Looking for an automated accounting business plan? You're in the right place.
A service that sends invoices and collects money for other businesses has to answer awkward questions before a bank or a partner will back it. How much cash does it need before client fees cover the staff? How many clients does one collector or one bookkeeper carry? How long do its own customers take to pay, and what does that do to the bank balance? A blank template won't show you what a sensible answer looks like.
"Automated accounting" covers a lot of ground. This plan takes one part of it, software-run invoicing, accounts receivable and cash collection, and builds a small business around it. We'll walk through a complete sample plan for that service in Indianapolis, Indiana, section by section, covering the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: put the whole business on one page, so a reader sees what you are asking for and what it buys within a minute
- The SWOT analysis: name a dependence on one software vendor or one founder without scaring the reader off
- The pricing and unit economics: check what a client pays, what a new client costs to win and how soon the margin repays it, before you commit to a price
- The questions a lender will ask: see short answers on contract terms, client concentration, collateral, insurance and vendor risk, before a banker raises them
- The capacity table: match clients to the people who serve them, so you hire when the workload says so and not before
- The working-capital view: see how the days customers take to pay turn into a receivables balance, and size your cash reserve to match
- The first year, month by month: spot the months that lose money before you reach them, and plan your cash around them
- The downside case: have an answer ready for "what if clients arrive 20% slower?", with the steps the owner takes in response
If you're planning a receivables or invoicing service, read this before you write your own. The firm is fictional, so take what fits your business and change the rest.
In this plan
To turn this example into your own automated accounting business plan, use the automated accounting business plan template.
Executive Summary
Ridge Receivables is an Indiana company that opens near downtown Indianapolis on 1 January 2027. It runs invoicing, accounts receivable and cash collection for small and mid-size businesses that sell to other businesses. It sends the invoices, tracks them, reminds the payer, posts the payment and reports on what is outstanding. From the third month it also offers a past-due follow-up desk, where a named collector chases late invoices in the client's name. Founder Marcus Brandt owns 100% of the firm.
Ridge raises $225,000. Marcus contributes $130,000 from savings and a bank lends $95,000 over five years. The money is split three ways: $169,500 stays in the bank as a reserve, $17,000 goes on equipment and fit-out, and $38,500 covers platform set-up, legal work, registrations and the launch campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $301,600 | $750,100 | $1,206,700 |
| Net income after start-up costs | ($75,055) | ($16,086) | $80,901 |
| Closing cash | $109,219 | $56,629 | $98,813 |
Six pilot clients sign before opening, and the client list reaches 32 by December 2027. Clients pay a monthly platform fee and a fee per invoice sent. Those that add the follow-up desk pay a flat monthly price for a collector's time. Years 1 and 2 are losses: a bookkeeper (month 7) and a collector (month 11) go on payroll before client fees can carry them. Monthly operating profit turns positive in August 2027, and Year 3 is the first profitable year.
The model also tests a bad outcome. With revenue 20% under plan, Marcus delays hires, trims marketing, takes less pay, keeps the first office and pays himself no distributions, and a positive cash balance survives each year-end.
What Ridge offers is modest: one small team runs a client's invoices from send to settlement on a fixed schedule. Payers pay into the client's own bank account, and Ridge never touches the money.
The Company
Legal name: Ridge Receivables, LLC, an Indiana limited liability company. Owner: Marcus Brandt, 100%. Premises: 1,400 square feet of leased office space near downtown Indianapolis. Start date: 1 January 2027. Stage: pre-launch. The lease is in draft, the platform is configured for the first accounting-system connectors, and pilot agreements for the first six clients are signed.
What Ridge is for
Get small and mid-size businesses paid sooner by running the invoicing and follow-up that their own staff rarely have time to do on schedule.
Targets from launch to 2031
- 32 clients by December 2027, up from 6 at launch, with the follow-up desk in use at 9 of them.
- Monthly operating profit from August 2027, and a profit after tax in 2029.
- Repay the bank loan on schedule from April 2027 and finish by the end of 2031, with owner distributions beginning in 2030.
- A team of six employees plus a contract engineer by the end of 2028.
Four ways Ridge earns
| Service | How it is priced | Year 1 share of revenue |
|---|---|---|
| Platform: invoice templates, client portal, payment links, reminders, monthly aging report | $450 a month per client | 33.7% |
| Per-invoice processing | $2.00 per invoice, about 200 a month per client | 29.8% |
| Past-due follow-up desk | $1,400 a month, for clients that add it | 25.5% |
| Client set-up: accounting-system connection, customer-list clean-up, templates | $1,000 once | 10.9% |
Where client money goes
A client's payers pay through a payment link or by their usual method. Card and bank payments made through a licensed payment partner settle directly into the client's own bank account. Ridge records the payment and updates the client's ledger. It does not receive, hold or transmit client funds.
Collection rules and the open licensing question
Ridge works only on business-to-business invoices. Consumer accounts and patient billing are excluded in the client agreement. The Federal Trade Commission's guidance states that business debts are not covered by the Fair Debt Collection Practices Act, which applies to personal and household debts. Other rules still apply. Collection messages go out in the client's name, and the $7,000 legal budget includes a review of how they are worded. Whether Indiana requires any license or registration for this kind of collection work is on Marcus's pre-opening diligence list for counsel, and the plan takes no position on the answer. The first client is not billed until it is settled.
