RBizz Corporate Accountants - Resources

Understanding Your Balance Sheet

Thu, 07 May 2026 23:10:09 +1000

Understanding Your Balance Sheet

To understand the financial position of a business at a specific point of time, look at the balance sheet. The balance sheet may also be called the statement of financial position. Together with the Profit and Loss Statement, and possibly other reports such as the Statement of Cash-flow, these reports provide a complete understanding of the financial position and business performance.

So what’s involved: The balance sheet has three sections: assets, liabilities and equity.

What are Assets?

Assets are things and resources that a company owns. They have current and/or future value and can be measured in currency.

Assets may be subdivided on the balance sheet into bank accounts, current assets, (receivable within one year), fixed assets, inventory, non-current (or long term) assets, intangible assets and prepayments.

These include banks and other financial accounts held, accounts receivable (trade debtors), supplier deposits or bonds, stock on hand, property, equipment, vehicles, investments and intellectual property. All of these can be translated into monetary value.

What are Liabilities?

Liabilities are amounts owed to suppliers and other creditors for goods or services already received. Liabilities may also include amounts received in advance for future services yet to be provided by the business.

Liabilities are generally subdivided into current, (payable within one year), and non-current liabilities.

These include accounts payable (trade creditors), payroll obligations (salaries, taxes, superannuation), interest, customer deposits received, warranties and loans.

What is Equity?

Equity includes owner funds contributed, drawings, retained earnings and stocks. The value of the equity equals assets minus liabilities.

Transactions that affect profit and loss accounts also affect balance sheet accounts. For example, providing a service increases the accounts receivable balance, which therefore increases the equity.

The Balance Sheet Equation

The balance sheet must always balance! Asset value = liabilities + equity.

For example, if you buy a new vehicle for the business at say 50,000, having paid a 10,000 deposit and taking out a 40,000 loan, the value of fixed assets increases by 50k, but the bank asset value decreases by the 10k deposit paid. The value of liabilities increases by 40k loan, thus leaving the balance sheet balanced on both sides of the equation.

The balance sheet equation shows you how much money you would have left over if you paid all your bills and debts and sold all your assets at a given date. This amount is the Owner’s Equity.

Note that the balance sheet equity total is not necessarily how much the business is worth at market value. Assets are listed on the balance sheet at their transaction value, which may be very different from the market value. Some assets may be worth more, and others may depreciate in value. Business value is calculated not just on the balance sheet figures but many other factors.

Need more information?

Talk to us. Get the complete picture of your business performance and financial position, regardless of what stage of business you are at.

Understanding Margin Compression and Its Impact on Your Revenue

Thu, 07 May 2026 23:09:50 +1000

Understanding Margin Compression and Its Impact on Your Revenue

With operational costs escalating and the market still sensitive to price rises, you’ll have seen the term ‘margin compression’ being thrown around in many small business forecasts.

But what exactly is margin compression? And how does this financial phenomenon impact your sales revenues and overall profitability as a business?

Here’s how to identify and tackle the financial challenge of margin compression.

1. What is margin compression?

Margin compression occurs when your operating costs increase at a faster rate than your sales revenue. You might be moving the same volume of products or services, but each sale yields less net profit. In essence, your gross profit margin – the percentage of revenue exceeding the cost of goods sold – is being squeezed from both ends.

2. The key drivers of margin compression

Margin compression is caused by rises in operational and production costs, where your sales revenue fails to keep pace with these increases. The primary drivers of margin compression can include increased inflation, rising energy costs, soaring insurance premiums and the need to increase wages to source specialised talent, etc.

Cautious consumer spending is also preventing businesses from raising prices enough to offset these rising overheads, leading to a thinner bottom line.

3. Taking steps to protect your profitability

To reduce the impact of margin compression, it’s important to focus on operational efficiency and making the value of your product/service stand out in a crowded marketplace.

First, conduct an audit of your supply chain with the aim of negotiating better terms or finding more local (and cheaper) alternatives.

Second, use software automation tools and AI-based solutions to lower your most labour-intensive tasks and the associated admin and people costs.

Finally, instead of competing on price, bundle services or enhance your customer experience to justify a premium pricing that can reduce the squeeze on revenues.

4. Managing sales revenue and cashflow

If margin compression is truly biting and affecting your profitability, it’s vital to shift from chasing high-volume sales to focusing on high-margin products.

Go through your recent sales data to find the 20% of your products/services that are generating 80% of your profit. By pivoting your marketing efforts toward these high-performing products and cutting the ones that are delivering low margins, you can maintain healthy cashflow – even when market conditions remain pressurised and challenging.

