Small & Medium Business Concern 2022 – Petrol Price is big Deal, Why?

Small & Medium Business Concern 2022 – Petrol Price is big Deal, Why?

Businesses are facing 1 after another big challenges, at some point no clue what’s coming next. Since January 2020 businesses already faced many challenges over the past 2.5 years that have seen many business operators struggle to keep door open during rocky & stormy road of COVID 19. Now let’s face new challenge of fuel price, when other parts of world are fighting each other, adding inflation pressure on top.

Last week we asked an electrician, what is your main expenses? Is it material? rent?? employee?? Surprisingly he answered NO to all. For his sole director and shareholder business with 1 subcontractor, main expenses are petrol & tolls. Visiting client cost increased to more than 100% and yes, all businesses are struggling who heavily depend on road transportations.

Any input costs into products and services will ultimately affect the cost for the consumer as an end user. If fuel costs rise for a long period, and the business has otherwise made all the cuts it can to trim overhead, that business eventually will be under pressure to pass costs on to its customers. Whether the company can feasibly do so, without losing customers, depends on the industry and the competition. Tradies, logistics company, transport sector already hard heated by fuel price increase and natural disasters like flood, heavy rain has some contribution too.

Fuel price not only effect business, it also directly heats large number of work force who regularly commute from home to work. With sudden inflationary and war situation put huge pressure in business all over the world made it harder for many to find and secure new income opportunities, which may eventually affect country’s growth.

 How Btax can help?

  • Assess impact the bottom line of a business, especially impact on Director Labour Cost (DLC)and Direct Material Cost (DMC)
  • Help to retain gross margin, mark up and net margin of business.
  • Working capital and cashflow related risk identification and how to manage.
  • We also expect Australian Taxation Office may adjust Cents per KM claim in deductions.

BTax Business Blog
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