Why the name says "automated accounting"
Automated accounting covers a wide range of software-driven finance work. Ridge takes one part of it: invoicing, receivables and collection. The firm does not keep clients' books or prepare their tax returns. It sends the invoices and chases the money, and it works alongside the client's own accountant.
Who Buys and Why
The business that bills on credit
Examples are an industrial distributor, a commercial contractor, a staffing agency, an equipment dealer or a professional-services firm with 10 to 100 employees. It sends about 200 invoices a month, has one or two people handling billing as a side job, and has a handful of slow payers whose balances nobody has time to chase. The owner learns of the problem when a credit line is fully drawn while customers owe the business money.
A typical client's arithmetic
The model's typical client sends 200 invoices a month at an average of $1,500, which is $300,000 a month or $3.6 million a year. These are the plan's own figures, not market figures. Ridge's fee for that client is $10,200 a year without the follow-up desk, 0.28% of billings, and $27,000 with it, 0.75%.
Each day taken off the client's average collection time frees about $9,863 of cash ($3.6 million divided by 365). A cut of 10 days would free about $98,600. That is the client's side of the working-capital argument, and the same arithmetic runs inside Ridge's own plan, which carries 18 days of receivables on its balance sheet. The 10-day cut illustrates how the sales conversation is framed. It is not a measured result, and the client agreement promises none.
How invoices get chased now
Some have a clerk who sends invoices on Fridays. Some have a reminder feature they never switched on. A few have a part-time bookkeeper who also does payroll. The usual failure is the follow-up: an invoice that is 15 days late gets no message because nobody owns it.
The trigger for calling Ridge
A cash crunch, a credit line at its limit, a billing clerk who leaves, a lender asking for an aging report, or an accountant calling the receivables ledger a mess.
Their priorities, ranked
Invoices go out the day work is done. Payers get polite, consistent reminders. Payments are posted without errors. The monthly fee is predictable, and a person returns their call.
Secondary customer: the accountant or banker who refers
An accounting firm or a community bank loan officer sees the client's aging report and has no service to offer. A named contact at Ridge who reports back on the account gives them a safe referral. Introductions from these partners are the largest channel in the marketing plan.
The Receivables Services Market
The dull middle of getting paid
A small business that sells on credit has two jobs it does not enjoy: sending invoices on time and asking for money. The first is usually done in a batch when someone has time. The second often waits until the owner is irritated. Ridge Receivables sells the dull middle: invoices out the day work is done, a reminder schedule, payment posted the same day, and a collector for the invoices that run late.
Wage anchors for the team
The Bureau of Labor Statistics reported May 2023 national median pay of $45,590 for billing and posting clerks and $44,250 for bill and account collectors. Those are the closest published categories to Ridge's bookkeepers and collectors. The plan starts its bookkeepers at $50,000 and its collectors at $52,000 to $54,000, because the work involves business accounts, disputes and judgment. No Indianapolis figure was available from the source, so the model's wages are planning figures that sit above the national medians.
Sizing the market by reach
No source found for this plan gives a count of Indianapolis-area businesses that outsource their receivables, so the plan does not size the market from the top down. It asks the reverse question: is 124 clients by Year 5 reachable? That takes 34 to 41 new clients a year, because about 18% of the client base leaves each year. The marketing plan shows the channels and the cost per client behind that figure.
Who else a client could pick
| Alternative | What it offers | Why a client picks it | How Ridge differs by design |
|---|---|---|---|
| In-house clerk or part-time bookkeeper | Invoices and chasing when time allows | Knows the business, no outside vendor | A fixed schedule that continues when one person is away |
| Receivables software the client's own staff run | Reminders, portals, payment links | Lowest fee, full control | Ridge does the work, where software alone leaves the chasing with the client |
| Invoicing inside accounting software or a bank's business tools | Basic invoices and payment links | Already paid for | No follow-up desk and no monthly aging review |
| Outsourced bookkeeping and accounting firms | Books and statements, sometimes invoicing | One provider for everything | Receivables are the whole job, with a named collector |
| Commercial collection agencies | Recovery of seriously overdue debts, often on contingency | Pay only if money comes back | Ridge starts before an invoice is late and charges a flat fee, so it complements an agency on old debts and does not replace one |
The table sets out what each category offers and where Ridge sits against it. It ranks nobody. Brand names and prices are left out because providers change plans often and publish their own.
Strengths, weaknesses, opportunities, threats
| Strengths | Weaknesses |
|---|---|
| Founder with twelve years in credit and collections | One senior person: when Marcus is away, sales and escalations stall |
| Flat monthly price that is easy to approve | No brand yet; every client starts from zero |
| Six pilot agreements signed before opening | Years 1 and 2 lose money and draw on the reserve |
| Licensed platform, so no software build before launch | Dependence on one platform vendor and one payment partner |
| Opportunities | Threats |
|---|---|
| Accountants and bankers who see slow-paying clients and have no service to offer | Receivables software getting simpler, so clients keep the work in-house |
| Payment links that let payers settle by bank debit without a mailed check | Larger outsourcers cutting price to win small accounts |
| Past-due follow-up as the add-on that makes clients stay | A collector leaving in the middle of a client's busy quarter |
| A security report that opens larger accounts | A payment-partner or platform outage that delays reminders |
Winning and Pricing Clients
From first call to live account
A 30-minute call, a short review of the prospect's aging report, a proposal at a fixed fee inside two working days, a signed agreement, and about two weeks of set-up. Marcus takes every call in Year 1. At a 25% close rate, the 30 clients won through marketing take about 120 demonstrations, a little over two a week alongside delivery work, which is a heavy load for one person and one reason the first hire is a bookkeeper. The account executive takes over new-client calls from month 24.
