Income and expense items and expense groups: setup

Why income and expense items are needed

An income or expense item is a category by which Bimp classifies cash receipts and payments. It defines which line of the reports “Income and expenses” (P&L), “Expenses”, and “Cash flow” an operation goes to. Without a configured list of items, the system does not know how to classify payments.

Correct items let you:

• separate production expenses from office maintenance expenses;
• see which line of business brings the most money;
• build P&L and Cash Flow reports automatically.

Example. A company makes eco goods. Buying raw materials is “Cost price”, type of activity “Operating”. Office rent is “Administrative expenses”, also “Operating”. Loan interest is “Financial operations”, type of activity “Financing”: in the Cash Flow report it is grouped separately.

How to create an expense item

An expense item is created in the “Expense items” directory.

1. Open Directories → Expense items and click Create.
2. In the “Name” field, enter a name, for example “Marketing”.
3. In the “Comment” field (optional, up to 1000 characters), describe what the item includes. This helps employees avoid mistakes when entering payments.
4. In the “Expense group” field, choose a group from the list; it determines where the expense appears in reports.
5. In the “Cash flow item” field, specify a name for the “Cash flow” report.
6. In the “Type of activity” field, choose Operating, Investing, or Financing.
7. To make the item a child of another, in the “Parent expense item” field choose the main one (for example, “Employee bonuses”). First make sure the right expense group is selected.
8. Click Save.


Which expense groups there are

The expense group is the main “filter” that defines where an expense goes in the financial reports.

Group	What it includes	Effect on reports	Example
Cost price	Direct costs of the product	Reduces gross profit in the P&L	Buying boards for tables
Administrative expenses	Maintaining the company as a structure	Operating expenses of the period	Office internet, accountant’s salary
Selling expenses	Selling and delivering to the customer	Affect operating profit	Facebook ads, Nova Poshta services
Production overhead	Indirect production costs	Affect operating profit	Workshop rent, electricity for machines
Financial operations	Work with money and capital	In Cash Flow, under financing activity if the matching type of activity is chosen	Bank fee, loan interest
Depreciation of non-current assets	Gradual wear of property	Reduces profit in the P&L but does not appear in Cash Flow	Wear of a company car
Other expenses	Rare expenses outside other categories	Affect overall net profit	Tax fine, charitable donation

A correct split between cost price and administrative expenses lets you determine the margin of a product accurately.

How to create an income item

An income item is created the same way as an expense item, in the “Income items” directory.

1. Open Directories → Income items and click Create.
2. In the “Name” field, enter a name, for example “Sales of goods” or “Installation services”.
3. In the “Comment” field (optional), describe the item.
4. In the “Income group” field, choose a group from the list (in the screenshot example, “Financial operations” and “Other income” are available, among others).
5. In the “Cash flow item” field, specify a name for the “Cash flow” report.
6. In the “Type of activity” field, choose Operating, Investing, or Financing.
7. If needed, choose “Parent income item”.
8. Click Save.

Example. A company sells wallpaper and provides wallpapering services. After creating the items “Sales of goods” and “Installation services”, the owner saw that services bring 10% of income but take 40% of staff time, and reviewed the price list.

How the type of activity affects Cash Flow

The “Type of activity” field defines where a money flow is shown in the Cash Flow report. Operating activity is the main business (sales, buying raw materials, rent, salaries). Investing is putting money into property and assets. Financing is loans, interest, dividends. Reports: Cash Flow by type of activity and the “Expenses” report.