BWA Explained: The 5 Biggest Financial Traps for D2C Brands

Many D2C brands appear to be growing rapidly – and yet suddenly find themselves facing existential financial problems. The BWA (monthly management report) explained simply: it is your company's most important monthly management tool – and this is exactly where most mistakes begin. Marketing is running, revenues are rising, but at the end of the month the account is empty or the tax office comes knocking with a hefty back payment. How can this be?

Matthias Walter Eser, external CFO, M&A advisor and published author, knows the answer from hundreds of consulting mandates: most e-commerce companies make the same five financial mistakes – over and over again. In the podcast episode "Behind the Scenes in Marketing" with host Antonio Blago, he exposes these mistakes unflinchingly and explains how profitable scaling really works.

To the podcast episode:

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This article summarises the key insights – practical, structured and with concrete recommendations for action.

Who is Matthias Walter Eser?

Matthias Walter Eser is an external CFO and M&A advisor with a focus on fast-growing e-commerce brands and marketing agencies in the German-speaking world. Through his consultancy ESA Capital Advisory Partners, he continuously works with 20 to 30 clients – covering everything from financial strategy and liquidity planning to tax optimisation.

His career path led him through investment banking, private equity and venture capital to a niche where his analytical skills meet an urgent need: financial clarity for founders who know their product inside and out – but not necessarily their numbers.

He is currently publishing the book "Wohlstandsarmut" through Forwardverlag, which deals with the succession problem in German medium-sized businesses. All proceeds go to charitable causes.

The 5 biggest financial mistakes in e-commerce controlling

Mistake 1: The BWA explained simply – and why it's still wrong

The BWA (monthly management report) explained simply: it is your monthly financial mirror. It shows whether your business is making a profit or a loss – and where costs are getting out of hand. Professional e-commerce controlling begins and ends with a correct BWA.

The problem: in practice, BWAs either arrive too late or are simply incorrect.

"When the BWAs are on time at all, they are simply incorrect in 99 out of 100 cases. These management reports do arrive, but what they contain is complete rubbish."
— Matthias Walter Eser

A BWA that is available by the 15th of the following month for the previous month is considered timely. Anyone who only sees their figures months later is navigating their company blind. Errors in financial accounting compound over time and lead to wrong decisions in purchasing, marketing and staffing.

What you can do:
– Agree on binding deadlines with your tax advisor for the monthly BWA.
– Have the BWA reviewed by someone who truly understands it.
– Ensure that the booking logic for inventory is correctly mapped (more on this in Mistake 5).

Mistake 2: No structured liquidity management in e-commerce controlling

The second most common mistake is managing a company "by bank balance". Many founders open their online banking, see a positive number and believe everything is fine. This is dangerous.

Professional e-commerce controlling requires knowing and planning all future incoming and outgoing payments – at least six to twelve months in advance. This includes:

• Due tax payments and advance payments
• Goods purchases and seasonal ordering cycles
• Payroll and salary settlements
• Repayments of loans or financing

"If there are persistent capital outflows that you didn't see coming, you should find someone who knows what they're doing – because ignorance is no defence against penalties, especially not for the entrepreneur."
— Matthias Walter Eser

Note: A positive bank balance today says nothing about whether there will still be money in three months to pay for goods or settle taxes.

Mistake 3: Missing inventory and procurement management

Closely linked to liquidity planning is inventory management. Many e-commerce companies purchase goods based on gut feeling, a glance at the previous year or simplified projections – without a structured system.

This leads to two classic problems:

1. Overstock: Too much capital is tied up in goods that are not being sold. Liquidity suffers, and at the same time tax consequences arise (more on this in Mistake 5).
2. Understock (out of stock): Bestsellers are sold out, revenue potential is lost, and expensive last-minute procurement becomes necessary.

Professional inventory management takes into account lead times, seasonal fluctuations, historical sales data and planned marketing activities – and incorporates all of this into an integrated planning model.