Where the first 36 clients come from
36 gross new clients: 6 pilots and about 30 from marketing and referrals. After 4 clients leave, the firm ends the year with 32.
| Lead source | Clients won, Year 1 |
|---|---|
| Referral partners (accountants, bankers, software consultants) | 11 |
| LinkedIn and Google search ads | 8 |
| Local trade associations and events | 5 |
| Monthly cash-collection guide and webinars | 3 |
| Outbound email and call sequences | 3 |
Pricing
The platform fee is $450 a month, and every invoice is billed at $2.00 on top. The follow-up desk is $1,400 a month for about 12 hours of collector time. The notes on the model explain why that price leaves a wide margin on the collector's time and why it still sits below the cost of doing the work in-house. Prices rise 3% a year from Year 2. Set-up costs $1,000, half for the pilots.
What a client signs
The agreement has a 12-month initial term, then rolls monthly with 60 days' notice. Cancelling inside the initial term ends the follow-up desk but leaves the platform fee payable to the end of the term. The set-up fee is not refunded. The pilots run six months with 30 days' notice, which is a weaker commitment than the standard agreement, and the plan treats them as evidence of interest and not as a guaranteed base.
Churn and the client count
The plan expects about 18% of average clients to leave each year. Four leave in Year 1, about a fifth of the 19 clients the firm averages that year. Clients on the follow-up desk are expected to stay longest, because the collector has a name and a history with their payers.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Clients at year end | 32 | 58 | 82 | 104 | 124 |
| Gross new clients in the year | 36 | 34 | 37 | 39 | 41 |
| Clients on the follow-up desk | 9 | 19 | 27 | 35 | 42 |
Net additions fall from 26 in Year 2 to 20 in Year 5. Gross wins stay between 34 and 41 a year, while a larger base loses more clients each year.
The six pilots
Six clients signed pilot agreements before opening, from introductions by two accounting firms and a community banker. A lender can see the signed agreements and the names of the people who made the introductions. None came from clients of Marcus's former employer, whose non-solicitation terms he has reviewed with a lawyer. The pilots pay half the set-up fee and the full monthly price. In January each pilot is about a sixth of revenue. The plan's rule is that no client exceeds 8% of monthly revenue from May onward, once the firm has 16 clients.
Finding Clients
What launch and Year 1 cost
The first year costs $58,000 to market: $14,000 spent at launch out of the start-up funds and $44,000 across the year. Together that is 19% of Year 1 revenue. Day-to-day marketing shrinks to 7% of revenue in Year 3 and 5% in Year 5 once referrals carry more of the load. Divided among the 30 clients that marketing wins, Year 1 works out at roughly $1,930 each. Marcus's own selling time and, from Year 3, the account executive's commission sit outside that figure.
| Channel | Year 1 spend | Clients won | Cost per client |
|---|---|---|---|
| Website, brand and sample aging report (launch) | $9,000 | – | – |
| Introductions to accountants and bankers (launch) | $5,000 | – | – |
| Referral partner program | $9,000 | 11 | $818 |
| LinkedIn and Google search ads | $15,000 | 8 | $1,875 |
| Local trade associations and events | $8,000 | 5 | $1,600 |
| Monthly cash-collection guide and webinars | $6,000 | 3 | $2,000 |
| Outbound email and call sequences | $6,000 | 3 | $2,000 |
Per-client economics
Per client per month, after payroll including the annual pay raises:
| Year 1 | Year 3 | Year 5 | |
|---|---|---|---|
| Revenue, including set-up fees | $1,335 | $1,437 | $1,523 |
| Direct costs | ($162) | ($175) | ($185) |
| Gross profit | $1,173 | $1,262 | $1,338 |
| Payroll, including pay raises | ($697) | ($841) | ($838) |
| Left for rent, marketing, software and other costs | $476 | $421 | $500 |
| Cost to win a client, with sales commission | $1,933 | $3,054 | $3,293 |
| Months of what is left, to repay that cost | 4.1 | 7.3 | 6.6 |
The per-client figures divide each year's revenue and costs by the client-months in that year, which is the sum of month-end clients in Year 1 and the average client count times 12 afterwards. The payback is measured against what is left after the people who serve the client, since that is the margin the client contributes. It runs four to seven months, which is the cost of the model: payroll takes 52% to 62% of revenue, and profit depends on the client-to-staff ratio far more than on cheap acquisition.
Milestones
- January 2027: 6 pilot clients live.
- April 2027: 13 clients, 2 on the follow-up desk.
- August 2027: 22 clients, first month of positive operating profit.
- December 2027: 32 clients, and monthly revenue of $43,900.
How the Work Gets Done
The office
1,400 square feet near downtown Indianapolis, priced in the model at roughly $23.50 a square foot per year all-in ($33,000 in Year 1). The lease runs five years and Marcus guarantees it personally. Some staff work from home. By Year 4 the office grows to about 2,200 square feet.