Helping you preserve your margins and drive profitability

Ultimately, overcoming margin compression is about monitoring your margins and remaining agile. Our team can help you track and review your operational costs, margins and sales revenues, while helping you spot the opportunities to increase margins and profits.

Beyond the Ledger: 3 Accounting Trends Reshaping 2026

Thu, 07 May 2026 23:09:03 +1000

Beyond the Ledger: 3 Accounting Trends Reshaping 2026

As we move through May 2026, the accounting landscape in Australia is shifting from "compliance-only" to "strategic-first." While the numbers still need to balance, the tools and regulations surrounding them have evolved significantly.

1. The Rise of "Payday Super" & Real-Time Reporting

The biggest structural change for 2026 is the mandatory shift to Payday Super. Starting 1 July 2026, the ATO requires superannuation to be paid on the same day as wages. For businesses, this means the end of the quarterly "lump sum" rush.

Actionable Tip: If you are still using the Small Business Superannuation Clearing House (SBSCH), be aware it is scheduled to close by 30 June 2026. You’ll need to transition to a direct payroll-integrated solution before the July 1st deadline.

2. From "Bookkeeper" to "Strategic Advisor"

With AI and automation now handling up to 80% of manual data entry and bank reconciliations, the role of your accountant has changed. In 2026, top firms are using real-time KPI dashboards to provide:

Predictive Cash Flow: Catching a shortfall before it happens.
Gross Margin Bridges: Pinpointing exactly why your profit dropped even when sales stayed high.
Scenario Modeling: Testing the impact of a new hire or price increase before you commit.

3. ESG Reporting: Not Just for Big Business

Environmental, Social, and Governance (ESG) reporting is no longer just for the ASX top 200. In 2026, small businesses are finding that "green credentials" are required for:

Bank Lending: Banks are increasingly factoring climate risk and governance into interest rate offers.
Government Tenders: Proving your sustainability and diversity metrics is now a standard requirement for many local and state contracts.

Calculated Growth: Why Your "Ordinary Time Earnings" Are Changing

Wed, 06 May 2026 14:42:26 +1000

Calculated Growth: Why Your "Ordinary Time Earnings" Are Changing

As we move through May 2026, the ATO is preparing for a technical but critical shift in how superannuation is calculated. 1 July 2026, the focus moves away from "Ordinary Time Earnings" (OTE) toward a new standard: Qualifying Earnings (QE).

What are Qualifying Earnings?

For years, employers calculated the 12% super guarantee based on OTE. Payday Super regime, the base for calculation is being refined to Qualifying Earnings. This change is designed to simplify calculations for diverse pay structures—including bonuses, commissions, and certain allowances—ensuring they are captured more consistently across all payroll software.

The "7-Day" Compliance Window

It’s not just about how much you pay, but how fast it arrives. Along with the shift to QE, the ATO is strictly enforcing the arrival window. 7 business days of their payday.

What Happens if You Miss the Window?

The penalties in 2026 are becoming more automated. If a payment is late:

The SGC Charge: Unlike the old system, the new Superannuation Guarantee Charge (SGC) will compound daily at the General Interest Charge rate.
Administrative Uplift: Businesses with a history of late payments may face an additional "administrative uplift" penalty of up to 50% of the unpaid amount.

Beyond the Ledger: 3 Accounting Trends Reshaping 2026

Tue, 05 May 2026 13:01:02 +1000

Beyond the Ledger: 3 Accounting Trends Reshaping 2026

1. The Rise of "Payday Super" & Real-Time Reporting

Actionable Tip: If you are still using the Small Business Superannuation Clearing House (SBSCH), be aware it is scheduled to close by 30 June 2026. You’ll need to transition to a direct payroll-integrated solution before the July 1st deadline.

2. From "Bookkeeper" to "Strategic Advisor"

Predictive Cash Flow: Catching a shortfall before it happens.
Gross Margin Bridges: Pinpointing exactly why your profit dropped even when sales stayed high.
Scenario Modeling: Testing the impact of a new hire or price increase before you commit.

3. ESG Reporting: Not Just for Big Business

Environmental, Social, and Governance (ESG) reporting is no longer just for the ASX top 200. In 2026, small businesses are finding that "green credentials" are required for:

Bank Lending: Banks are increasingly factoring climate risk and governance into interest rate offers.
Government Tenders: Proving your sustainability and diversity metrics is now a standard requirement for many local and state contracts.

Division 296: Does It Affect You?

Tue, 05 May 2026 12:58:12 +1000

Division 296: Does It Affect You?

From 1 July 2026, a new tax (Division 296) will be introduced to reduce concessional tax rates on superannuation earnings above $3 million. But how does Division 296 work, and are you affected?

What is Division 296?

