Installment (postponement) of a monetary obligation or tax debt as a tool for balancing the Company's Cash Budget

The main principles of asset management include the following:
maintaining an optimal balance of cash assets to ensure continuity of operations;
creation of a reserve of free cash to compensate for expenses: possible expansion of production, unforeseen losses;
accounting for the range of seasonal changes in cash balances;
timely transformation of free cash into highly liquid financial investments and their reverse conversion to replenish the cash balance.

Input cash flows include:
flows from the sale of the company's products;
the flows are related to loans received by the Company;
the flows are due to an increase in the Company's capital.

Source streams may result from:
long-term decisions: payments on loans, payments to suppliers;
payment of operating expenses;
making investment payments;
payment of taxes and payments to the State budget

Analysis of incoming and outgoing cash flows by period (month, quarter, year) shows an excess or shortage of cash.

To effectively manage the company's cash, it is useful to create a cash budget or cash budget (Cash Budget).

Cash Budget - a periodic forecast of incoming and outgoing cash flows over a certain period.

The cash budget is an integral part of the Company's general budget.

The main factors taken into account when compiling the Company's cash budget:
cash flow analysis;
analysis of collection of receivables;
analysis of accounts payable;
inflation;
credit rate;
dividend policy;
taxes.

One of the tools for balancing the Company's Cash Budget in terms of taxes can be an installment (deferred) payment obligation or tax debt of the Company.

Thus, in accordance with the provisions of Article 100 of the Tax Code of Ukraine dated December 02, 2010 No. 2755-VI (as amended and supplemented) (hereinafter referred to as TCU), installment, deferral of monetary obligations or tax debt is the postponement of the payment by the Company of its monetary obligations or tax debt under interest, the amount of which is equal to the amount of 120 percent per annum of the discount rate of the National Bank of Ukraine, effective on the day the State Tax Service of Ukraine (hereinafter referred to as the controlling body) makes a decision on installment, deferral of monetary obligations or tax debt.

The company has the right to apply to the regulatory authority with an application for installment and deferral of monetary obligations or tax debt. A company that applies to the supervisory authority with an application for installment, deferral of monetary obligations is considered to have agreed on the amount of such monetary obligation (clause 100.2 of article 100 of the TCU).

The basis for the installment plan of monetary obligations or tax debt of the Company is the provision by it of sufficient evidence of the existence of circumstances, the list of which is determined by the Cabinet of Ministers of Ukraine, indicating the presence of a threat of occurrence or accumulation of the tax debt of such a Company, as well as an economic justification indicating the possibility of repaying monetary obligations and tax debt and / or an increase in tax revenues to the relevant budget as a result of the application of the installment plan, during which there will be changes in the production or sales management policy of such a Company (paragraph 100.4 of article 100 of the TCU).

The basis for postponing the Company's monetary obligations or tax debt is the provision by them of evidence, the list of which is determined by the Cabinet of Ministers of Ukraine, indicating the presence of force majeure circumstances that caused the threat of the occurrence or accumulation of the tax debt of such a Company, as well as an economic justification that indicates the possibility of repaying monetary obligations or tax debt and / or increase in tax revenues to the relevant budget as a result of the application of the deferral regime, during which there will be changes in the production or sales management policy of such a Company (paragraph 100.5 of article 100 of the TCU).

Installed amounts of monetary obligations or tax debt (including separately - the amount of punitive (financial) sanctions) are repaid in equal installments starting from the month following the month in which the decision to grant such an installment plan was made (paragraph 100.6 of Article 100 of the TCU).

The deferred amounts of monetary obligations or tax debt are repaid in equal installments starting from any month determined by the relevant regulatory authority or the relevant local self-government body, which, in accordance with paragraph 100.8 of this article, approves the decision to install or defer monetary obligations or tax debt, but no later than the expiration of 12 calendar months from the date such financial obligation arises/

If the amount of a monetary obligation or tax debt declared for installment, deferment is 1 million or more, installment, deferral is granted only if:
transfer to the tax lien of the Company's property, the book value of which is equal to or exceeds the amount of the monetary obligation declared for installment, deferment, - in the case of installment plan, deferment of monetary obligations;
stay in the tax lien of the Company's property, the book value of which is equal to or exceeds the amount of tax debt declared for installment, deferment - in case of installment plan, deferral of tax debt (paragraph 100.11 of Article 100 of the CCU).

Installment, deferment of the tax debt does not dismiss the Company's property under the tax lien (paragraph 100.14 of article 100 of the TCU).

Only a balanced cash budget (Cash Budget) of the Company will make it possible to form the optimal balance of funds necessary for settlements on its own urgent financial obligations, investing in short-term financial instruments.