A client's month at Ridge
Every client has a monthly cycle. Invoices flow from the client's accounting system into the platform and go out the same day. Reminders run on a schedule: before the due date, on the due date, and at 7, 15 and 30 days late. Payments are posted to the client's ledger, and a monthly aging report goes to the owner by the 5th. Disputed invoices go to the client's contact on a written list. On the desk, the collector calls and emails payers in the client's name and records each contact.
Platform, payment partner and vendors
A licensed receivables platform, connectors to QuickBooks, Xero, NetSuite and Sage, a client portal, a payment partner for card and bank payments, telephony with call recording, a ticket system and a CRM. Software subscriptions cost $14,000 in Year 1 and $42,000 by Year 5. Platform and per-invoice usage charges sit in direct costs, at 12% to 22% of the fees they support. A contract integrations engineer, half time from month 15, builds and maintains the connectors.
The platform license is expected to run for 12 months with 90 days' notice and per-client and usage pricing, and the payment partner is expected to charge its processing fees to the client or the payer. Both agreements are draft terms to be confirmed with the vendors before launch. The firm keeps its clients' data exportable in standard formats, so a switch of platform is possible, though it would cost weeks of work.
Clients per person
| At year end | Clients | Invoices a month | Desk clients | Collectors | Desk clients each | Bookkeepers | Bookkeeping hours needed, of available |
|---|---|---|---|---|---|---|---|
| Year 1 | 32 | 6,400 | 9 | 1 | 9.0 | 1 | 96 of 160 |
| Year 2 | 58 | 11,600 | 19 | 2 | 9.5 | 1 | 157 of 160 |
| Year 3 | 82 | 16,400 | 27 | 3 | 9.0 | 2 | 213 of 320 |
| Year 4 | 104 | 20,800 | 35 | 4 | 8.8 | 2 | 260 of 320 |
| Year 5 | 124 | 24,800 | 42 | 4 | 10.5 | 2 | 298 of 320 |
Invoices a month are clients times 200, before the Year 1 seasonal pattern. A bookkeeper has about 160 productive hours a month, and a collector works up to 11 desk clients at about 12 hours each. New hires start at 40% to 70% of capacity, since a role cannot be bought in pieces. The first bookkeeper, at 20 clients, is about 40% loaded, and the second collector starts with about half a desk. The plan accepts that cost. The implementation specialist covers onboarding and support alone until month 38, when the client-success manager joins, with the part-time biller taking routine tickets from month 30.
Who is on payroll when
Four on payroll at the end of Year 1, six employees and a half-time contract engineer at the end of Year 2, eight employees, the engineer and a part-time biller at the end of Year 3, and eleven employees from Year 4, twelve in Year 5, alongside the engineer and the biller. Start dates follow the workload table above, and the downside case shows which of them slip or disappear if revenue falls short. Marcus spends about half his time on sales in Years 1 and 2, then hands new-client calls to the account executive.
Security and compliance controls
- Counsel's review of collection communications and the client agreement before launch.
- A written information security program covering client and payer data. Readiness work runs in months 12 to 18, a SOC 2 Type 1 report is targeted for month 20, and a Type 2 observation period runs through Year 3. The cost sits in the $38,000 and $30,000 of professional fees for Years 2 and 3.
- Multi-factor sign-in, role-based access and call recording with retention limits.
- Insurance for professional liability and cyber at $2 million per claim, plus crime and fidelity, general liability and workers' compensation, budgeted at $11,000 in Year 1. No quotes have been obtained.
- Written agreements for every client, with scope, fees, data handling and a statement that consumer accounts are excluded.
Vendors that are hard to replace
The receivables platform, the payment partner, a telephony provider and an employment lawyer on call. The platform and payment partner are the two hardest to replace.
Who Runs It
Marcus Brandt, founder and managing director
Marcus has twelve years in credit and collections, the last six as credit manager at a regional building-supply distributor in Indianapolis, where he ran a team of four and owned the receivables ledger. He holds a degree in accounting. His $130,000 investment is savings built over those years. He is leaving to build a service that runs that function for companies too small to employ a team.
What Marcus has not done
Marcus has not built a software product, has not sold to strangers at volume and has not run a business with outside staff. The plan covers these with a licensed platform and a contract engineer, a referral program run on a fixed weekly schedule, and an account executive from month 24. A lawyer is on call for hiring.
If Marcus is out
Marcus owns every client relationship in the first year. Each client has a named bookkeeper from month 7 and a written procedure for its account, so that a second person can run the cycle if he is away. Life and disability insurance on Marcus is part of the insurance budget.
Outside eyes
A Carmel accountant with a 10-person practice goes through the Year 1 figures with Marcus each quarter. For pricing and marketing questions he can call on his local Small Business Development Center.
Ownership and the bank's position
Marcus holds all of Ridge Receivables, LLC and backs the loan with his personal guarantee. The bank will want quarterly accounts as a loan condition.
