What you are seeing
The figures are invented to show the pattern. They are not what any business should expect.
| Number | Three months ago | Now |
|---|---|---|
| Bank balance | R150 000 | R150 000 |
| Tax owed | R20 000 | R47 000 |
| Bills due in 30 days | R38 000 | R58 000 |
| Available cash | R92 000 | R45 000 |
The bank balance did not move. Available cash fell by more than half.
What it could be revealing
| It could be revealing | How to tell | You could |
|---|---|---|
| VAT you collected was spent as cash | VAT collected less VAT paid this period, against what you set aside | Move tax money aside as each payment arrives |
| Sales rose, so VAT rose with them | The VAT201s from the last two periods | Forecast VAT from sales, not from the last period |
| The provisional tax estimate was too low | The estimate against your actual profit to date | Ask your accountant for a revised estimate before the payment |
| New staff added PAYE, UIF and SDL | The payroll tax since the hire | Add it to the true cost of each hire |
| Records were behind, so nobody knew what was due | Your last VAT201 and EMP201 | Ask your bookkeeper for a list of what is due and when |
Check these first
- Tax set aside: how much of it is covered?
- Available cash: what is left after tax?
- Revenue trend: did sales, and so VAT, rise?
The hiring cost calculator shows the payroll taxes a new hire adds.
Questions people ask
How far ahead should I look at tax?
Look 90 days ahead. Work out the VAT, PAYE and provisional tax due, and compare it with the money set aside. Divide any shortfall by the months left, and set that amount aside each month.