VAT implementation in 2018, will highly likely to have an impact on cash flows and working capital. In line with regulations requirements, tax due needs is to be paid by the tax return due date, regardless of the collection from customers, or payments to suppliers within a specific period, of up to 6 month. Planning ahead of time for cash flows is, therefore, has never been more critical for survival. The longer the period lead period between the settlement of vendors/payables and collection of receivables, the more difficult will be the settlement of tax by date.
The attached diagram provides some details on the recoverability of tax in case of bad-debts.
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