Always check with an Accountant and to refer to the IRD website for information before changing your GST Basis
PAYMENTS to INVOICE Basis:
There are manual adjustments clients need to make to handle this.
So you need to be aware of what happens in the background within the software, and make appropriate adjustments based on that.
While they are on Payments Basis – the software only outputs records to GSTDET when a payment is made (so dollars coming in for a Customer payment, dollars going out for a Supplier payment and the same for Cashbook entries).
So at the end of the month all of the invoices that are outstanding for Customers and for Suppliers have not had the GST declared. When you convert to GST Invoice Basis (the software outputs records to GSTDET when an invoice is processed) so only NEW invoices that are processed are reported and it doesn’t matter what date they are dated – it will report any NEW invoices (Customers and Suppliers, plus Cashbook transactions)
SO whatever is showing as Outstanding in Customers and Suppliers at the time you change the GST setting hasn’t been declared and never will be declared for GST purposes so that has to be reported to IRD manually somehow.
INVOICE to PAYMENTS Basis:
By the end of the month all Customer and Supplier invoices and their GST content have been included in GSTDET and so declared to IRD.
When they subsequently PAY those same invoices the software will report them AGAIN so a manual adjustment has to be done in subsequent GST returns to remove the value of the payments received / made for invoices that were keyed in and dated prior the end of the Month.
So regardless of which way you are going you have to have an Aged Trial Balance for both Customers and Suppliers which lists all Invoices, etc that are outstanding at the end of the period. Then you make a manual adjustment either in the GST for that period (when going Payment to Invoice) or in subsequent periods when payments are made for invoices dated the month the GST was changed and earlier.
But always check with the IRD and your accountant for the most accurate requirements.