David Mayrand
Partner | CPA, CA | Management consulting

In the coming weeks and months, CFOs will be called on to play a key role in ensuring their organization’s recovery and continued operations.

Before the pandemic, the overall objective of finance teams was to transition to a position as strategic partner where transaction processing would be automated to reduce the time spent on lower-value activities.

In due course, they would be dividing their time collaborating on the entity’s strategic initiatives (e.g., assessing growth prospects), supporting decision-making through business intelligence and strengthening oversight and governance mechanisms.

How to manage liquid assets effectively

The financial flow pattern has changed dramatically in all organizations as a result of the pandemic. This paradigm shift requires CFOs to play a major role in the business’s continuity, including managing liquidities. In the medium term, they must ensure that the organizational structure and technology deployed make it possible to maintain and optimize cash resources.

However, there are a number of issues that limit how efficiently finance teams are able to manage cash resources. Some of these include:

  • the difficulty in easily obtaining an overview of all bank balances;
  • the partial accessibility of funds;
  • issues related to the preparation of cash flow forecasts over different periods;
  • the challenges of preparing multiple versions of cash flows;
  • inefficiencies in producing management reports.

The current pandemic environment is expected to result in further centralization and integration of treasury and finance activities in order to better manage and optimize liquidity.

The treasury system as an interface

Thanks to changes in the technological environment, previously decentralized processes will be combined and then optimized through integrated solutions such as the consolidation of bank accounts, payments and collections and working capital management.

Ultimately, the treasury system will serve as an interface between banking platforms, market data, accounting and all other systems, providing a comprehensive view of treasury activities, including cash resources.

Bandeau - Management RCGT

CFOs will be major contributors in the implementation of all of these technologies, as well as in the organization’s overall innovation process.

This will require the ability to analyze and plan quickly, to act while keeping an eye on changes in the ecosystem, and to keep a watchful eye on the market and the measures in place. This function will require considerable agility and resiliency. Learning, unlearning and relearning, will be vital in a world that has been transformed and will continue to change.

Above all, because of and, perhaps, despite this exceptional situation, CFOs will be able to strengthen their position as a strategic player within their organization.

They will ensure the resumption and optimization of operations through the use of available and affordable technologies. They will contribute to adjusting the business model, optimizing cash management and searching for financing and strategic partnerships. They will provide advice on investments in the organization’s main sectors and ensure that they have a significant role in governance, particularly in terms of risk management and cybersecurity.

With its key role in the recovery, the finance function’s transformation will be accelerated, potentially providing it with an unprecedented position within the organization.

11 May 2020  |  Written by :

David Mayrand is a management consulting expert at Raymond Chabot Grant Thornton. Contact him today!

See the profile

Next article

Wayne Tessier
General Manager | Auray Sourcing | Human resources consulting

Many companies will welcome temporary foreign workers (TFWs) for the summer but the current situation requires additional measures.

The pandemic has added a new layer of complexity to many rules and regulations—including those surrounding air transportation and immigration—and resulted in a number of changes. That’s why you need to invest time and energy into preparing for the arrival of your temporary foreign workers.

Here’s how to ensure your foreign workers land smoothly in Canada:

1. Do your foreign workers have all the travel documents they need?

The Government of Canada has established certain restrictions on who can enter the country right now. Foreign workers will only be admitted if they are coming to perform essential work.

To ensure that your workers are let into the country, make sure they arrive at the airport with a valid work permit or the Letter of Introduction issued by Immigration, Refugees and Citizenship Canada (IRCC) indicating that their request has been approved. They will also be asked for this document prior to boarding.

It’s also a good idea to provide your inbound workers with proof of employment that they can present upon arrival in Canada.

SME Solutions - Relance RCGT

2. Do your workers have a mask, which is essential for travelling to Canada?

Since April 20, 2020, passengers on flights to and from Canada have been required to wear a mask. Since travellers without a mask won’t be allowed to board their flight, it’s important to inform your workers of this requirement before they leave home.

Non-medical and homemade masks are permitted, as long as they meet government requirements. Consult this document for more information.

3. Have you implemented an isolation plan?

All travellers arriving from abroad must complete 14 days of self-isolation. Employers are responsible for creating self-isolation plans for their TFWs.

The plan should state how the foreign workers will be transported from the airport to their isolation location and how they will obtain essential items such as food, medication and personal hygiene products during the isolation period.

Employers should provide a copy of the detailed self-isolation plan to workers prior to departure, since they will be asked to show it at the port of entry. This is doubly important for workers who don’t speak English or French, as they won’t be able to explain the plan to border agents.

By following the advice listed above, you’ll make sure your workers get here on time, without issues at the border.

06 May 2020  |  Written by :

Wayne Tessier is an international recruiting expert at Raymond Chabot Grant Thornton. Contact him...

See the profile

Next article

Josianne Cloutier
Partner | CPA, CA | Assurance

Not the lonely, boring types you think they are. Get to know your accountant, you might be surprised at what they can do for you.

Often, we imagine accountants as bland characters with brown socks. However, CPAs come in a wide range of colours. Simply find the shade that suits you and your business.

Yes, you’re right, they have a Cartesian side as well and act with discipline and depth to analyze your numbers… but they can also have a vibrant, effervescent side.

The work world is constantly changing and so are accountants. Curious and passionate, they touch on all business sectors and take a keen interest in the issues facing entrepreneurs and their industry.