Mistake 4: No understanding of integrated corporate planning

One of the conceptually most challenging points for many founders: the difference between profit and loss (P&L) and cash flow (cash flow statement).

Matthias Walter Eser explains it this way:

• The profit and loss statement operates at the level of expenses and revenues. It shows whether a profit or loss arises from an accounting perspective.
• The cash flow statement shows what money has actually flowed – in and out.

Both perspectives can differ significantly from each other – especially in retail. A company can report an accounting profit while simultaneously being illiquid. Anyone who has had the BWA explained but ignores the cash flow statement only has half the picture.

"Integrated corporate planning means: a planned balance sheet, a planned profit and loss statement and a planned cash flow statement. These two components are not accessible to most e-commerce brands."
— Matthias Walter Eser

The three pillars of integrated planning:

Anyone who only looks at the P&L and ignores the cash flow statement will regularly be caught off guard by liquidity shortfalls.

Mistake 5: The HGB trap – taxes on goods still sitting in the warehouse

This mistake is particularly insidious – and for many e-commerce founders it is the most expensive lesson of all.

Under the German Commercial Code (HGB), goods purchases are not immediately recorded as an expense. Instead, the principle of inventory changes applies: what matters is the difference in inventory levels between two stocktaking dates (e.g. 31/12/2024 and 31/12/2025).

A concrete example:

Imagine you purchase goods worth €250,000 and sell none of them during this period. Your inventory rises from zero to €250,000. Under HGB, this creates an increase in inventory – and this increase is not treated as an expense in accounting terms; instead, it increases your profit.

The result: the tax office sees a notional profit of €250,000 – and demands around 30% tax on it, which amounts to approximately €75,000 to €85,000. And this is despite the fact that you have just invested €250,000 in goods and have not yet generated a single cent in revenue.

"You have drained €250,000 in liquidity at the cash flow level and still have to pay the full 30% in taxes, because it does not constitute an expense. This puts many companies in existential financial difficulty."
— Matthias Walter Eser

Particularly dangerous: Many founders who started during the Corona boom phase of 2020–2022 are only seeing these tax consequences now – with a time delay. Anyone who has not planned for this suddenly faces back payments that could bring the company to its knees.

This is precisely why it is so important to have the BWA explained – and by someone who truly understands the tax implications as well.

ROAS e-commerce: why you are optimising the wrong metric

ROAS e-commerce (Return on Advertising Spend) is ubiquitous in the e-commerce world. It indicates how much revenue you generate per euro of advertising spend. A ROAS of 4 means: for every euro invested, €4 in revenue comes back.

That sounds good. The problem: ROAS e-commerce says nothing about profitability.

The iPhone example illustrates the ROAS problem

Imagine you are selling an iPhone that costs you €1,000 to purchase, for only €600. With a low marketing budget, the ROAS would be astronomically high – perhaps even 600. But you are losing €400 on every sale.

"If you get €2 back, that does not at all mean that this sale comes with a positive contribution margin. ROAS ignores all the costs."
— Matthias Walter Eser

What you should measure instead in e-commerce controlling

The more meaningful metric is the contribution margin – and not just CM1 (revenue minus variable costs), but ideally CM3, which takes all relevant cost blocks into account:

• CM1: Revenue minus cost of goods sold (gross margin)
• CM2: CM1 minus variable marketing costs
• CM3: CM2 minus fixed overhead costs (rent, personnel, overheads)

Only when CM3 is positive is the company truly making money. All other analyses are, as Matthias calls them, "back-of-a-napkin calculations" – they tell the story you want to hear, not the one that is true.

Further useful metrics for professional e-commerce controlling:
– Marketing Efficiency Rate (MER): the ratio of total revenue to total marketing spend – provides a more holistic picture than ROAS in e-commerce.
– Customer Acquisition Cost (CAC): what does it actually cost to acquire a new customer – across all channels?
– Contribution Margin per Order: contribution margin per order after all variable costs