How does GST impact on your cash flow?

The timing of cash flow is hugely important to all businesses no matter what stage in the business journey you're in.

Your GST filing frequency and accounting basis will dramatically impact on your business’s cash flow. Often, both of these are not given much thought when registering for GST and it is a very underrated and vastly unconsidered decision that can huge implications on a business cash flow if not selected wisely.

How can this cashflow be impacted by your GST filing frequency and basis?

For example, a property developer in the early stages of their business development is spending on development and paying out larger amounts initially because of this. Consequently, they'll be receiving GST refunds but won't receive any revenue until the end of the project. It makes sense then for the business to be registered on an invoice basis and to file GST returns monthly so the GST refunds are received as early as possible and keep cashflow afoot.

Here are some ways that you can structure your GST filing frequency and basis to improve your cashflow:

  • If your business has slow recovery of its debtors, a good option may be to register on a payments basis so that the GST on its debtors is not payable until the funds are collected, rather than when invoice has been raised.
  • If your business will regularly be receiving GST refunds, it is wise to register on a monthly basis so the cash is received as early as possible from the IRD.
  • If your business will generally be making GST payments, the payment should be deferred as much as possible by registering for longer GST periods.

Of course, all businesses are different, so if you're wanting to discuss which option might be the best for you please either contact your Business Partner, call us on 0800 555 024 or email