General Strategies for improvising cash flow to address COVID-19 Stress!
1. Stay on Top of Invoicing:
Send invoices to customers as soon as work is completed, or products are delivered. Make Automated system of generating invoices.
2. Cost cutting strategy:
a. Are you spending money on subscriptions or services you are not using or insurance you no longer need? Consider unsubscribe all such services.
b. Do you have non-performer employees in your team? Consider temporary renegotiating salary and other benefits and analyse if you still need them.
3. Cash in on Assets strategy:
Do you have any equipment you no longer use or inventory that’s becoming obsolete? Consider selling it to generate quick cash and then re-invest into the business.
4. Negotiate with Suppliers and Lenders:
a. Negotiate and ask extension for accounts payables.
b. Apply for deferring EMI for existing loans with the banks/financial institutions.
c. Restructuring debts.
Innovating your business through wizardly technological advancements and generating new ideas to promote your business that would enhance new sources of revenue generation.
Tax Strategies for improvising cash flow to address COVID-19 Stress!
1. Adjustments of VAT paid on Accounts Receivables:
Evaluate the ageing of accounts receivables and identify the unpaid customers for more than 6 months. These unpaid receivables could be adjusted in the subsequent VAT return after fulfilling conditions mentioned in Federal Decree-Law No. (8) of 2017 on Value Added Tax & Executive Regulations.
2. File Reconsideration Form for waiver of administrative penalties:
In the outbreak of the current pandemic situation, FTA may consider waiving off the administrative penalties and accept request by clearing only tax liabilities. It’s time to request for waiver on penalties due to errors/omissions in historical VAT Returns.
3. File VAT Administrative Exceptions Form:
In the outbreak of the current pandemic situation, FTA may consider on its discretion subject to conditions, request on extension of length of the tax period from quarterly to half-yearly.
4. VAT Refunds:
Filing the VAT refund application if you have excess refund in the FTA Portal to generate quick cash and get it credited in your bank account within 3-5 weeks.
5. Re-negotiate payment terms:
Re-negotiation of payment terms will help the business in order to keep the VAT Credit claimed as per Federal Decree-Law No. (8) of 2017 on Value Added Tax.
There may exist challenges in supplier payments, therefore its critical to agree with supplier to extend the earlier agreed due date of payment in writing to continue your eligibility for the input VAT claimed earlier.
6. Identify unclaimed input VAT and Claim:
As per recent public clarification by Federal Tax Authority, input tax must be claimed in the first tax period in which both the two conditions are satisfied:
a. The tax invoice is received
b. An intention to make the payment before the expiry of 6 months from the due date
Claim input credit for all the expenses where intention to make the payment is formed now even though you have received the tax invoice in the prior tax periods. You can evaluate unclaimed input and claim now.
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