Questions a Lender Will Ask
| Question | Answer in this plan |
|---|---|
| What do clients sign, and how easily can they leave? | A 12-month initial term, then monthly with 60 days' notice. Pilots run six months with 30 days' notice. |
| How concentrated is the revenue? | In January each of six pilots is about a sixth of revenue. From May, no client may exceed 8% of monthly revenue. |
| What proves the pilot demand? | Six signed pilot agreements, available with the introducers' names. They are weaker than standard contracts and the plan does not rely on them past Year 1. |
| What security is the bank taking? | A personal guarantee and a lien on about $17,000 of equipment and receivables of $14,900 at the end of Year 1. Both are thin, so the guarantee and the $169,500 reserve carry the loan. |
| What covers a professional error or a data breach? | Professional liability and cyber cover at $2 million per claim. No quotes obtained yet. |
| What if the platform or payment partner fails? | Draft terms give 90 days' notice on the platform. Client data is exportable. A switch would take weeks and is not costed. |
| When does the firm have a SOC 2 report? | Readiness in months 12 to 18, a Type 1 report targeted for month 20, and a Type 2 period through Year 3. |
| Can the loan be serviced? | Not from operations until Year 3. Debt service cover is negative in Years 1 and 2 and the reserve pays the $25,067 due in Year 2. |
The Numbers
The tables that follow all come out of a single model of the business. Year 1 is run month by month and Years 2 to 5 are annual. The reasoning behind each input is set out before the results, so a reader can check any figure against its source.
Funding the launch
| Use of funds | Amount |
|---|---|
| Laptops, headsets, monitors and phones | $9,000 |
| Office furniture and fit-out | $8,000 |
| Platform set-up: accounting-system connectors, client portal, templates | $16,000 |
| Legal: entity set-up, client agreements, collections-practice review | $7,000 |
| Business registrations and payment-partner onboarding | $1,500 |
| Launch: website, brand, accountant and banker introductions | $14,000 |
| Cash reserve for the first two years | $169,500 |
| Total uses | $225,000 |
| Source of funds | Amount |
|---|---|
| Marcus Brandt's savings | $130,000 |
| Bank term loan | $95,000 |
| Total sources | $225,000 |
Marcus puts in $130,000 of savings (58% of the total) and the bank supplies $95,000 over five years at 9.75%, with only interest due for the first three months. The model gives the bank a personal guarantee plus a claim over the equipment and receivables. Those two assets are thin collateral, about $17,000 of new equipment and $14,900 of receivables at the end of Year 1, so the loan rests mainly on the guarantee and the reserve. The 9.75% is a planning rate, not a lender quote. The $169,500 reserve is deliberately large. The firm pays a bookkeeper from month 7 and a collector from month 11, before its client fees cover them, and cash used in operations lasts through Year 2. Of the $225,000, $38,500 is expensed at opening (platform set-up, legal work, registrations and the launch campaign) and $17,000 buys equipment and fit-out.
What the figures rest on
- Each client pays a platform fee of $450 a month for invoice templates, the client portal, payment links, automatic reminders and a monthly aging report. Invoices are billed on top at $2.00 each, and a typical client sends about 200 a month. Clients that add the past-due follow-up desk pay $1,400 a month. Set-up costs $1,000 once, with the six launch clients paying half. Prices rise 3% a year from Year 2. The client agreement has a 12-month initial term, then rolls monthly with 60 days' notice. The launch pilots run six months with 30 days' notice.
- Six clients are live at launch; year-end counts run 32, 58, 82, 104 and 124. Gross new clients are 36, 34, 37, 39 and 41. About 18% of average clients leave each year, a cautious figure for small-business customers on a monthly contract that is not drawn from a published benchmark, and about a fifth leave in Year 1 (four of the 19 the firm averages). Clients that add the desk are 28% of the base at the end of Year 1 and 34% by Year 5.
- Invoice volume follows the calendar in Year 1: 0.92 of the average in January, 0.90 in December, and up to 1.04 in June and October, as contractors and distributors slow over the winter and the holidays. Later years are shown as annual figures. Recurring revenue per client works out at about $1,188 a month in Year 1 and $1,390 in Year 3, before set-up fees.
- Direct costs run at about 12.2% of revenue. Platform fees carry 12% for the licensed receivables platform and accounting-system connectors. Invoice processing carries 22%, about 44 cents an invoice, for platform usage charges, e-delivery and text messages, paper printing and mailing for the clients that want it, and payment-partner returns handling. The follow-up desk carries 4% for dialer minutes and set-up fees 5%. The engine applies the blended Year 1 percentage to later years.
- Receivables average 18 days. Platform fees are collected by bank debit on the first of the month. Invoice and desk fees are billed on the first of the following month, due in 15 days, with autopay encouraged. Set-up fees are billed at signing. Year-end receivables are 18 days of the year's revenue, which understates a fast-growing firm: December 2027 revenue of $43,900 is a $526,800 annual run rate, and 18 days of that is about $26,000 against the $14,873 shown, so Year 1 closing cash is overstated by about $11,000 and later years by a smaller amount. Payables are set to zero days, because software and platform licenses are billed monthly by card in advance. Client payments settle straight into each client's own bank account through the payment partner, so the firm holds no client money and carries no float.
- Bookkeepers post payments and reconcile client ledgers. The model allows 3.0 hours per client per month in Year 1, falling to 2.7, 2.6, 2.5 and 2.4 in Years 2 to 5 as automatic matching improves, against about 160 productive hours per bookkeeper. A collector works up to 11 desk clients at about 12 hours each a month. The implementation specialist spends about 14 hours onboarding each new client and 1.5 hours a month on support per client. Hires land when the workload is 40% to 70% of the role, because a client's work arrives in blocks and a role cannot be bought in pieces.
