The numbers, in plain English.

Accrual accounting

Accrual accounting records revenue when it is earned and costs when they are incurred, regardless of when cash moves. Cash-basis accounting records them when money changes hands. Most management accounts are on the accrual basis, which is why profit and cash can move in opposite directions in the same month.

Anomaly flag

An anomaly flag is a figure that has moved outside its normal range against a fixed rule: revenue moving more than 10% on the month or 15% on the year, a cost line moving more than 25%, a new expense category, cash falling more than 10%, debtor days rising by more than five, a net loss, or current liabilities above current assets. A flag is a prompt for a second look, not a finding that something is wrong.

Base rate entity

A base rate entity is a company that pays the lower 25% company tax rate rather than 30%. For the 2026–27 income year a company qualifies if its aggregated turnover is below $50 million and no more than 80% of its assessable income is base rate entity passive income, such as interest, rent, dividends and net capital gains.

Burn rate

Burn rate is how much cash a business uses each month. Gross burn is total cash out; net burn is cash out minus cash in. Net burn is the figure that goes into cash runway, while gross burn shows the size of the cost base and is used for stress tests.

Business activity statement (BAS)

A business activity statement is the form on which an Australian business reports and pays GST, PAYG withholding and PAYG instalments to the ATO. Most small businesses lodge quarterly: for the 2026–27 income year the standard due dates are 28 October 2026, 28 February 2027, 28 April 2027 and 28 July 2027. Monthly lodgers lodge by the 21st of the following month.

Cash runway

Cash runway is the number of months a business can keep operating at its current rate of spending before cash runs out. It is cash on hand divided by average monthly net burn (cash out minus cash in). A snapshot, not a forecast: it assumes the next month looks like the recent average.

Cash-flow forecast

A cash-flow forecast projects the bank balance forward month by month from expected receipts and known payments: customers, suppliers, payroll, tax, loan repayments and one-offs. Unlike runway, which assumes the recent average continues, a forecast uses what is actually due, so it shows where the pinch points fall.

Creditor days

Creditor days is the average number of days a business takes to pay its suppliers: trade creditors (accounts payable) divided by purchases or cost of sales for the period, multiplied by the days in the period. Read with debtor days, it shows whether a business is being paid before or after it pays.

Current ratio

The current ratio is current assets divided by current liabilities, read from the balance sheet. It is a rough test of whether the cash, debtors and stock a business holds would cover the bills due in the next twelve months. A ratio above 1 means current assets exceed current liabilities.

Customer concentration

Customer concentration is the share of revenue that comes from the largest customer, or the largest few. A business earning half its revenue from one customer is exposed to anything that happens to that customer, which is why the figure appears in most management packs and in the Nella Score.

Debtor days

Debtor days is the average number of days customers take to pay. The usual formula is trade debtors (accounts receivable) divided by revenue for the period, multiplied by the number of days in the period. A rising figure means cash is tied up in unpaid invoices for longer.

Gross margin

Gross margin is gross profit as a percentage of revenue, where gross profit is revenue minus the direct cost of the goods or services sold. It isolates pricing and direct costs from overheads, which is why a falling gross margin on steady revenue usually points to input costs, discounting or a change in sales mix.

GST turnover

GST turnover is gross business income excluding GST, input-taxed sales and sales not connected with Australia. It is measured two ways: current GST turnover (this month plus the previous 11) and projected GST turnover (this month plus the next 11). Registration for GST is required when either reaches $75,000, or $150,000 for a non-profit organisation.

Management accounts

Management accounts are the internal monthly (or quarterly) report of how a business is performing: a profit and loss, a balance sheet, a cash view and a short set of KPIs, with a note on what changed and why. They are built for decisions, not for filing, and have no prescribed format.

Nella Score

The Nella Score is a finance health check from 0 to 100, calculated from a business's own accounting data. It scores five dimensions out of 20 each: cash visibility, margin health, debtor risk, bookkeeping quality and growth readiness. The arithmetic runs in code, so the same figures always give the same score; an AI model writes the explanation but never sets the number.

Net margin

Net margin is net profit as a percentage of revenue: what is left after cost of sales, overheads, interest and tax, divided by sales. It shows how much of each unit of revenue the business keeps once everything has been paid.

PAYG instalments

PAYG instalments are regular prepayments of the income tax a business or individual expects to owe on business and investment income, so the liability is spread across the year rather than paid in one amount after the return. The ATO enters a taxpayer into the system based on the last return; instalments are usually paid quarterly with the BAS.

Superannuation guarantee

The superannuation guarantee is the minimum super an employer must pay for eligible employees: 12% of ordinary time earnings from 1 July 2025. For earnings paid up to 30 June 2026 contributions are due quarterly; for earnings paid from 1 July 2026 the Payday Super rules apply, under which contributions are tied to each pay.

Working capital

Working capital is current assets minus current liabilities: the money tied up in running the business day to day. Cash, customer invoices and stock on one side; supplier bills, tax owed and short-term borrowing on the other. It rises when customers pay slowly or stock builds, and that rise absorbs cash.

Nella provides financial information and education, not accounting or tax advice.