Now more than ever, businesses should step up their communications with stakeholders and look past the current conditions.

Quebec businesses are facing unprecedented challenges as the province grinds to a halt in a concerted effort to slow the spread of COVID-19. Attention, speed and agility: that’s what small and mid-size businesses need to lessen the impact on their finances, workforce, strategy and operations.

Financial assistance programs

Several government programs have already been introduced to help businesses through the crisis. This has left people wondering:

  • What programs is my business eligible for?
  • What is the application process?
  • Can I get additional help?
  • How can I prove that my business will be viable once the COVID-19 outbreak is over?

Since these are new programs, you may want to get help to make sure you apply for all available opportunities. More aid means your business takes less of a financial hit.

Take care of your employees

Action needs to be taken quickly, but this can put a lot of pressure on companies and workers.

As recently as a few weeks ago, one of the main factors holding businesses back was the skilled labour shortage.

This issue may no longer be making headlines, but it’s sure to resurface once the coronavirus crisis subsides.
Many companies are being forced to temporarily layoff staff. How can they make sure their top talent returns once business resumes?

Communication is the key. Businesses need to establish open lines of communication, maintain contact, provide reassurance and take care of their laid-off workers with initiatives such as helping them with employment insurance applications.

Since we have every reason to believe that staffing will still be a critical issue after the crisis blows over, business owners should develop an effective internal communications plan that will help them retain the employees they’ve had to temporarily let go.

Keep in touch with partners and suppliers

Your partners and suppliers deserve to know where you’re at. To do so, develop and implement a carefully planned stakeholder communications strategy. Maintaining relationships by providing helpful information and reassurance is sure to benefit your business today and tomorrow.

Modernize your work practices

The way we work is changing. Even before the crisis, thousands of Quebeckers had already started working from home.

Various studies have shown that workers are more productive when they don’t have to come into the office. In order to make telework a success, businesses need powerful tools that make it easy and efficient for employees to do carry out their tasks remotely.

Of course, working from home isn’t a realistic option for everyone. But many businesses should prepare for the future by setting up services that could help you keep employee on board, even if they’re working from home.

One such example is e-commerce. In Quebec’s Saguenay—Lac-Saint-Jean region, businesses haven’t kept up with the e-commerce and transactional website trend. But the crisis has spurred a number of companies to take action. As a result, they’re now able to continue serving customers and hold on to some of their staff, despite the closure of their brick-and-mortar locations.

Take action today

The government-imposed closures won’t last forever. Smart business owners know that the time to act is now if they want to be ready for action once things get back to normal. Companies should try to restore stability as quickly as possible by focussing on:

  • Managing cash flows
  • Supporting employees
  • Stabilizing and boosting revenues
  • Managing procurement
  • Maintaining operations
  • Keeping IT systems secure
  • Monitoring performance
  • Reassuring stakeholders

To give you a hand, our team created Solution PME – COVID-19, which includes concrete customizable interventions and fast-track action plan.

Find out how our entrepreneurial values and standards of excellence can support your business. By leveraging our tactics, shared leadership, complementary skills and professionalism, you can find quiet in the eye of the storm and start planning for a brighter future.

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Eugène Gilbert
Senior Manager | CPA, CMA | Business Transformation

In order to adapt in these uncertain times due to the coronavirus, it is essential for a business to have a clear vision of its activities.

Fast operational diagnostics are now more important than ever. This involves analyzing your financial position, future operations, profitability and break-even point.

Here are some strategies to help you meet the challenge.

Examine your financial situation

To assess your business’ financial health, you need to look at your working capital, credit options, securities and other assets.

Then prepare a list of your priority creditors, assess your risks and negotiate payment agreements as needed.

Adjust your financial projections

Since the current crisis is a total game-changer, you’ll probably need to adjust your plan. It’s important to be realistic and base your projections on an effective short-term plan.

Forecast operations and earnings

Again, be realistic. Assumptions that made sense yesterday may no longer apply. Business volumes may be down, but there may be opportunities ahead. For example, consider re-purposing your production line to meet the needs of an industry facing shortages.

Don’t forget to check your supply chain. Many businesses are currently grappling with supply disruptions leading to a shortage of parts and pieces. If this is the case for your company, you may not be able to reach your production targets.

Align your workforce with projected needs

Once you’ve established new production forecasts, it’s time to adjust your workforce planning accordingly.

Make sure the environment is safe for workers.

Create temporary staff reduction strategies.

Be creative

Revisit all variable costs. You might find interesting opportunities.

Convert fixed costs into variable costs whenever possible.

Assess and test several different scenarios. Prepare a cash budget to properly evaluate your financial needs. It’s important to plan out the disruption period, as well as the revitalization period.

Calculate your break-even point

You need to know your break-even point in order to develop a short-term action plan.

Make sure your production forecasts and costs are equal to your projected earnings.

If the scale doesn’t balance, see if you can adjust operations or find ways to cut costs. Be conservative in your estimates.

Set indicators and keep your eye on the goal

You now have a plan. It may not be your dream scenario, but at least it’s realistic and carefully thought-out. Your next task is to make sure your plan can be implemented and tracked effectively.

