1. Do a cash flow forecast
Businesses that haven’t faced a liquidity crunch can find it difficult to change their cash flow management. By moving to a receipts and payments basis and conducting daily forecasting and integrating short- and medium-term forecasts, you may be able to increase capacity for other financial obligations and build confidence with shareholders and lenders.
2. Conduct a stress test and map out “what if” scenarios
You can determine if your liquidity is sufficient by stress testing your forecasts for different impact scenarios, then you will be able to make decisions based on real time data. This can also help inform an appropriate response to your financial stakeholders, who may be asking for forward looking data on your business.
3. Communicate with your financial partners
Your business may be facing cash flow issues despite your best efforts. If forecasting and stress testing show that your business might not be able to meet its debt obligations, proactively communicate with your financial institution to discuss your options. Don’t wait until your liquidity reaches crisis levels. Provide your financial institution with as much notice as possible if there’s a good chance that you won’t be able to make certain payments. They may offer some flexibility.
4. Review temporary finance options
Other sources of temporary financing might be possible—and these are changing every day. Speak to a business advisor and get advice on the best options for your situation.
5. Speak with customers and suppliers
Communicate with your customers and suppliers on a regular basis to get in front of potential cash flow inconsistencies. For example, you can accelerate cash collections by submitting invoices in a timely manner. Consistent, proactive dialogue may also reveal ways to negotiate discounts or introduce flexible payment options.
6. Get your GST/HST returns in
Filing timely GST/HST returns can help you access cash sooner if your costs outweigh your revenue. This is common for companies with start-up costs but can also be the case for mature companies because of timing of expenses or unforeseen events. File GST/HST and other remittances on time—even if you can’t turn the payment into cash—as it can help prevent penalties and maintain your business’ financial health.
7. Consider R&D tax credit eligibility
If your company has refundable tax credits such as those under the Scientific Research and Experimental Development (SRED) program, filing your corporate income tax return early can help accelerate timely access to this cash.
Doing business in a volatile time isn’t easy, but we’ll work with you to find the right solution for your business. If you’re looking to improve your cash flow, our advisors can help you find the way forward.