Improve your cashflow
How VAT impacts your companies’ cashflow / Improve your cashflow: manage your VAT
Effective cash flow management is one of the most important factors for both the profitability and sustainainibity of any business.
Effective management of VAT cashflows should form the basis of any robust VAT framework but this is an area that many businesses critically review on an infrequent basis at best, meaning slippage occurs and the business suffers negative cashflows. Standard rates of VAT are significant and the impact on working capital can be considerable regardless of the size of the business.
How VAT impacts cashflow
If you’re looking to improve your cashflow, then VAT management should be on your radar as an organisation. VAT can provide a helpful contribution to cashflow, reducing the need for external sources of working capital such as costly bank overdrafts and loans, which actually reduce your cashflow and profitability.
There is a basic principle at the heart of managing VAT cashflows – output tax paid as late as possible and input tax claimed as early as possible. Perhaps a more fundamental principle however is one of ensuring the business does not charge or incur VAT where this is not necessary. An important factor is also to ensure that everything is accounted for, recorded and filed timeously to ensure benefits and no penalties which will in turn affect cashflow.
Unlocking cash flow through VAT management
The VAT strategies to reduce working capital tied up in VAT balances and lead to VAT savings that ease the burden of VAT on companies can be broadly broken down into two categories – namely VAT cost reduction and VAT cash flow.
Solutions like the VATSolve Cash Flow Benefit, a centralised VAT tracking, administration and reporting service can assist with cash flow management. A solution like VATSolve automates and consolidates your organisations VAT returns timeously and accurately, resulting in cash flow and improved business efficiencies. This also offers real-time and historic access to all VAT data.
With cash as a key indicator of the financial health of a company, optimising cash flow and ensuring the correct cash position is reported each month, is critical. VAT over or under-payments and late submissions can severely impact cash flow and influence business decisions. Large South African corporates using VATSolve Cash Flow Benefit save between R20 Million to over 150 Million Rand per month! VATSolve’s Cash Flow Benefit enables organisations to optimise cash flow by ensuring the accurate allocation of input and output VAT to the correct period. VATSolve is a complete VAT management solution for SAP that offers the benefit of submitting a single VAT return for multiple entities. It provides finance departments with increased productivity, it drives efficiencies, optimises cash positions and reduces risk. VATSolve, a South African-developed solution designed to address specific challenges associated with VAT regulation, complexity and compliance offers a VAT solution for SAP users that automates and consolidates VAT returns timeously and accurately with increased cash flow and improved business efficiencies. VATSolve is so confident that their solution delivers exceptional service and achieves what it sets out to do, that they offer a try-before-you-buy for qualifying clients. If you would like to know more, get in touch with us at info@vatsolve.co.za
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