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Interested in accessing PwC VAT Cash Flow Modelling Tool?

Depending on the sector and regions in which an organisation operates the indirect taxes can account for around a fifth of the cash flow associated with all its sales and purchases.

This is a significant amount and is often the third largest cash figure under management, behind turnover and cost of sales, yet it is incorrectly seen as a wash through by many and the true impact it has is poorly understood.

This tool focuses on these VAT/GST (VAT) related cash flows.

The impact VAT has on cash flows is primarily affected by three factors:

  1. The billing patterns and creditor and debtor profiles of the business
  2. The compliance regulations on return periods and payment & repayment/offset dates
  3. The various rates, rules, reliefs and regimes set out by the tax authorities, that are simply good housekeeping, surrounding the date on which the tax is brought to account on individual payments and transactions and processes

When considering all these variable factors it is possible to measure the impact VAT has on cash flow.

A simple example is in the impact of setting up a principal based model versus a commissionaire based model, where the VAT cash flow impact is primarily driven by the proposed DSO, which if short will favour the principle model and if long favour the commissionaire structure – where one structure we reviewed resulted in a £26m VAT cash flow difference between the two scenarios.

It is therefore important to consider all the indirect tax cash flow impacts on the current arrangements of an organisation and to measure the impact of any proposed changes to the future operating model.
In addition to enhancing and protecting the cash flow position all organisations also seek to identify and realise cash improvement opportunities through the indirect taxes, and these ‘quick wins’ are equally available in the different sectors and territories across the world.

The tool will allow you to input your business model and any future business model permutations and understand the impact different decisions will have on your cash flow, giving you the opportunity to input into the decision making process and explore the best ways to do business, protecting your cash flow position.

Please contact for further information.

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