- The desk bills $1,400 for about 12 hours of collector time. At 11 clients per collector, a collector's loaded year of $66,000 works out at about $500 per desk client per month, a 64% margin on the collector's time. The gap pays for the lead's supervision, call review, training, cover for absences and the collection-practice legal review, and it sits below what the client would pay for the same work in-house: half a collector's loaded year at the May 2023 BLS median is about $2,340 a month. The same arithmetic is why the plan runs the desk with four collectors by Year 4 and not two.
- Wages are launch rates, with annual 3% pay raises charged as a separate line from Year 2. Bookkeepers start at $50,000 and collectors at $52,000 to $54,000, about 10% and 18% to 22% above the May 2023 national medians of $45,590 for billing and posting clerks and $44,250 for bill and account collectors, because business-to-business work involves disputes and judgment. On top of wages, payroll carries 27% for employer taxes, health cover, workers' compensation and a retirement match, and 12% for the part-time biller. The integrations engineer is a contractor at about 20 hours a week and $85,000 a year, roughly $82 an hour, with no on-cost. The account executive has a $60,000 base plus commission of about 5% of the first-year recurring revenue from new clients, which gives on-target earnings of about $93,000 in Year 3; the model does not add payroll taxes to commission.
- Rent is based on 1,400 square feet near downtown Indianapolis at about $23.50 a square foot a year, all-in, then about 2,200 square feet from Year 4. That rate is a planning figure, not a quoted market rate. Insurance covers professional liability and cyber at $2 million per claim, plus crime and fidelity, general liability and workers' compensation, budgeted at $11,000 in Year 1; no quotes were obtained. Professional fees are $16,000 in Year 1 for a legal retainer, outside accounting and tax, then $38,000 in Year 2 when the first SOC 2 report and a penetration test are paid for, and $30,000 to $34,000 a year after that.
- Marketing is $44,000 in Year 1 on top of the $14,000 launch campaign, rising to $98,000 by Year 5. The bad debt allowance is about 0.7% of revenue.
- Profit is taxed at 21% federal and 4.9% Indiana corporate rates, after earlier losses are carried forward. Federal law limits the loss deduction to 80% of taxable income; on these figures Year 3 uses about 60%, so the limit does not bind, but Indiana's loss rules and county income taxes are not modeled. An S corporation election, which a firm like this would usually make, would shift the tax to Marcus's own return and leave more cash in the company. Corporate rates stand in as a cautious placeholder.
- Marcus draws $25,000 in Year 4 and $40,000 in Year 5, once the balance sheet has cash to spare. The bank loan is gone by the end of Year 5.
Revenue by line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Platform and service fees | $101,700 | $250,300 | $401,000 | $548,800 | $692,900 |
| Per-invoice processing | $89,900 | $222,500 | $356,500 | $487,800 | $615,900 |
| Past-due follow-up desk | $77,000 | $242,300 | $409,900 | $569,100 | $728,000 |
| Client set-up fees | $33,000 | $35,000 | $39,300 | $42,600 | $46,100 |
| Total revenue | $301,600 | $750,100 | $1,206,700 | $1,648,300 | $2,082,900 |
| Growth on prior year | – | 149% | 61% | 37% | 26% |
The three recurring lines are 89% of Year 1 revenue and 98% of Year 5, so the plan is mostly a bet on keeping clients. The follow-up desk is the line that grows fastest, from 25.5% of revenue in Year 1 to 35.0% in Year 5, because it is priced for the labor behind it. Revenue more than doubles in Year 2 (149%) because Year 1 is a part-year ramp: the firm averages 19 clients in Year 1 and 45 in Year 2, and prices rise 3%. Growth then slows to 61%, 37% and 26%. Set-up fees fall from 10.9% of revenue to 2.2%.
The first twelve months
| Month | Platform and service fees | Per-invoice processing | Past-due follow-up desk | Client set-up fees | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $2,700 | $2,200 | $0 | $3,000 | $7,900 | ($17,160) |
| Feb 2027 | $3,600 | $3,000 | $0 | $2,000 | $8,600 | ($16,545) |
| Mar 2027 | $4,950 | $4,400 | $1,400 | $3,000 | $13,750 | ($12,022) |
| Apr 2027 | $5,850 | $5,300 | $2,800 | $2,000 | $15,950 | ($10,090) |
| May 2027 | $7,200 | $6,600 | $4,200 | $3,000 | $21,000 | ($5,655) |
| Jun 2027 | $8,100 | $7,500 | $5,600 | $3,000 | $24,200 | ($2,844) |
| Jul 2027 | $9,000 | $7,800 | $7,000 | $2,000 | $25,800 | ($1,439) |
| Aug 2027 | $9,900 | $8,800 | $8,400 | $3,000 | $30,100 | $2,338 |
| Sep 2027 | $10,800 | $9,800 | $9,800 | $2,000 | $32,400 | $4,358 |
| Oct 2027 | $12,150 | $11,200 | $11,200 | $4,000 | $38,550 | $9,759 |
| Nov 2027 | $13,050 | $11,800 | $12,600 | $2,000 | $39,450 | $10,550 |
| Dec 2027 | $14,400 | $11,500 | $14,000 | $4,000 | $43,900 | $14,458 |
Monthly revenue climbs steadily, though invoice counts sag in January, February and December. Operating profit before interest, depreciation and tax (EBITDA) stays negative until August, when the 22nd client comes on. Year 1 cash bottoms out in Aug at about $75,000, once the 18 days clients take to pay are allowed for. The five-year low arrives later, at the end of Year 2.
