Recent disruptions have challenged Canadian businesses like never before. During the various waves of the COVID-19 pandemic, for example, many companies saw their sales, revenues and cash flows severely affected, driving them to conserve cash and embrace cost efficiencies. Even businesses that benefited from the dramatic shift in customer behaviours came under pressure to find liquidity so they could better respond to increasing demand, pursue merger and acquisition opportunities or accelerate initiatives to stay ahead of key priorities like digital transformation and performance on environmental, social and governance (ESG) matters.
As Canada emerges from the pandemic, many business leaders are setting their sights on transformation and growth. But they’re still being cautious as they want to be sure they have the cash to move their strategic activities forward. Some organizations are also watching out for potential near-term cash pressures, especially with upcoming audits of Canada Emergency Wage Subsidy payments creating concerns about clawbacks. Others are looking for ways to build resilience amid renewed macroeconomic uncertainty and volatility.
The good news is there are many levers to unlock cash, including in the tax function. But for many companies, the challenge is figuring out where to look. Through our work with businesses across Canada, we’ve identified four common tax drivers of liquidity that are often overlooked when it comes to reviewing potential opportunities: labour; customer transactions; capital investment and infrastructure; and tax compliance and corporate structuring. By taking an integrated approach to reviewing these drivers, companies can identify and prioritize areas of opportunity so they can free up cash and forge ahead with their goals.
