Our financial policy outlines the key components that shape our company's finances. We share these policies publicly, reflecting our commitment to Open Core governance, which naturally aligns with our open-source [[Design Philosophy]]. ## Systems ### Accounting We use the software program Moneybird. It is by far the best software program available in the Netherlands, focusing on companies that have 1-20 employees. In this system we track invoices, expenses, investments and cash balances. ### Banking We are using 3 banks. Rabobank, Adyen and Revolut. The Rabobank accounts are the primary accounts. The Adyen accounts are used to receive invoice payments from clients and pay day-to-day expenses. The Revolut bank account has a linked debit card, which allows for paying all software licenses that we have to pay for ourselves and our clients. The Adyen bank accounts have fewer features than Rabobank and Revolut offer. But with one benefit, it has a real-time sync with our accounting system. This makes administrative processes faster and less opaque. ## Billing The default process is that we send out our invoices at the first day of the month for the work we delivered the month before. For example, on February 1st, we bill for all the work delivered from January 1st to January 31st. We aggregate our invoices based on projects. This means a client can receive multiple invoices per month for different projects. This flow creates a bit more administrative hassle on both side, but also creates a more simple to understand administration. When an invoice for one project is wrong, or the client is not happy about the value we provide, the other invoices can still be paid. ## Revenue types We use 4 types of revenue: 1. Time & Materials 2. Fixed 3. Licenses 4. Contributions ### Time & Materials With this pricing model, we charge the client our hourly rate plus any costs we made to provide our services. The hours we make per project are tracked in Toggl. For larger tasks we ask for individual Dedicated Budgets that exist outside our monthly capacity contracts. These will be billed as a separate line-item in our monthly billing cycle. The Materials part is practically non-existent, since we don’t charge our clients for food, travel costs and office materials since our hourly rate is high enough to sustain these costs. But in some edge-cases, we will charge our clients when we incur some significant one-off costs. ### Fixed We sometimes agree on a fixed price for a specific project. Then we provide a budget for what a certain set of deliverables has to cost, we send them a quote, they digitally sign it and we can start. Usually these fixed amounts are calculated based on hours required to do the work times the hourly rate. When the project tends to take longer than expected, usually the client understands that predicting the amount of work is hard and will go along with additional fees for the unforeseen work. All of this within reason. These ad-hoc hours that emerge due to unforeseen work are booked through the ‘Time & Materials’ pricing model. ### Licenses It is very typical that we charge our clients for the license costs we incur when operating their data architecture. These software license fees are always linked to a separate project per client, because the revenues from these licenses should be properly tracked separately from the hourly revenue cashflow. ### Contributions These are a form of recurring donations we charge our clients for the usage of open-source intellectual property that is part of their data architecture. The fees are transferred to the open-source project leader after we take a 20% revenue share. These fees are completely voluntary, but are valuable because it offers financial compensation to the software engineers keeping the open source project up-to-date and maintained. ## Pricing changes At the start of each calendar year we raise our standard hourly prices to correct for price inflation. For the next five years, we assume the CPI in Europe to remain between 2-3%. This results in the following expected price changes: | **Year** | **Junior Engineer** | **Medior Engineer** | **Senior Engineer** | **Architect** | | -------- | ------------------- | ------------------- | ------------------- | ------------- | | 2024 | 80 EUR | 115 EUR | 170 EUR | 255 EUR | | 2025 | 80 EUR | 120 EUR | 180 EUR | 270 EUR | | 2026 | 85 EUR | 125 EUR | 190 EUR | 285 EUR | | 2027 | 85 EUR | 130 EUR | 195 EUR | 295 EUR | | 2028 | 90 EUR | 135 EUR | 205 EUR | 310 EUR | | 2029 | 95 EUR | 140 EUR | 210 EUR | 315 EUR | | 2030 | 95 EUR | 145 EUR | 220 EUR | 330 EUR | Independent of the inflation adjustment, we expect to raise our hourly prices a few percentage points once or twice this decade, to compensate for our improved competencies in delivery, consistency and dependability. ## Payables We have 2 timing protocols when it comes to paying outstanding invoices. 1. Waterfall-payables 2. ASAP-payables The Waterfall-payables are invoices larger than 1k EUR that we receive from our engineers for which we have charged our clients. These invoices are paid when we are paid. We try to pay these invoices within several working days after receiving the payments on our outstanding invoice. The ASAP-payables applies to all other outstanding invoices, independent of size. We pay our suppliers within 5 working days after receiving the invoice. We don’t see our suppliers as a free credit providers, but as solid entrpreneurs that need their cash just as much as we do. The Dutch law stipulates a maximum days-outstanding of 30 days, so for reasonable exceptions we abide to these rulings. The incoming invoices that originate from our engineers should contain at least the following components: Invoice properties: 1. Project Number *(e.g. PR0008)* 2. Client Name *(e.g. ClubCollect)* 3. Service *(e.g. Data Engineering)* 4. Billing type of Project *(e.g. Hourly)* Invoice lines: 1. Number of hours *(e.g. 13.75)* 2. General description of tasks. *(e.g. Ad-hoc Data Engineering & Issue fixes )* 3. Hourly rate *(e.g. 96.00 EUR)* 4. Invoice line amount: *(e.g. 1,320.00 EUR)* ## Liquidity ### Liquidity principles We hold cash on multiple bank accounts within specific bandwidths that