The impact of VAT on the business can be determined as following
- Performing the transactional analysis of purchases (to determine the potential input VAT)
- Performing transactional analysis of the sales (to determine the potential output VAT)
- Analysing the Cash-cycle of the business (to determine the cash recovery rate of the business)
- Business payment terms (both for suppliers and the customers)
- Operational Cash-flow availability
The analysis of above-mentioned components will help to determine the additional cash requirements and its financial impact on the business. The detailed transactional analysis will also help in determining the business input VAT recovery position and VAT burdon (if any – as in case of partially exempt business).