation                   │
└────────────────────────────────────────────────────────────────────────┘

4. Operating Assets & Automated Depreciation (Operating Assets)​

  • Purpose: Tracks asset registers and automates monthly depreciation into fixed costs.
  • Path: Finance ➔ Operating Assets (path /operating-assets).

4.1. Supported Asset Categories:​

  1. Fixed Assets (FIXED_ASSET): Furniture, HVAC, delivery vehicles, warehouse racks...
  2. Tools & Equipment (TOOL): Laptops, POS terminals, receipt printers, barcode scanners...
  3. Prepaid Expenses (PREPAID): Multi-year office deposits, annual software licenses...

4.2. Monthly Depreciation Formula:​

Monthly Depreciation Cost = (Original Cost - Estimated Salvage Value) / Depreciation Period (Months)

5. Break-Even Analysis & Financial Runway (Break-Even & Runway)​

  • Path: Finance ➔ Operating Break-Even (path /operating-break-even).

Core Business Financial Metrics:​

MetricFormulaManagement Significance
Contribution Margin (CM)CM = Revenue - Variable CostsReal margin dollars available to cover fixed overhead.
Contribution Margin Ratio (CMR)CMR = (CM / Revenue) * 100%Gross contribution generated per $1.00 of revenue.
Accounting Break-Even (BEP_acc)BEP_acc = Accounting Fixed Costs / CMRMinimum monthly revenue required to avoid accounting loss.
Cash Break-Even (BEP_cash)BEP_cash = Cash Fixed Costs / CMRMinimum revenue required to prevent cash depletion.
Margin of Safety (MOS)MOS = ((Actual Revenue - BEP) / Actual Revenue) * 100%Percentage revenue can decline before entering loss territory.
Net Cash Burn RateNet Burn = Cash Outflows - Cash InflowsMonthly rate of cash consumption when operating pre-profit.
Financial RunwayRunway = Total Available Cash / Net Burn RateMonths the business can survive at current cash burn.