Currently, income earned on superannuation balances is generally taxed at a headline rate of up to 15%. However, from 1 July 2026, individuals who have a total superannuation balance above $3 million will be subject to a higher tax rate on earnings in their superannuation accounts.

Broadly:

Superannuation balances between $3 million and $10 million will be taxed at 30% on the percentage of earnings between $3 million and $10 million; and
Superannuation balances above $10 million will be taxed at 40% on the percentage of earnings that exceeds $10 million.

The ATO will notify any individuals who are liable to pay any Division 296 tax, with those taxpayers given the option to either pay the tax directly or release the appropriate amount from their super fund. Remember, as Division 296 only applies from 1 July 2026, the first notices of assessment aren’t likely to be issued until the 2027-28 financial year.

So, Division 296 won’t apply to everyone?

In short, no. This new measure is expected to affect less than 0.5% of Australians with superannuation accounts in 2026-27; with the higher 40% rate for balances above $10 million estimated to affect less than 0.1% of Australians with superannuation accounts.

Importantly, this means that those with super balances lower than $3 million will keep being taxed on their super earnings at the current concessional rate of 15% (i.e. there is no change to current tax arrangements).

What happens if my super grows over time?

Both the $3 million and $10 million thresholds will now be indexed to the Consumer Price Index (CPI) each year. This means the application of Division 296 should remain relatively limited, even if your superannuation balance increases.

What if I am affected by the changes?

If you’re in scope of Division 296, or expect to have a super balance above $3 million in the near future, there are a few actions you can take ahead of 1 July. For one, you may want to speak to a qualified financial adviser to review your investment mix. You might also consider modeling how Division 296 is expected to impact your super balance over the long term.

For a more bespoke chat about your options, book some time in with our team today – we’d be happy to help.

Some junior wage rates to be abolished: The impact for your business

Mon, 04 May 2026 11:11:54 +1000

Some junior wage rates to be abolished: The impact for your business

“Q: What’s happening with junior wage rates? Have they been amended?”

Back in February 2026, we mentioned that junior wage rates may be changing, due to an ongoing legal case brought by the Shop, Distributive and Allied Employees' Association (SDA or ‘Shoppies’) against the Fair Work Commission.

The basic premise of the case was that younger workers – those aged 18, 19 and 20 years old – should earn the same pay rate as their older 20+ colleagues, and that it was unfair that younger workers did the same work but did not get the same pay.

“A: In short, yes, junior rates for workers under certain rewards are to be abolished.”

Following the success of the SDA campaign and legal action, the Fair Work Commission has announced upcoming changes to junior wages under the:

Retail Award
Fast Food Award
Pharmacy Award.

Under the old rules, if your business has workers under the age of 21 covered by the three awards, these workers would be paid a percentage of the adult pay rate for their classification.

Under the new changes to junior wage rates, employees between the ages of 18 and 20 will be entitled to the adult pay rate for their classification if they’ve been employed by their employer for more than 6 months.

Workers aged 18 to 20 won’t change their wage rate if they’ve been employed for less than 6 months with their employer. And workers under the age of 18 also won’t see any change to their wage rate. They will remain at the junior rate for employees who are younger than 18.

These changes to junior wage rates are to be gradually introduced. Further hearings will be held to determine exactly how wage rates will change and the plan for implementation. However, the Commission has said that the changes could start from 1 December 2026.

How could a change to junior rates affect your business?

If you employ a large number of younger workers between the ages of 18-20, the abolishment of junior rates could have a significant impact on your payroll.

With the junior rates removed, all workers in that age range would be paid at the same standard rate as their older colleagues. This would increase your payroll costs and impact your cashflow.

Talk to us about the impact of a change to junior wage rates

If you’re worried about the potential impact of the removal of junior rates, and the subsequent increase in wage costs, book some time for a chat with our team.

We can run scenarios to outline the potential costs and the overall impact on your cashflow.

The "Payday Super" Countdown: What You Need to Know

Mon, 04 May 2026 11:11:34 +1000

The "Payday Super" Countdown: What You Need to Know

From 1 July 2026, the way Australian employers pay superannuation is fundamentally changing. The Federal Government’s "Payday Super" reform means that Superannuation Guarantee (SG) contributions must be paid at the same time as salary and wages, rather than the current quarterly system.

Why the Change?

The shift aims to ensure employees receive their entitlements faster and to help them track their super more easily. It also prevents the "super gap" that occurs when businesses fall behind on quarterly payments.

What This Means for Your Business

Cashflow Timing: Instead of a large lump sum every three months, your cashflow will need to accommodate super payments every pay cycle (weekly, fortnightly, or monthly).
Compliance Deadlines: Contributions must reach the employee's fund within 7 business days of payday.
Software Updates: You must ensure your payroll software is configured to handle these automated, frequent transfers well before the July deadline.

