For many New Zealand businesses, 31 March is the end of their financial year. This means that businesses need to get their books “in order” so they can produce their annual financial reports and complete tax assessments.
One key task for businesses prior to the end of the financial year is to tidy up their debtors / accounts receivable list.
Why? Well, businesses are required to pay tax on income in the year that it was earned. So, if you have outstanding debtors at your balance date, you may end up having to pay tax on income that has been earned but not yet received. This represents a double whammy hitting cashflow at a critical time of year for many.
If you have outstanding debts, make sure you collect them before 31 March. So, you then have the funds needed to pay your tax bill.
We can help here… Sometimes a single phone call or a letter from EC Credit Control is all that is needed for you to become the number 1 priority for payment from your customers.
Plus, if you load debts with EC Credit Control before 31 March 2024, you might just win yourself a Weber Baby Q BBQ.
If you have taken all prudent measures (such as lodging the debt with EC Credit Control) and you do not expect the debt to be paid, you can write the debt off as a “bad debt”. This means you will not have to pay tax on that uncollected amount. Note that the IRD requires sufficient information supporting the debt as “bad”, a collection report from EC Credit Control will suffice.
For more information and any questions about our debt resolution services please contact us via the form below.
