What should go into a cash flow forecast for a tax payment arrangement request?

Show how the proposed payments can actually be made

A payment forecast should explain where the money will come from and when it will be available. It is not a sales target or a profit estimate. A business can show an accounting profit while lacking enough cash on the instalment date.

The SARS payment-arrangement criteria include the taxpayer’s financial circumstances and prospects of satisfying the debt. Prepare evidence that allows those circumstances to be assessed rather than proposing the smallest monthly amount the business would prefer to pay.

Use the forecast period and supporting information requested for the case. Do not assume that a standard spreadsheet length establishes entitlement to a particular repayment term. The proposed dates, amount and duration still need SARS’s agreement.

State the preparation date, currency, taxpayer and scope at the top of the working document. A reviewer should be able to tell whether it concerns the company, an individual or a group, and which funds are actually available to the taxpayer owing the debt.

Begin with a reconciled opening cash position

Start from recent bank balances reconciled to the accounting records. Account for payments already committed or not yet reflected. Explain restricted funds separately so that money unavailable for the proposed payment is not counted as freely usable cash.

Show the opening position for each relevant account and avoid counting transfers between the taxpayer’s accounts as new income. If an overdraft or other facility is included, disclose the approved limit, amount already used and conditions affecting availability.

Do not rely on unapproved borrowing or a shareholder’s informal promise as though it were cash in the bank. Put proposed funding in a separate line with its supporting evidence and outstanding conditions.

Reconcile the tax balance used in the forecast to a current SARS statement and the periods being discussed. The debt-verification guide explains how to distinguish account errors and disputed amounts from an affordability problem.

Include the lines that explain affordability

Adapt the rows to the taxpayer’s circumstances. The point is a complete explanation of cash movements, not a longer spreadsheet with unsupported assumptions.

Support receipts with their likely timing

Separate invoiced debtors from work that has not yet been won. For each major expected collection, record the customer, invoice or contract, due date and reason for the expected payment date. Identify amounts under dispute or overdue.

A signed order may support future activity but still require delivery, acceptance and collection before cash is received. Include the costs and timing needed to earn that receipt. Do not show the full contract amount arriving immediately while postponing all related outgoings.

Use actual collection experience to challenge optimistic dates. If a customer regularly pays late, explain why the current forecast assumes otherwise. Keep written confirmations where they support a changed expectation, while recognising that a promise is not a completed payment.

For an asset sale, disclose the asset, ownership, sale stage, expected net proceeds and any finance to be settled. A suggested selling price is not equivalent to cash available for the first instalment.

Include the payments that keep arising

List wages, rent, supplier payments, finance commitments and other material expenses using realistic dates. Include annual or irregular costs that fall within the forecast period. A smooth average can hide a month in which the proposed instalment is unaffordable.

Show current tax obligations separately from the historic debt. An arrangement for an old balance does not explain how future VAT, PAYE or income tax will be paid. Avoid a proposal that appears affordable only because current liabilities are omitted.

Disclose other payment arrangements and significant obligations to creditors. If an owner intends to introduce funds or reduce drawings, explain the commitment and how it appears in the forecast. Do not quietly assume that every related person will defer payment indefinitely.

Use the correct treatment of VAT and other components consistently so receipts and outgoings are comparable. Ask the accountant to check for double counting where the forecast is derived from figures in financial statements.

Test the instalment against a delayed-receipt scenario

Prepare a realistic base case and a sensitivity showing the effect of a material receipt arriving later. This is a planning exercise, not a prediction that the worse outcome will occur. Explain the assumption changed and its effect on available cash.

For a fictional supplier awaiting a customer payment, move that collection to the later plausible date while leaving wages and rent on their actual due dates. Check whether the proposed SARS payment still fits. If it does not, the initial proposal needs further thought.

Identify credible ways to address the gap, such as confirmed funding or a different proposed start date. Do not solve it by inserting unexplained “other income”. If no workable plan exists, present that position honestly and seek advice on the options appropriate to the facts.

Also inspect timing within a month. A forecast can show a positive month-end balance even though the instalment falls before the customer collection. Add a more detailed short-term view around the proposed payment date where timing is tight. Explain any bridging funds actually available and the cost of using them. This prevents a monthly total from concealing a predictable shortfall on the agreed day.

Check the whole repayment period, not only the first instalment. A plan can begin comfortably and fail later when seasonal receipts fall or a major expense becomes due.

Keep the forecast tied to the supporting pack

The SARS debt page links the Collection Information Statement and explains different debt processes. Follow the particular requirements for a deferral request. A document list published for a compromise should not automatically be treated as the universal list for every instalment application.

Attach an assumptions schedule linking significant forecast lines to the evidence. Provide current accounting information, bank records and other documents SARS asks for. Explain differences between older annual statements and the current operating position.

Keep the prepared, reviewed and submitted versions identifiable. If a customer cancels an order before submission, update the forecast and explanation. A recently dated cover page does not make stale underlying assumptions current.

Where a prior arrangement failed, include the reason and what has changed. The official arrangement FAQ specifically calls for an explanation of previous defaults. A revised spreadsheet without an explanation of the earlier failure may leave the central concern unanswered.

Review the proposal before accepting terms

1. Confirm the taxpayer and debt covered.
2. Reconcile opening cash and the current account position.
3. Support receipts and outgoings with records.
4. Include current taxes and other commitments.
5. Test the proposed instalments and a delayed-receipt scenario.
6. Explain assumptions and previous defaults.
7. Have the authorised person review the proposal.
8. Retain the submitted forecast and actual SARS outcome.

The SARS deferral guide distinguishes a simulated proposal, submitted request and outcome. Read the actual terms before accepting them. Do not assume a saved plan has become an approved arrangement.

For tax payment-arrangement support, provide the debt statement, financial records, forecast and assumptions. An evidence-based proposal gives the decision-maker a clearer affordability picture, while SARS retains the approval decision.