Preparing for the Shift

To avoid penalties and administrative stress, businesses should use the remainder of 2026 to audit their payroll processes. Your cash reserves now to reflect "real-time" super obligations will make the transition in July 2026 much smoother.

Review Your Business Expenses and Save

Thu, 30 Apr 2026 12:20:33 +1000

Review Your Business Expenses and Save

Running a business costs money. There are always costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit.

So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?

Getting proactive with your spend management

Spend management is all about getting in control of your expenses – and, where possible, aiming to reduce the level of costs and overheads that you incur as a company.

Excessive spending eats into your cashflow, reduces your profit margins and stops you from achieving the profits that you’re capable of as a business. So if you can get proactive with your spend management, you can actually make your company a far more financially productive enterprise – and that’s great for your overall business health.

What can you do to reduce spend and slim down your company expenses?

Here are some key ways to reduce expenses:

Reduce your overheads – your overheads are the unavoidable costs of running your business, producing your products or supplying your services. If you have bricks and mortar premises, these overheads will include rental payments, utility bills and the cost of paying your staff. Drill down into the numbers and see where there are opportunities to reduce these overhead costs. That could mean moving to smaller premises, or reducing the size of your workforce, to reduce payroll expenditure.
Put limits on staff expenses – if your employees can claim expenses, or buy raw materials and equipment with the company’s money, these costs can soon start to rack up. It’s a good idea to put a spending limit in place, so each staff member can only spend up to an agreed amount. Having a clear expenses policy helps, as will training up your staff in good spend management techniques. Expenses cards or expense managment software will allow you to quickly set spend limits, track expenses and pull your expenses data through to your cloud accounting platform for processing.
Look for cheaper suppliers – if you can reduce your supplier costs, this will go a long way to bringing down your overall spend. If you’ve been with certain key suppliers for years, look around for new quotes, look at current market prices and see if you can negotiate better deals. And if your old suppliers aren’t flexible enough, try swapping to newer, more eager suppliers who will be willing to meet you in the middle on price.
Make your operations leaner – the bigger your operational costs are, the less margin you’ll make on your end products and services. One way to resolve this is to aim for a ‘lean approach’, paring back your staff, resources and operational complexity to the bare minimum. By making the business as lean as possible, whilst still delivering the same output, you keep your revenue stable, but reduce the spend level that’s eating into your cost of goods sold (COGS). The smaller your COGS, the more profit you make on each unit or sale – and that means better cashflow, more working capital and bigger profits.
Explore tax reliefs – you might assume that tax costs are an unavoidable expense when running your business, but it’s worth exploring which tax reliefs, grants or other business benefits you may benefit from. For example, research and development (R&D) tax credits that help cut your corporation tax expenses if you can demonstrate that you’re involved in innovation and groundbreaking R&D within your industry or specialism.

Talk to us about improving your spend management

If you’d like to get in control of your expenses, we’d love to chat. We’ll review your current costs and will highlight the key areas where expenses can be cut. Then we’ll help you formulate a proactive spend management programme, to reduce your unnecessary spending.

The Importance of "Working Capital" for Business Growth

Thu, 30 Apr 2026 12:20:15 +1000

The Importance of "Working Capital" for Business Growth

Many business owners focus solely on profit, but profit doesn't pay the bills—cash does. In 2026’s fast-paced market, understanding your Working Capital is the difference between a business that can seize new opportunities and one that struggles to keep the lights on.

What is Working Capital?

Working capital is the money your business has available for its day-to-day operations. It is the liquid funds used to pay for raw materials, inventory, salaries, and overheads while you wait for your customers to pay you.

The Working Capital Cycle

The "cycle" represents the time it takes to turn your net current assets and liabilities into cash. For example, when you buy stock, that cash is "trapped" until the product is sold and the customer pays the invoice. If your cycle is too long, you might find yourself "asset rich but cash poor."

How to Improve Your Working Capital Position

Optimise Inventory: Holding too much stock ties up cash. Use "Just-in-Time" inventory management to keep only what you need.

Shorten Payment Terms: Instead of 30-day terms, consider 7-day or 14-day terms, or offer a small discount for early payment.

Negotiate with Suppliers: Try to extend your "Accounts Payable" terms. If you can pay your suppliers in 45 days but collect from customers in 15, you have a 30-day "cash cushion."

Audit Your Expenses: Regularly review recurring subscriptions and overheads to ensure no "leaks" are draining your daily operational funds.

Why Working Capital Matters for Scaling

Growth requires an upfront investment in people, marketing, or equipment. If your working capital is tied up in unpaid invoices or dusty inventory, you won't have the "fuel" needed to accelerate. By mastering this metric, you ensure your business remains agile and resilient.