Who is hired when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and managing director | $85,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Bookkeeper | $50,000 | Month 7 | 1 | 1 | 1 | 1 | 1 |
| Collections lead | $54,000 | Month 11 | 1 | 1 | 1 | 1 | 1 |
| Implementation specialist | $60,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Integrations engineer (contract, half time) | $85,000 | Month 15 | – | 1 | 1 | 1 | 1 |
| Collector | $52,000 | Month 15 | – | 1 | 1 | 1 | 1 |
| Account executive (base salary) | $60,000 | Month 24 | – | 1 | 1 | 1 | 1 |
| Second bookkeeper (cash application) | $50,000 | Month 25 | – | – | 1 | 1 | 1 |
| Collector (third) | $52,000 | Month 30 | – | – | 1 | 1 | 1 |
| Billing support (part time, 25 hours a week) | $31,000 | Month 30 | – | – | 0.5 | 0.5 | 0.5 |
| Client-success manager | $65,000 | Month 38 | – | – | – | 1 | 1 |
| Second senior collections specialist | $58,000 | Month 44 | – | – | – | 1 | 1 |
| Operations manager | $72,000 | Month 46 | – | – | – | 1 | 1 |
| Implementation specialist (second) | $60,000 | Month 51 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $157,480 | $448,447 | $665,747 | $836,953 | $1,018,880 |
January finds Marcus on his own. The bookkeeper starts in month 7 with 20 clients on the books and the job about 40% full; the first collector follows in month 11 and the implementation specialist in month 12. The integrations engineer is a contractor from month 15 and works half time, although the table shows 1; a second collector starts the same month. The account executive joins in month 24, the second bookkeeper in month 25, a third collector and a part-time biller in month 30, the client-success manager in month 38, a fourth collector in month 44, an operations manager in month 46 and a second implementation specialist in month 51. The account executive's $60,000 is a base salary; commission is a separate line. The biller's $31,000 is a part-time salary for about 25 hours a week. Marcus draws $85,000 a year from the first month, and every profit figure is struck after that.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $301,600 | $750,100 | $1,206,700 | $1,648,300 | $2,082,900 |
| Direct costs (platform fees, invoice delivery, dialer) | ($36,712) | ($91,305) | ($146,885) | ($200,638) | ($253,539) |
| Gross profit | $264,888 | $658,795 | $1,059,815 | $1,447,662 | $1,829,361 |
| Payroll incl. on-costs | ($157,480) | ($448,447) | ($665,747) | ($836,952) | ($1,018,880) |
| Rent | ($33,000) | ($34,000) | ($35,000) | ($52,000) | ($53,500) |
| Utilities | ($4,200) | ($4,300) | ($4,400) | ($6,500) | ($6,700) |
| Marketing | ($44,000) | ($70,000) | ($80,000) | ($90,000) | ($98,000) |
| Insurance | ($11,000) | ($12,500) | ($14,000) | ($15,500) | ($17,000) |
| Professional fees | ($16,000) | ($38,000) | ($30,000) | ($32,000) | ($34,000) |
| Software subscriptions | ($14,000) | ($21,000) | ($29,000) | ($36,000) | ($42,000) |
| Training, dues and license renewals | ($2,500) | ($3,500) | ($5,000) | ($6,000) | ($6,500) |
| Phones, supplies and postage | ($3,500) | ($4,500) | ($5,500) | ($6,500) | ($7,000) |
| Sales commissions | $0 | $0 | ($33,000) | ($35,000) | ($37,000) |
| Recruiting and payroll service | ($1,500) | ($5,000) | ($5,000) | ($6,000) | ($6,000) |
| Equipment replacement and new-hire kit | $0 | ($4,000) | ($5,000) | ($6,000) | ($5,000) |
| Bad debt allowance | ($2,000) | ($5,500) | ($8,500) | ($11,000) | ($13,500) |
| Annual pay raises (3% a year) | $0 | ($13,453) | ($40,544) | ($77,608) | ($127,878) |
| EBITDA | ($24,292) | ($5,405) | $99,125 | $230,602 | $356,403 |
| Depreciation | ($3,393) | ($3,393) | ($3,393) | ($3,393) | ($1,143) |
| Interest | ($8,870) | ($7,288) | ($5,475) | ($3,477) | ($1,275) |
| Income tax | $0 | $0 | ($9,356) | ($55,644) | ($88,040) |
| Net income before start-up costs | ($36,555) | ($16,086) | $80,901 | $168,088 | $265,945 |
| Start-up costs expensed at opening (platform set-up $16,000, legal, registrations, launch marketing) | ($38,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($75,055) | ($16,086) | $80,901 | $168,088 | $265,945 |
In Year 1 the loss is $36,555 ahead of start-up costs and $75,055 once they are included. Year 2 loses a little more: EBITDA of negative $5,405 and a net loss of $16,086 once interest and depreciation are charged. Year 3 turns the corner with net income of $80,901 and an EBITDA margin of 8.2%. The margin rises to 14.0% in Year 4 and 17.1% in Year 5 as the client base grows faster than the team. Payroll, including pay raises, is 52%, 62%, 59%, 55% and 55% of revenue across the five years; Year 2 is the peak because the contractor, a collector and the account executive arrive before their clients do. Income tax is zero in Years 1 and 2 and appears in Year 3, once the earlier losses are used up.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($86,535) | ($34,811) | $61,777 | $149,703 | $245,656 |
| Equipment and fit-out | ($17,000) | $0 | $0 | $0 | $0 |
| Funding received | $225,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | ($12,246) | ($17,779) | ($19,592) | ($21,590) | ($23,792) |
| Owner distributions | $0 | $0 | $0 | ($25,000) | ($40,000) |
| Net change in cash | $109,219 | ($52,590) | $42,185 | $103,113 | $181,864 |
| Closing cash | $109,219 | $56,629 | $98,813 | $201,926 | $383,790 |
Cash never runs out. The low is $56,629 at the end of Year 2, after operations consume $34,811 and $17,779 of loan principal is repaid. Year 1 closes higher at $109,219 only because the funding arrives in month 1, and about $11,000 lower once receivables are measured at the December run rate. Marcus starts drawing distributions in Year 4, when retained earnings and cash can fund them, and the loan is cleared by the end of Year 5.
