How We Leveraged Xero and Wagepoint for Canadian Covid-19 Subsidies — ConnectCPA
When it was apparent that COVID-19 was going to put a major dent in the day-to-day lives of Canadian individuals and businesses, the government of Canada sprung into action.
The government released a variety of measures to ensure that individuals still received some sort of paycheque and that businesses had the liquidity necessary to continue paying employees if they suffered a downturn in revenue.
As information regarding the various subsidies started to come out, accountants across the country also sprung into action.
As of now, we’ve helped numerous businesses with various government grants that are still ongoing today. Our team has filed dozens of Canada Emergency Wage Subsidy (CEWS) applications and has consulted on CEBA applications and the 10% Temporary Wage Subsidy.
But now that the funds are flowing, we’re responsible for the other side of the coin - ensuring that the transactions are accounted for and accurately reflected in our clients’ balance sheet and profit and loss reports.
FIRST - WE HAD TO GET THE INFO - AND QUICKLY!
The most challenging subsidy of all was CEWS. At first, information was being provided from multiple sources and it wasn’t clear who could/couldn’t qualify.
Finally, when things were more clear, in order to determine which clients could qualify, we depended heavily on Xero.
Could we have received this info if our clients were in other accounting systems or in no systems at all? Eventually, yes. But, it would have been really unorganized, it would have taken much longer to verify and and our clients would have been exposed to an audit and even payback of the grant.
More importantly though, some clients were severely impacted by COVID-19 and needed the subsidies/funds as soon as possible to keep operating.
With Xero, we were able to create a custom reporting template that allowed us to grab necessary information from our client accounts really quickly. Thanks to our team for moving so quickly on this!
The Canada Emergency Wage Subsidy is a grant that provides employers with 75% of an employee’s salary up to a maximum threshold ($847 maximum per week). If you’re looking for more information on the subsidy, read our blog post here. For some companies, that’s a lot of money and could be the difference between shutting down and continuing operations.
To qualify for the program, eligible companies would need to show that revenue declined by 15% in March 2020, compared to either:
And for April and ongoing months, you’d have to show a 30% drop in revenue using the same pattern.
To complicate matters, the government allowed businesses to report under the ‘cash method’ if it helped them to qualify for the program (as opposed to reporting their financials using the accrual method - which is usually more common).
THANK YOU TO XERO
Starting with the month of March 2020, using Xero Report Templates, our team set up a report pack that brought all the necessary information to the forefront. We needed:
We created some formulas to get us the percentage change and voila, mission accomplished. We were able to deploy this single report across hundreds of clients to determine eligibility under the ‘accrual’ method: