AP and AR management in Thailand

AP and AR management is the day-to-day handling of supplier invoices (accounts payable: checking them, calculating withholding tax, issuing WHT certificates, scheduling payments) and customer invoices (accounts receivable: issuing tax invoices at the correct tax point, tracking what is overdue, and collecting it). It is different from bookkeeping, which records completed transactions, and from treasury, which executes approved payments.

From about 10 supplier and customer invoices a month, a dedicated service usually pays for itself through: (a) input VAT you keep because PP 36 is filed correctly, (b) fewer bad debts because overdue invoices are chased before the legal deadline, and (c) staff time saved on WHT certificates, e-WHT payments, and follow-ups. Bookkeeping alone records these transactions after the fact; it does not manage them.

Under Revenue Code Section 65 Bis (9) and Ministerial Regulation No. 186 (B.E. 2534), a bad debt is deductible only when it was previously booked as income, real collection efforts have been made and documented, and, for debts above THB 500,000 per debtor, court action has been started (unless legal costs would exceed the debt). An old receivable is not enough on its own: the deduction depends on following the procedure.

At the tax point. For goods (Revenue Code Section 78), that is generally delivery, or earlier if you receive payment or issue the tax invoice first. For services (Section 78/1), it is generally when you receive payment, or earlier if you issue the tax invoice or the customer uses the service first. So a sale of goods on 30-day terms needs its tax invoice at delivery, not when the customer pays. Late or back-dated invoices put the buyer's input VAT claim at risk and can trigger surcharges for you.

When a payment runs through the e-WHT system of a participating Thai bank, the WHT rate on services, rent, advertising, and similar payments falls to 1% (instead of the usual 2% to 5%). The bank files the WHT with the Revenue Department for you, so there are no paper WHT certificates or monthly PND 3 / PND 53 filings for those payments. WHT is an advance payment of your supplier's tax, not a cost to you: the gain is simpler paperwork for you and better cash flow for your suppliers. The reduced rate is time-limited and has been extended several times, most recently to 31 December 2027, so we confirm the current period when we set it up.

PP 36 is the form a Thai company uses to self-assess and pay 7% VAT on services bought from abroad: Google Ads, Meta, AWS, Microsoft 365, foreign consultants, or royalties to a parent company. You file PP 36 by the 7th of the following month (15th if you e-file), pay the 7%, and, if you are VAT-registered, claim it back as input VAT on your next monthly VAT return (PP 30). Miss it and you lose the input VAT credit and owe penalties and surcharges.

Under Section 193/34 of the Civil and Commercial Code (CCC), many claims for goods sold and services provided must be taken to court within 2 years of the due date; where the customer bought for its own business, the period is often longer (5 years). After the deadline, you lose the right to sue, even if the debt is real. Because the rule depends on the facts, Plizz flags any receivable older than 18 months and recommends formal demand before the 2-year mark.

The domestic rate on payments abroad, filed on PND 54, is 15% for royalties, interest, and service or management fees, and 10% for dividends. Thailand's 61 double tax agreements (DTAs) can reduce these rates, and service fees are often exempt when the provider has no permanent establishment in Thailand. To use a treaty, you need the supplier's certificate of residence from its tax authority before you pay; without it, the full domestic rate applies.

Bookkeeping records what has already happened. AP and AR management handles open items before they reach the ledger: supplier invoices to check, customer invoices to collect, WHT certificates to issue. Above about 10 invoices a month, a separate AP and AR process catches errors before they reach the books and makes sure no WHT certificate is missed.