Balance sheet at each year end
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $109,219 | $56,629 | $98,813 | $201,926 | $383,790 |
| Accounts receivable | $14,873 | $36,991 | $59,508 | $81,286 | $102,718 |
| Equipment and fit-out (net) | $13,607 | $10,214 | $6,821 | $3,429 | $2,286 |
| Total assets | $137,699 | $103,834 | $165,143 | $286,641 | $488,794 |
| Bank loan | $82,754 | $64,975 | $45,382 | $23,792 | $0 |
| Paid-in capital | $130,000 | $130,000 | $130,000 | $130,000 | $130,000 |
| Retained earnings | ($75,055) | ($91,140) | ($10,239) | $132,849 | $358,794 |
| Total liabilities and equity | $137,699 | $103,834 | $165,143 | $286,641 | $488,794 |
Break-even and margins
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -8.1% | -0.7% | 8.2% | 14.0% | 17.1% |
| Net margin (before start-up costs) | -12.1% | -2.1% | 6.7% | 10.2% | 12.8% |
| Payroll incl. pay raises as share of revenue | 52% | 62% | 59% | 55% | 55% |
| Revenue per full-time equivalent at year end | $75,400 | $125,017 | $141,965 | $143,330 | $166,632 |
| Average monthly revenue | $25,133 | $62,508 | $100,558 | $137,358 | $173,575 |
| Monthly revenue needed to cover operating costs | $27,438 | $63,021 | $91,153 | $115,478 | $139,758 |
| Debt service cover (EBITDA / interest + principal) | -1.2x | -0.2x | 4.0x | 9.2x | 14.2x |
A year covers its costs when average monthly revenue beats the "needed" line in the margins table. Year 1 brings in $25,133 a month on average where $27,438 is required, a shortfall. Year 2 brings in $62,508 against $63,021, narrowly short. Year 3 brings in $100,558 against $91,153. Debt service cover is below zero in Years 1 and 2, because EBITDA does not cover the $25,067 of interest and principal due in Year 2, which the reserve pays. It rises to 4.0x in Year 3.
If clients arrive 20% slower
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $241,280 | $600,080 | $965,360 | $1,318,640 | $1,666,320 |
| Net income before start-up costs | ($48,559) | ($27,282) | $38,014 | $81,052 | $150,180 |
| Net income after start-up costs | ($87,059) | ($27,282) | $38,014 | $81,052 | $150,180 |
| Closing cash | $100,189 | $40,827 | $44,627 | $90,060 | $200,444 |
Here every revenue line is 20% lower in every year, which amounts to 20% fewer clients. Marcus responds as follows: the bookkeeper starts two months late, hires from month 13 onward slip by six months, the fourth collector never arrives, marketing falls 20%, Marcus's pay drops 20%, the firm keeps its first office and distributions stop. Under that plan the firm loses money through Year 2, never holds less than $40,827 at a year end, and makes a profit from Year 3. Year 1 is still about $12,000 worse than the base case before start-up costs, because the cuts do not offset the lost revenue until the later hires would have started. Equity ends Year 1 at $42,941 and falls to about $15,700 at the end of Year 2, thin enough that Marcus would talk to the bank before the first quarterly accounts of that year are due. With no response, the same shortfall would drain the firm's cash in Year 2 and with negative equity from the same year.
Sources
- Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2023: Billing and Posting Clerks (43-3021) and Bill and Account Collectors (43-3011). National medians only. The May 2024 and May 2025 occupation pages loaded without wage figures, so May 2023 is quoted.
- Federal Trade Commission, Debt Collection FAQs: business debts are not covered by the Fair Debt Collection Practices Act.
- Indiana Department of Revenue, Tax types: corporate adjusted gross income tax rate of 4.9%.
- 26 U.S.C. section 11(b): federal corporate rate of 21% of taxable income. 26 U.S.C. section 172: net operating loss deduction limited to 80% of taxable income for later losses.
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