Vat Forces Dry Cleaner Switch To Prepayment



Tribune Business Reporter


A Bahamian dry cleaning chain yesterday said Value-Added Tax (VAT) will force it to move to a prepayment system, as it urged other businesses to start preparations and “not wait until January to figure it out”.

Lana Lee-Brogdon, New Oriental Laundry & Cleaners’ president, told Tribune Business that the company would be moving to an ‘upfront’ or prepayment system beginning on November 1, as there was “no way around it”.

“We are going to switch to prepayment,” she said. “For us we just have so many clothes that are just sort of left. It’s not that we don’t remind people, but some just don’t come and we are eft with a bunch of write-offs.

“With VAT coming on-line and knowing that we are going to have to pay on our incoming sales, we see no other way around that because we can’t afford to lose that or wait for the six-month window when you recognise the write-off. That is going to be effective November 1.”

Mrs Brogdon said the company, which has 108 employees, was looking at the possibility of establishing a special payment system with its regular or VIP customers.

“For our very important customers we are trying to put in place a credit on their account so they don’t have to sit and wait on us to write up everything, and/or a credit card on file because more and more people are using credit cards,” she said.

“I know it’s going to be a shift because a lot of government employees are getting paid at the end of the month, and they would bring things in during the month and everything comes out at the end.

“We just don’t see any other way around it right now. That’s one thing that is going to be a change in the way we do business. The other thing is we are going to try and do business with VAT-registered businesses only, otherwise we cannot recover our inputs.”

Mrs Brogdon said New Oriental had tightened up its operations in several areas since a very “soft” June. “Since then our sales have been quite good actually. I’m not sure about September, which is traditionally very slow, but July and August were very strong. I’m optimistic but everyone is just uncertain how people’s spending patterns are going to be impacted in January,” Mrs Brogdon said

“We have tightened up quite a number of things.We did do a couple of lay-offs. We had planned on it, but we also did a productivity incentive programme.

“We are a production company and everything we do is how efficient you can be. We put in a productivity incentive for our pressers where they have a certain standard they’re to meet. If they reach certain criteria at the end of every week as an average output per day, then their salary is going to go up. We started with our pressers because that’s our biggest group.”

Noting that New Oriental was effectively “ready to go” from an accounting perspective, Mrs Brogdon expressed concern that not enough was being done to educate businesses on the proposed tax. “I’m concerned. Being involved with the Coalition, I’m very close to the stuff and I still have questions,” she added.

“Businesses just need to do the basics. Don’t wait until January 1 to figure it out. It’s not that hard to prepare if you are an established business and you have your existing computerised system in place. If you think it through now, it should not be that big of a deal come January 1. If you don’t think it through you may end up not sure of what is happening.”

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