are rebalanced on the first week of each calendar month during the financial close of the previous month. We aim to run the finances of our company in a consistent way, so that each account is provided with the necessary liquidity to operate the company smoothly, without hoarding too much cash. ### Bank Accounts Our bank accounts: 1. Hub *(RABO: xxx202)* 1. Minimum: 500 EUR 2. Maximum: 1k EUR 3. Rebalance: monthly 2. Automated payments *(REVO: xxx976)* 1. Minimum: 2k EUR 2. Maximum: 4k EUR 3. Rebalance: monthly 3. Manual payments *(ADYB: xxx691)* 1. Minimum: 2k EUR 2. Maximum: 8k EUR 3. Rebalance: monthly (excess cash is stored here) 4. VAT *(ADYB: xxx724)* 1. Minimum: 0 EUR 2. Maximum: ∞ 3. Rebalance: automated 5. Corporate Tax *(ADYB: xxx006)* 1. Minimum: 0 EUR 2. Maximum: ∞ 3. Rebalance: quarterly 6. Shareholder dividend *(ADYB: xxx626)* 1. Minimum: 0 EUR 2. Maximum: ∞ 3. Rebalance: quarterly 7. Ecosystem dividend *(ADYB: xxx909)* 1. Minimum: 0 EUR 2. Maximum: ∞ 3. Rebalance: quarterly 8. Reinvestments *(ADYB: xxx404)* 1. Minimum: 0 EUR 2. Maximum: ∞ 3. Rebalance: quarterly ### Shortages Whenever there are liquidity shortages, which are rare based on our business model, the holding company Mare Nostrum Holding B.V. will provide short-term credit to MAXQ Analytics B.V. based on the [Current Accounts Agreement](https://drive.google.com/file/d/1Bn_9HyiY6sO0c_MozcAwW5c2AG1g1elD/view?usp=sharing) that is set to a maximum of 50.000 EUR. Through this credit line, the holding company acts as a credit-provider of last resort. We are not considering setting up a credit line from our main bank the Rabobank in the foreseeable future. ## Profitability ### Gross Profit Each project on itself should be profitable or at least break-even. Overall ‘Time & Materials’ based projects generate a gross profit margin between 20% and 30%. This margin is predominantly dependent on the revenue share that was agreed between the engineers and our company. The recurring license projects tend to have a 20% gross profit margin, since we offer our clients to handle all licenses payments related to their infrastructure so they have a clear overview of all fees and costs related to their data infrastructure. Apart from the overview benefit, we know which fees are reasonable and which not, so will pro-actively reduce fees and setups where possible to lower their expenditures. ### EBITDA Each month, quarter and year should aim for an EBITDA (Earnings before Interest Tax Depreciation and Amortisation) margin of 10%. To realise this, invoices sent by our engineers for projects they contributed to should match the time-period that we ourselves are using for our invoicing cycle, which is predominantly monthly. ### Earnings The Dutch corporate tax above 200k EUR in earnings-before-tax currently sits at 25.8%. The expected depreciations and amortizations will sit around 2-3% of revenue. We have no credit lines, so interest payments are near zero. All these components will result in an Earnings margin between 5% and 6%. These earnings will be distributed based on the profit allocation percentages. ## Profit allocation ### Shareholder dividend We allocate 40% of our earnings towards the shareholder dividend payout. These dividends offer capital providers a stable and dependable cashflow which allows our company to emit new shares whenever we are in need of capital to invest in an asset that is too large to finance through our reservations for reinvestments. ### Ecosystem dividend We allocate 10% of our earnings towards the ecosystem dividend payout. These dividends are allocated to foundations and initiatives that are actively involved in improving the overall health of the business ecosystem that we are a part of. This can be open source projects, open course education or open core ventures. ### Reinvestments We reinvest 50% of our earnings into projects that will reinforce our value proposition and enable our engineers to grow the impact they make. When solid projects are not available we will store the excess cash in European short-term government bond ETFs. ## Profit distribution ### Internal distributions At the start of each quarter we review the financials of 2 quarters back to determine what the actual distributions have to be based on the booked EBITDA and expected corporate tax. The calculated amounts are then allocated to their respective bank accounts to await distribution. For each of these distributions, we first make sure that all minimum buffer requirements are met. ### External distributions The shareholder dividend is distributed after publishing the annual report, the same holds for the ecosystem dividends. The reinvestment cash is distributed on-demand depending on requests from the company to allocate the funds to respective projects that are expected to create sufficient value for our engineers. ## Shareholders ### Current shareholders Currently all shares in MAXQ Analytics B.V. (CoC: 95597166) are held by Mare Nostrum Holding B.V. (CoC: 95594337), the personal financial holding company of Philip Boontje. ### Future shareholders We will open up to sell shares in our company to the guild members when we have reached 3 consecutive years of revenue above 5.0 mln EUR per year. We allow each member to own 2x their 60-month trailing relative contribution to the top line engineering services based revenue towards MAXQ Analytics as a percentage of the total shares outstanding. We allow the engineers to buy the shares from each other based on an advised fair value. When no guild members are willing to buy the shares, the company will buy back the shares at 70% of the fair value. This discrepancy incentivices share re-selling between engineers and incentivices long term commitments. When an engineer has not contributed to the top line revenue over a period of 5 years, the company has the right to buy back the shares at the set discount rate relative to the fair value. Whenever the demand for shares is larger than the supply, the guild will ask the members with the highest allocation percentages to voluntarily sell a portion of their shares to allow new members to also buy shares. Each share in the company reresents one vote in the annual general shareholder meeting.