Industrial Equipment Wholesaler Accounting: Industry Analysis
An industrial equipment wholesaler carries expensive stock and buys much of it overseas. Its customers’ demand also rises and falls with mining and construction. In the video below, our team summarises IBISWorld’s report on mining and industrial equipment wholesaling in Australia. It covers industry performance, the link to resources investment and the pressures on distributor margins.
Tax and trade issues for industrial equipment wholesalers
- Imports: GST on imported goods is generally 10% of the value of the taxable importation. Eligible importers can use the deferred GST scheme to pay that GST through the BAS rather than at the border, which helps cash flow.
- Exports: exported goods are generally GST-free if exported within 60 days of payment or invoice, whichever comes first. Missing that window can turn a GST-free sale into a taxable one.
- Export grants: wholesalers building overseas markets may be eligible for an Export Market Development Grant from Austrade.
- Foreign exchange: purchases in US dollars, euros or yen create currency gains and losses. These need to be measured and reported correctly.
- Hire fleets: some wholesalers also hire out equipment. In that case, depreciation, maintenance and finance costs need to be tracked separately from trading stock.
Stock, margins and working capital
Large, slow-moving items tie up cash for months. For this reason, we focus on landed cost, stock turnover and the age of each line. In addition, we review trading stock valuation at year end, because write-downs on obsolete equipment can be significant.
Customer credit is the other pressure point. Mining and construction customers often expect long payment terms. Therefore, an industrial equipment wholesaler needs a forecast that links debtor days, supplier terms and shipping times.
How Quantum House supports wholesalers and exporters
- Bookkeeping, BAS and inventory reporting through our Sydney accounting services.
- Import, export and currency advice through our international trade services.
- Specialist advice set out on our exporters and wholesale accounting pages.
- Working capital forecasting through our outsourced CFO services.
If you run an industrial equipment wholesaler and want a clearer view of margins and cash, contact our Sydney team.