COVID-19

5 tips for extending cash flow amid times of uncertainty

Business owners may be concerned about liquidity for any number of reasons as the country addresses the challenge of COVID-19. We understand these pressures, and we know that as an entrepreneur, you might want options for extending your available resources. Earlier in this series we wrote about steps you can take to manage your cash flow, and here we are expanding that list to include five cash flow tips that may provide some needed flexibility.

1. Sales tax

Filing timely HST returns can help access cash sooner if you have more costs than revenue. This is common for early stage companies with start-up costs, but it can also be the case for mature companies as a result of timing of expenses or unforeseen events. File HST and other remittances on time, even if you cannot turn the payment into cash, as it prevents penalties and maintains the financial health of your company. 

2. R&D tax credits

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 more timely access to this cash. 

3. Government programs

Keeping claims up-to-date for existing programs will help access cash in a timely manner. The Government of Canada has announced new programs and changes to help business, and we’ve published a number of to help keep you up to date. One program that is becoming more relevant is the work sharing program, which provides access to EI benefits to some workers who agree to reduced hours. The Supplemental Unemployment Benefit (SUB) Program may also provide you with the flexibility to lay off employees if needed, but maintain their compensation to keep them on your team for when things return to normal. Both the work-sharing and SUB programs can be complex so you may want to speak to your accountant or lawyer, first, because not everyone may qualify.

4. Debt facilities

Large Canadian banks recently announced they are offering up to six-month payment deferral on mortgages for individuals financially impacted by COVID-19. In addition, the Business Development Bank of Canada (BDC) has announced the Business Credit availability Program (BCAP) that provides additional support for corporate debt. You should coordinate with your banker and BDC, to see what you might qualify for, in order to maximize your access to both funding and payment relief. 

5. Customers & Suppliers

Invoice timely and electronically to speed up cash collections and continue looking for growth opportunities. Of note, the Canadian government is looking for information from suppliers on their ability to provide products and services in support of Canada’s response to COVID-19. Although this will not apply to all businesses, a list of products and services can be found here. Similar to having regular discussions with your debtors, have an open dialogue with your suppliers on potential deferment of payments and or discounts.

These measures, where relevant, can supplement others you may be taking. As ever, forecasting your cash flow should be an essential step in extending your runway, and including multiple scenarios can better inform major business decisions. Finally, it’s easy to get overwhelmed in extraordinary times like these, so remember to focus on those things you can control within your business.

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We understand that you want to be agile and responsive as the situation unfolds. Having access to experts, insights and accurate information as quickly as possible is critical—but your resources may be stretched at this time.

We’re here to support you as you navigate through the impacts of coronavirus on your business and your investments.