Since there has been a lot of talk about the newly implemented Goods and Services Tax (GST) over the last few months, it’s natural to wonder how this will affect your small business and its payments to clients. One area that often gets overlooked when considering GST is the effect that it will have on late paying clients.
Late payments are not only an issue with business-to-consumer transactions; businesses pay other businesses as well and are affected by late payment fees as well as tax implications from large sums of cash being held in accounts on behalf of clients.
What is the Goods and Services Tax (GST)?
GST is a tax imposed by the government and applies to most goods and services. The tax is collected at the time of sale, which increases the price for consumers.
How does the GST affect businesses?
GST is a consumption tax that is charged at the time of sale for goods and services. It’s applied to the total price of the purchase, including taxes.
Some companies will send a monthly bill to their customers, which includes GST and other fees. This can lead to an increase in delayed payments, as customers may have forgotten they owe money or simply refuse to pay.
In order to avoid these situations, some small businesses are switching to GST billing software.
How can businesses minimise the effects of late payments?
Businesses can minimise the effects of late payments by implementing GST billing software. This will not only save time and help you avoid common errors, but it also means that you won’t have to worry about GST compliance.
With this type of software, all GST-related calculations are automatically performed and you can easily generate reports to meet your needs.