Research on Risk Control of VAT Cash Flow Based on Financial Governance

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 9

Year of Publication : 2020

Authors : Wang Yuhui

10.14445/23939125/IJEMS-V7I9P105

How to Cite?

Wang Yuhui, "Research on Risk Control of VAT Cash Flow Based on Financial Governance," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 9, pp. 41-47, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I9P105

Abstract:

Cash flow is an important part of enterprise financial governance. Chinese enterprises pay value-added tax in an all-around way. Still, few enterprises are aware of the cash flow risk caused by the value-added tax, especially the two-way policy of levying output tax outside the price and deducting input tax with invoices, which drives the cash flow risk enterprises to increase continuously make enterprise financial governance produce colossal influence. As a result, many enterprises are caught in a severe shortage of funds, and even there is a strange phenomenon that the accounting books are profitable at the end of the period. Still, there is no allocation of funds in the bank accounts. Therefore, this paper introduces the relationship between value-added tax and cash flow of enterprises, expounds the policy basis of value-added tax deduction, discusses the identification, evaluation, and control strategies of cash flow risk of value-added tax, and emphatically introduces the method and application of cash flow risk assessment because enterprises cannot obtain special invoices for the value-added tax to purchase. It aims to provide an objective basis for enterprises to formulate a purchasing price strategy and strengthen cash flow management.

Keywords:

Financial governance; VAT cash flow risk; Manufacturing industry.

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