This involves setting key indicators. You don’t need to define the whole set. Instead, focus on those that are crucial to your plan’s success, such as:

  • Cash levels;
  • Sales;
  • Backlog;
  • Inventory;
  • Employee numbers;
  • Hourly productivity;
  • Profit per order.

Analyze profitability and fine-tune your plan

It never makes sense to sell products or services at a loss. This is doubly true today, especially if you’re short on material or human resources. To get the most from what you have, you should:

  • Assess product and customer profitability based on historical data, and update your priorities based on these insights;
  • Reassess your sales prospects by focusing on your most profitable products and clients.

A healthy dose of optimism is good for business, especially when times are tough. By carefully assessing your situation and developing a solid plan of action, you’ll be able to make informed decisions no matter what comes up. And if you need a hand, we’re here to help.

30 Mar 2020  |  Written by :

Eugène Gilbert is a Business Transformation expert at Raymond Chabot Grant Thornton.

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Sébastien Roy
Partner | CPA, CA, CBV, M.Sc. | Financial advisory

Updated on July 16, 2021

Managing cash flows is always a key concern for business leaders. Companies need capital to meet their financial obligations, such as payroll, accounts payable, loan repayments and business investments.

Having sufficient cash on hand is more important than ever to ensure the sustainability of the organisation. Your business’ survival depends on it. In turbulent times, your cash budget can come to the rescue by preventing critical operations from being hard hit.

That’s why it’s crucial for all companies to develop a cash budget and have a clear understanding of its liquidities.

Cash budgets are typically calculated monthly. But in special situations such as those that have occurred over the past year, you might want to review your cash assets as often as weekly.

Here’s how to prepare a cash budget in four steps:

1. Project your accounts receivable realistically

Review your payment requirements and realities. For example, even if you require payment within 30 days, you might have a client who typically takes 45 days to pay invoices. This is an important factor to consider when projecting your accounts receivable.

In other words, an invoice issued in July might not translate into a deposit until September. Also, in times of turmoil, some clients may take longer than usual to pay invoices.

2. Review other cash sources

You may be expecting income from other sources, such as:

  • Deposits from clients for upcoming work;
  • The sale of fixed assets;
  • Grants, government assistance or tax credits for which your company is eligible;
  • New loans or deposits from an available line of credit.

3. List all your expenses and other cash outflows

The easiest way to do this is to look at your expenses from the previous period (month, quarter or year). You may find it helpful to categorize expenses based on whether they are fixed or variable.

Fixed expenses—like administrative salaries, rent, insurance, travel expenses and utilities—are those that you have to pay regardless of the business’ earnings. They are the largest source of pressure on a company’s cash flow.

Variable expenses (or cash outflows)—like raw materials, direct workforce wages and royalties—are subject to change, depending on the company’s earnings. Typically, these expenses are scaled back as revenues decrease.

At this stage, you should also take into account the company’s loan payments (capital and interest). Loan deferrals or other relief measures may be available. It is therefore important to stay informed.

4. Analyze your accounts payable (suppliers, taxes, payroll, etc.) for the previous month, quarter or year

What payment terms apply? When will you be able to make your payments? It’s very important to know exactly when you plan to make these payments so that you can compare them to your projected deposits for the same period. That’s how you predict a cash shortfall or surplus for a given period.

By following these four steps, you’ll have a better understanding of your business’ cash flow situation and be better prepared to take proactive measures as needed.

25 Mar 2020  |  Written by :

Sébastien Roy is an expert in business valuation and financial litigation. Contact him today!

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When external circumstances like the coronavirus impact business operations, focus on each affected area to control damage.

So many variables can affect your operations. As a business leader, you need to assess sales levels, personnel availability, operational inputs, equipment capacity, work teams, infrastructure quality and technological capabilities. Each of these considerations can impact your ability to achieve production and performance targets.

When a crisis strikes, several problems can surface, including:

  • Unpredictable sales volumes, with substantial increases or declines;
  • Variations in employee availability, affecting their hours or ability to travel. In some cases, workers may be entirely unavailable;
  • Supply chain disruptions;
  • Product scarcity or unavailability.

The keys to effective crisis management

If you want to minimize business impacts and maintain an equilibrium, you may need to adjust certain procedures. Carefully evaluate each variable impacting your operations, assess associated risk levels and establish priority actions.

Here’s a summary of what you need to consider.

Dynamic production planning

  • Clarify employee availability;
  • Assess supply chain issues and how they could impact production;
  • Assess your company’s capacity surplus or shortage;
  • Determine which tasks aren’t critical to business continuity and eliminate them in priority order;
  • Implement a dynamic production planning tool and increase planning cycle frequency;
  • Set up tracking mechanisms and schedule frequent checks with the sales team.

Technology optimization

  • Use available technologies to run simulations of different scenarios.

Actual cost reviews

  • Assess how volume fluctuations are affecting your variable and fixed costs, and determine your breakeven point;
  • Develop a plan for reducing fixed costs.

Implementing these actions can help you control costs and improve operations. When combined, small actions can make a big difference. Do the right thing for your business’ future by preparing for the unexpected.

Our operations analysis experts can help you implement fast and effective solutions so that you’ll be ready for whatever lies ahead.