The first quarter of the financial year is more than a checkpoint. It is an opportunity to step back from the day-to-day running of your business and ask: Are we on track for the year ahead?
For Australian businesses, including small and service-based enterprises, your profit and loss (P&L) statement can provide an early indication of whether revenue is growing as expected, costs are under control and your margins are where they need to be.
With the first quarter of FY2026–27 ending on 30 September, reviewing your P&L can help you identify issues early and make adjustments before they have a larger impact on your full-year results.
WHAT SHOULD YOUR P&L TELL YOU BY THE END OF Q1?
1. Are you on track to meet your revenue target?
Compare your actual first-quarter revenue with your budget and full-year target. If revenue is below expectations, look at what is driving the gap. Has a major project been delayed? Have you lost a client? Is there seasonal variation? Or are sales taking longer to convert?
Stronger-than-expected revenue is also worth investigating. Understanding where additional sales came from can help you determine whether the increase is repeatable or a one-off.
For organisations that want a clearer picture of their financial performance, reliable accounting services for small businesses can help turn financial reports into useful insights rather than simply recording historical transactions.
2. Are your profit margins improving or shrinking?
A growing top line can look positive, but your margin tells you how much of that revenue remains after the costs of delivering your products or services.
If revenue has increased while your gross or net profit margin has declined, your P&L is sending an important warning. You may need to review pricing, supplier costs, staffing levels or the profitability of particular services.
For service businesses, consider whether your most time-consuming clients or projects are also among your most profitable. This can reveal whether you are generating more revenue at the expense of your margins.
3. Which costs are putting pressure on profitability?
Look beyond the total expense figure and compare individual categories against your budget and previous periods.
Pay attention to wages, contractors, technology, rent, marketing and other recurring expenses. If a cost has increased, check whether it is contributing to revenue growth or simply reducing your margin.
For maintaining accurate records and monitoring these movements throughout the year, outsourced bookkeeping services for small businesses can provide ongoing support without requiring an in-house bookkeeping team.
4. Is your pricing still working?
Your Q1 P&L can reveal whether your current pricing reflects the true cost of running your business. If your costs have increased but your prices have remained unchanged, your margins may gradually deteriorate. This is particularly important for businesses with fixed-price projects, retainers or long-term contracts.
Your Q1 results give you an opportunity to assess whether pricing needs to change before the gap between revenue and costs becomes more difficult to address.
5. Are you generating enough cash to support the business?
Profit and cash flow are not the same thing. You can report a profit while waiting for customers to pay invoices, while significant expenses are due or while cash is tied up in inventory. Review your P&L alongside your cash flow, accounts receivable and accounts payable.
If financial decisions are becoming more complex, consider tapping the resources of CFO services for small businesses who can help with your cash-flow forecasting, budgeting and financial planning.
6. Do you need to adjust your budget or forecast?
Your first-quarter results give you real-world information that can be used to revisit your original budget.
If revenue is consistently above or below expectations, or certain costs are moving differently from your assumptions, your forecast may need updating. A revised forecast can give you a more realistic view of the remaining nine months of FY2026–27.
This can be particularly valuable for businesses planning to hire, invest in new equipment, expand services or take on larger projects.
Don’t overlook your BAS and record keeping
The end of Q1 also coincides with important Australian tax obligations. For businesses reporting GST quarterly, the July–September Business Activity Statement (BAS) is generally due on 28 October.
Your P&L review is a useful time to check that transactions have been correctly recorded and reconciled before financial information is used for tax reporting or business decisions. The Australian Taxation Office (ATO) generally requires businesses to keep relevant records for five years, although the applicable period can vary depending on the record and circumstances.
A trusted outsourced accounting services in Sydney can bring together bookkeeping, financial reporting and accounting support, giving business owners a clearer view of their financial position while staying compliant to ATO’s requirements.
What should you do with your Q1 results?
Your first-quarter P&L should ultimately help you make better decisions for the next nine months. If revenue is behind target, investigate the cause. If costs are rising, determine whether they are necessary or need to be controlled. If margins are improving, identify what is working and consider how you can build on it.
The goal is not to react to every fluctuation. Instead, look for meaningful trends and consider what they could mean for the rest of FY2026–27.
Working with professional accounting firms in Sydney can give business owners support with financial reporting, budgeting and financial analysis, while helping you to turn your numbers into practical next steps.
Make your Q1 numbers work harder for your business
At Keeping Company, our outsourced bookkeeping and CFO services in Sydney can help Australian businesses make sense of their numbers through a range of financial management solutions. Whether you need help keeping your records up to date, understanding your P&L or planning for the months ahead, our team of expert accountants in Sydney can tailor support to your business.
Contact us today and let’s talk about how to make better financial decisions for the rest of FY2026–27.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice, and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
Ryan Miller is the founder of Keeping Company, May 2011 – Present. A tie-loathing, people person with an entrepreneurial spirit. Ryan’s drive to modernize the accounting industry coupled with his desire to help people succeed saw the birth of Keeping Company. Focusing on the SME space, KeepingCo. empowers business owners by providing high-quality end-to-end accounting and business advisory services.
Ryan took his first Accounting role working at KPMG. He went onto further refine his skills as a Chartered Accountant taking the role of Director of a Chartered Accounting firm in Erskineville.
Ryan is a fully qualified Chartered Accountant and a member of the Institute for Chartered Accountants Australia and New Zealand. He is also a Registered Tax Agent and holds a Bachelor of Commerce from the University of South Australia.