Pro­vi­sional tax: A source of fi­nance

NZ Business - - FINANCE | FEATURE -

Vin­cent Papesch knows the im­por­tance of hav­ing work­ing cap­i­tal avail­able to fuel busi­ness growth.

It’s why the owner of in­te­rior floor­cov­er­ing spe­cial­ists Newflor uses Tax Man­age­ment NZ (TMNZ) to de­fer the busi­ness’s up­com­ing pro­vi­sional tax pay­ments to a date in the fu­ture, to free up money to pur­chase ad­di­tional stock to sell.

“It’s all about ex­pand­ing our range of sup­pli­ers and hav­ing more prod­uct. That’s put a lot of pres­sure on us cash-wise over the last four years,” says Papesch.

“With this fa­cil­ity, it’s so cost-ef­fec­tive – the in­ter­est cost to us is neg­li­gi­ble com­pared to our mar­gins. We can add more stock to our busi­ness with­out the hor­ren­dous costs com­ing with it.

“If this ser­vice did not ex­ist and we had to pay tax when it was due, we would’ve paid it, but that would’ve slowed our growth.”

Growth is some­thing the Taka­puna-based busi­ness has un­der­gone since Papesch pur­chased it in 2012. Papesch has grad­u­ally up­graded sys­tems, mod­ernised the web­site, re­freshed mar­ket­ing and hired new staff. As a re­sult, turnover has dou­bled com­pared to what it was four years ago.

Newflor is among thou­sands of grow­ing busi­nesses TMNZ has as­sisted since 2003.

Com­pany chief ex­ec­u­tive Chris Cun­niffe says up­com­ing pro­vi­sional tax pay­ments can be de­ferred for up to 12 months. TMNZ pays IRD on a client’s be­half, so there is no IRD in­ter­est and late pay­ment penal­ties, and the client pays TMNZ at the agreed upon fu­ture date.

The up­front fi­nance fee is much cheaper in com­par­i­son to other tra­di­tional lend­ing fa­cil­i­ties, and the ar­range­ment does not af­fect other credit lines. No credit checks or se­cu­rity are re­quired.

“Money set aside for pro­vi­sional tax can of­ten be used far more pro­duc­tively if it can be kept in the busi­ness.

“We al­low own­ers to do that so they can take ad­van­tage of eco­nomic con­di­tions or other com­mer­cial op­por­tu­ni­ties that will de­liver a greater re­turn,” says Cun­niffe.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.