Motivated by the success of their clients, CPAs take the time needed to fully understand each one’s needs. They can therefore help them at every stage of their business growth, as their expertise covers many aspects, from start-up to financial optimization, and from financial statement analysis to management consulting.

Promoting growth in a time of technologies

Increasingly, accountants are integrating the mastery of technological tools into their practice and acting as analyst-advisors.

The rise of artificial intelligence, advanced analytics, blockchains and cryptocurrencies is forcing companies to transform their ways of doing things in order to remain competitive. Mobile applications, cloud computing and cybersecurity are now part of the daily life of organizations.

Accountants can help you adapt, step by step, at the pace that suits you. They will conduct a 4.0 audit to identify your technology needs and work with you to put in place a game plan to make the changes in the short and longer term, including a financing plan and optimization of the organizational structure.

Implementing promising business strategies

In the current workforce shortage, it’s all the more important to dare to adapt to the market in order to deal with local and international competition. The challenges are daunting so it’s essential to put in place a visionary and effective strategic plan.

Your CPA can see far ahead. As a consultant on the lookout for emerging and enduring trends, he will guide your thinking on the best ways to showcase your business and keep you at the forefront of your market.

Having a successful business transfer

During an acquisition, or to ensure the sustainability of your business, it’s vital to prepare the transition upstream. To do so, your accountant will work with you to establish a solid succession plan to avoid conflicts and the uncertainties of improvisation. Developed over several years, a succession plan is an invaluable tool in the case of a family transfer as well as a buyout and sale.

Providing assurance for your financial information

Of course, your accountant will continue to meet your assurance needs, whether for an audit or compilation engagement or to provide a reasonable or moderate assurance report to your shareholders, creditors or any other users of your financial statements.

Your company can always count on your CPA to advise it and ensure that your financial information complies with current standards.

Addressing Canadian and international tax with confidence

It can be easy to get lost in the maze of a company’s tax system, whether in Canada, the United States or internationally.

To avoid complicating your life and, of course, maximize your situation, it’s advantageous to deal with an expert. Your accountant will continue to be there for you, regardless of the context in which your business operates.

Working in tandem with your accountant

Every entrepreneur wants to work with professionals who have their business at heart. When a climate of trust is established between you and your accountant, it becomes easier to move forward and deal with the issues that arise.

Accountants don’t work alone in their corner. They act as a team with you and in synergy with their collaborators so that their expertise allows your business to stand out. They put all of their energy, determination and experience at your service to ensure your success.

06 May 2020  |  Written by :

Josianne Cloutier is an assurance expert at Raymond Chabot Grant Thornton. Contact her today.

See the profile

Next article

Limited-risk distributors and intra-group service providers: Should you adjust your transfer prices in connection with COVID-19?

As multinational groups face unprecedented negative economic pressures, transfer pricing understandably might not be on the top of priorities.

However, transfer pricing policies will potentially need to be modified to consider the financial and economic impact of COVID-19 when companies finalize their transfer pricing adjustments, to comply with local jurisdiction requirements and be in line with the arm’s length principle.

This is particularly true for companies that have a transfer pricing structure involving limited-risk distributors or services centers, as the profitability of such entities is generally constant from one year to another. The reason for this is that these entities assume limited risk.

Challenging transfer pricing structures

In fact, limited-risk distributors are named this way because they are usually exposed to general market risks, but are not exposed to significant risks with respect to inventory, credit and collection, product liability or foreign exchange.

On the other hand, entities that act as service providers for the benefit of other entities of their group are usually remunerated on a cost plus basis, meaning that their profitability is equivalent to the markup they applied on their costs. Accordingly, these intra-group service centers are not exposed to risks other than general market risks.

The negative impact that the COVID-19 will have on the profitability of many companies challenges these intercompany structures and will need to be reflected in the transfer pricing adjustments for fiscal year 2020.

Although negative results are caused by extraordinary circumstances, they are part of the market risks that should be shared between all entities of a group, including limited-risk distributors and intra-group service providers.

Determining profitability

The profitability of limited-risk distributors and intra-group service centers is usually determined by applying the transactional net margin method and by performing a benchmarking analysis of public companies that have a comparable functions, risks or assets profile.

The profit-level indicators of the companies selected as comparables (operating margin, markup on total costs, return on operating assets, etc.) are used to establish an arm’s length range, and the profitability of the limited-risk distributor or service center is considered to be arm’s length if it falls within this arm’s length range.

When the results of a limited-risk distributor or service center are outside the arm’s length range, transfer pricing adjustments are booked, either at year-end or during the financial year.

The financial results of the public companies used to benchmark the profitability of limited-risk distributors and group service centers will be impacted by COVID-19. The annual financial results of the comparable companies for 2020 will be available in the first half of 2021, and it might be too late for companies to adjust their transfer prices at that time.

While this delay in the availability of financial information might not be an issue in normal times, when the arm’s length range does not vary significantly from one year to another, this could become an issue for the fiscal year 2020.

Look at the quarterly results of the public companies

In these circumstances, a solution could be to look at the quarterly results of the public companies used as comparables and assess the impact of COVID-19 on their profitability in the first half of 2020. The transfer prices of limited-risk distributors and intra-group service providers could then be adjusted to reflect the decrease observed in the market.

These adjustments should be carefully documented by the multinational groups, and reflected in their transfer pricing documentation for fiscal 2020 and beyond. Such documentation will be important to explain changes in transfer pricing policies to tax authorities in the event of an audit, and to explain potential losses for limited-risk distributors and intra-group service providers.