Medical Equipment Wholesaler Accounting: Industry Analysis
A medical equipment wholesaler faces a mix of regulation, imported stock and GST rules that few other distributors deal with. In the video below, our team summarises IBISWorld’s report on medical and scientific equipment wholesaling in Australia. It covers industry performance, the main customer groups and the pressures on distributor margins.
Regulation and tax issues for medical equipment wholesalers
- TGA requirements: medical devices generally must be included in the Australian Register of Therapeutic Goods before supply. An Australian sponsor is responsible for each device. The TGA explains the process in its guide to importing and supplying medical devices. Consequently, a wholesaler needs to know who the sponsor is for every product line.
- GST-free medical aids: some products are GST-free. To qualify, the item must be listed in Schedule 3 to the GST Act. It must also be specifically designed for people with an illness or disability and not widely used by others. The ATO’s guide to medical aids and appliances confirms that the same treatment applies at wholesale and retail level.
- Imports: GST on imported goods is generally 10% of the value of the taxable importation. However, eligible importers can use the deferred GST scheme to pay it through the BAS instead of at the border.
- Exports: exported goods are generally GST-free if exported within 60 days of payment or invoice, whichever comes first.
Stock, margins and cash flow
Wholesale margins depend on holding the right stock at the right cost. For this reason, we review trading stock valuation, landed cost calculations and foreign exchange exposure on overseas purchases. In addition, slow-moving or expired stock needs regular review, because it ties up cash and can affect the value of the business.
A medical equipment wholesaler supplying hospitals and clinics may also wait longer for payment than a retailer. Therefore, forecasting debtor days and supplier terms is often as important as the profit and loss statement.
How Quantum House supports wholesalers
- Bookkeeping, BAS and inventory reporting through our Sydney accounting services.
- Import, export and foreign exchange advice through our international trade services.
- Advice for distributors and online sellers, set out on our wholesale accounting page.
- Cash flow forecasting through our outsourced CFO services.
If you run a medical equipment wholesaler and want clearer numbers, contact our Sydney team.