Bookkeeping & Payroll for Manufacturers

Most production, fabrication, assembly, and associated technical employees are covered by the Manufacturing and Associated Industries and Occupations Award 2020 (MA000010), which sets graded classifications, shift loadings, overtime, weekend penalties, allowances, and leave on top of the National Employment Standards. Some specific food, beverage, or other sub-industries can be covered by their own awards depending on the precise activity and classifications involved. Because coverage turns on the work performed and the classification structure, it's worth confirming the right award and grade for each role rather than assuming the Manufacturing Award applies to your whole team.

The Manufacturing and Associated Industries and Occupations Award 2020 provides loadings for afternoon and night shifts, with higher rates where a shift doesn't continue for the required run of consecutive shifts—commonly 150% of the ordinary rate for the first few hours and 200% thereafter in those cases. Overtime, weekend work, and public holidays carry their own penalty rates, and various allowances apply depending on the work. The exact percentages and conditions are set in the award and indexed over time, so confirm the current rates and the specific shift definitions for your roster before running payroll.

Because in manufacturing your margin is made or lost in the cost of producing each item, and that cost isn't obvious. A proper product cost combines direct materials, direct labour, machine or production time, and a fair allocation of overhead. If you price off materials alone, or off a rough guess, you can sell steadily at a loss or pour effort into low-margin lines without knowing it. Accurate job and production costing tells you what each product really costs, which lines are worth pushing, and where price increases or efficiency gains will actually move profit. It's the single most important number discipline in the business.

Inventory—raw materials, work in progress, and finished goods—is an asset, and the cash spent on it isn't an expense until the goods are sold. Materials sit as inventory when purchased; as they move into production they become work in progress, picking up labour and overhead; and once complete they're finished goods until sold, at which point their cost becomes cost of goods sold. If you expense purchases immediately and ignore stock on hand, both your profit and your balance sheet are wrong. Tracking and valuing inventory properly shows true profitability and reveals how much cash is tied up on the floor at any time.

Manufacturing has a long cash cycle: you pay for materials and wages up front, then wait through production and customer payment terms before the cash comes back. A large or growing order makes this worse, locking more cash into inventory and work in progress exactly when you're busiest. So you can be genuinely profitable yet repeatedly short of cash. The answer is a cash flow forecast built around your buy-make-sell-collect cycle, sensible inventory levels, and disciplined collections—so you fund production deliberately rather than being surprised by how much working capital each order consumes.

Financed plant and machinery shouldn't be treated as a simple monthly expense. The equipment is an asset on your balance sheet and the finance is a liability; each repayment splits between interest, which is an expense, and principal, which reduces the liability. The asset's cost is spread over its useful life through depreciation, affecting both profit and the written-down value you carry. Treating the full repayment as an expense overstates early costs and hides the value still in your equipment. Proper asset accounting gives an honest view of profitability and what your plant is genuinely worth.

If you're registered for GST, you generally charge GST on taxable sales and claim credits on business purchases, but imports add wrinkles—GST can apply at the border, and the timing and documentation differ from local purchases. With many suppliers and a high volume of buys, the practical risk is misapplied GST and unreconciled supplier accounts turning BAS into a clean-up. The cleaner path is to set up correct GST treatment for local and imported inputs, reconcile supplier statements regularly, and keep import documentation in order, so your credits are accurate and quarter-end is routine rather than a scramble.

For employees you must keep records of hours worked, classifications and loadings applied, amounts paid, allowances, leave, and superannuation—generally for seven years for Fair Work purposes. For tax, keep purchase and sales records, supplier invoices, import documentation, inventory records, and asset details supporting depreciation. Good records underpin accurate costing, a defensible BAS, and clean year-end accounts, and they protect you in a Fair Work or ATO query. In a costing-driven business like manufacturing, disciplined records aren't just compliance—they're what makes reliable product costing and pricing possible in the first place.