Many of you requested and received assistance from various levels of government during the pandemic. While some assistance, such as the Canada Emergency Wage Subsidy (CESS), was non-refundable, this is not the case for all programs. Some of them now represent a debt on your company’s balance sheet, and you’ll have to make sure that repayments are made in accordance with the terms of the contract, putting (or putting) pressure on your cash flow.
Canadian Business Emergency Account (CBEEA)
The most common program is the Canadian Business Emergency Account (CBEEA). As you probably already know, the deadline for repayment of the refundable portion – $30,000 or $40,000, as the case may be – is December 31, 2023, at the risk of losing the grant altogether if payment is not made on time!
It is therefore very important to ensure that your company will have the necessary liquidity at that time. If the company has not set aside the required amount, and even if there is a reserve, you need to ensure that sufficient funds will be available when the time comes.
Have a cash budget
What’s more, a number of factors are currently putting pressure on your profitability and liquidity: the rise in interest rates over the past year, the recent increase in the minimum wage, the labour shortage, persistently high inflation, the variable-speed economic recovery and the uncertainty surrounding the future, and so on. And let’s not forget that the Covid subsidies of the past two years may have distorted your perception of reality, and that the return to normalcy may prove brutal for many industries. All these factors make it increasingly necessary to have an operating budget, or at the very least, a rough cash budget to forecast cash inflows and outflows over a horizon of several months, so as to be able to stay on course, like any good captain.
The cash budget is all the more important for cyclical businesses – we’re thinking here of the construction or tourism sectors in particular – because it enables you to forecast working capital requirements during so-called slack periods, but it also enables you to plan for exceptional needs such as loan repayments. It’s an excellent planning tool to add to your arsenal.
If you don’t know where to start or would like some support, at Amyot Gélinas we have a team of professionals ready to help. You can contact our expert Gustave Legault-Brousseau, CPA Director – Consulting Services at 1 877 326-3400, ext. 3472.
