Fuel levies have moved from being a temporary surcharge to a permanent cost pressure for many Australian businesses. Whether it’s freight, materials, or supplier surcharges, the reality is the same: fuel costs are now part of your margin conversation.
But for businesses running Job Orders in systems like Ostendo, the real challenge isn’t just capturing the cost — it’s understanding its impact.
At Cutcher & Neale, we work with businesses ranging from $2 million through to over $200 million in turnover. One consistent theme we see across all of them is this: fuel levies are often recorded correctly but reported poorly.
The hidden problem with fuel levies
In a Job Order environment, fuel levies are correctly treated as part of job cost. They flow through work in progress (WIP) and ultimately become part of cost of goods sold when the job is invoiced.
From an accounting perspective, this is correct. However, from a management perspective, it creates a problem. Fuel levies get absorbed into total job cost, disappear into gross margin, and become difficult to isolate.
So when margins tighten, businesses struggle to determine whether the issue is pricing, efficiency, or external cost increases.
Why this matters
Fuel levies are not a reflection of operational performance. They are an external, often volatile cost. If not isolated, margin analysis becomes unreliable, pricing decisions become reactive, and conversations with lenders and stakeholders become harder.
The key insight
The system is already doing the right thing. Fuel levies should flow through the job. The challenge is not costing — it's visibility.
Our approach
We take a structured approach:
1. Track the levy clearly
2. Let the levy flow through the job
3. Restore visibility through reporting
This ensures job costing remains accurate while still enabling clear analysis of fuel impact.
The critical decision
The success of this approach depends on how materials are sourced.
If materials are purchased per job, fuel levies align naturally with cost and revenue.
If materials are sourced from stock, fuel levies become disconnected from when costs are recognised, creating timing issues and reporting distortion.
In stock-driven environments, it is often better to treat fuel levies as a separate period cost rather than forcing them through jobs.
Why one size does not fit all
Different business sizes and operating models require different approaches. The right solution depends on how the business operates, not just the system.
What good looks like
Every business should be able to answer:
- How much have fuel levies cost us?
- How much have they impacted margin?
- What does margin look like without them?
Where we add value
Our role is to design an approach that fits the business, ensuring fuel levies are handled in a way that supports clear, confident decision-making.
Fuel levies are not going away. Businesses that manage them well are those that make them visible, keep costing accurate, and align their approach with how they operate.
Clarity drives better decisions — and better decisions protect margin.
If you'd like to learn more, feel free to reach out to the team.
Michael Graham is a Partner specialising in business systems, operational workflows, and cost accounting. Direct, honest, and analytical, he helps clients optimise their systems, improve operational efficiency, and make informed financial and strategic decisions across diverse industries.