ECOVIS Bahamas is a full-service mid-tier public accounting and consultancy firm situated on the island of New Providence in the Commonwealth of The Bahamas. ECOVIS Bahamas is a locally registered firm of the Bahamas Institute of Chartered Accountants (BICA).
Construction in Cambodia: A tense situation since the coronavirus pandemic
Output in the Cambodian construction sector fell massively in 2021, also as a result of the corona pandemic. Good cash flow and procurement management is important to mitigate the impact on businesses. The Ecovis experts explain how this can work.
According to the Ministry of Information, the construction industry in Cambodia has boomed. From 2000 to November 2018, Cambodia’s Ministry of Land Management, Urban Planning and Construction approved 43,136 construction projects representing an estimated investment capital of more than USD 43.3 billion.
While most of the money going into construction is locally sourced, China, South Korea and Japan have been considered as the top foreign investors in the country’s construction and real estate sector.
Unfortunately, in 2021 due to the impact of several issues including COVID-19 related slowdowns, Cambodia’s construction sector has fallen considerably year-on-year. This has had a significant impact on the country’s overall performance as together with clothing manufacturing, tourism and agriculture, construction is one of the four key sectors supporting Cambodia’s economic expansion.
Companies in the construction sector must pay attention to good cash flow management during the crisis. Murray Macmillan, Director of Financial Advisory, ECOVIS VSDK & Partners, Phnom Penh, Cambodia
Cash flow management and shortages
Construction is a business completely reliant on managing cash flow and many companies are experiencing the same problems as in Cambodia.
So how can cash flow be improved in a construction business? The Ecovis experts recommend that their clients and affected companies
ensure that the original quotation is realistic
ask for an advance
ensure that major costs are index linked
ensure that ERP systems can handle multi line project budgeting
ensure that any contract amendments are properly recorded
set strict monthly payment deadlines
ensure a clear division between cash flow in different projects
Like all EU Member States, the Republic of Croatia is obliged to collect statistical data within the framework of the Intrastat system. Companies that meet the criteria set by the Croatian government and exceed the defined thresholds for receiving and sending commercial goods in Croatia are obliged to fill out the Intrastat declaration and submit it electronically to the customs authorities.
What Intrastat Reporting Means Intrastat is a system of official statistics on trade between the Member States of the European Union. It was introduced in 1993 following the introduction of the European Union single market. Data on trade within the European Union, together with data on trade with third countries (Extrastat), provide statistics which are a key component of compiling the balance of payments and calculating gross domestic product. Also, Intrastat data are the basis for making macroeconomic decisions and for further market analyses.
Intrastat Reporting Obligation in Croatia
There are three conditions that make business entities subject to Intrastat reporting in Croatia:
Businesses must hold a Croatian VAT number, making them a VAT payer in Croatia.
Businesses must be engaged in trade with other Member States of the European Union, where the term “trade” implies all goods that are physically shipped from and delivered to the Republic of Croatia.
Trade must exceed the threshold for inclusion in the Intrastat system, which is determined separately for each calendar year by the national statistical authority in all Member States of the European Union. There are two thresholds, one for the receipt of goods in Croatia and one for the shipment of goods from Croatia. For 2021, the receipt threshold is HRK 2,500,000 and for shipment it is HRK 1,300,000.
We can register your company in the Intrastat system, prepare the data and submit the Intrastat report to the customs authorities. Mihael Gruičić, Payroll Specialist, ECOVIS FINUM, Zagreb, Croatia
Submission of Intrastat Reports in Croatia
A business entity in the Republic of Croatia may submit Intrastat forms independently or through a declarant authorised to submit the forms on its behalf, explain the Ecovis experts. Although the declarant may submit the Intrastat forms, the business entity is still responsible for providing accurate and complete data. Moreover, since Intrastat forms are submitted via the internet, it is necessary to have certificates for signing documents electronically and to register with the internet service of the Customs Administration of the Republic of Croatia.
For further information please contact:
Mihael Gruičić, Payroll Specialist, ECOVIS FINUM, Zagreb, Croatia Email: email@example.com
Succession planning and ownership transitions, especially in family businesses, can be challenging. In many cases, the current owner and the successors have different levels of motivation and disparate timelines.
While ownership transitions benefit both the original owner and the new owner, there are many pitfalls to avoid. The devil is in the details, as they say. Aligning the expectations of both parties is paramount. Consider, for example:
Does the current owner and the successor expect the same outcomes?
Are both generations going to be willing and ready for transition at the same time?
The key to success is open and honest communication, as well as shared common values.
To that end, it may be worth formalising an agreement between generations. A “Family Constitution” is a set of principles that a family agrees to follow with regard to personal and business relations. This is a good place to define the goals and core values – not of the company – but of both generations. Succession planning needs to take into account both the transfer of property, as well as the opportunity to maintain or build relationship equity. The value of the business is certainly central, but it is not the only asset to consider.
Therefore, the help of experienced consultants in drafting a Family Constitution is indispensable. This neutral third party can help navigate the ins and outs of a family dynamic more objectively. Further, they can advise on whether this document should be a formal and binding legal agreement or more of a values-based declaration without creating any legal obligations.
Is your business transition-ready? Have you considered a Family Constitution for your family-owned business? How might your family and your business benefit from one?