Lines of credit have almost completely dried up in this recession, and it’s harder than ever for businesses to fund their new development projects.  Ontario’s Advanced Manufacturing Investment Strategy (AMIS) is a great venue for Ontario manufacturers to pursue. What’s more, AMIS is available to companies from all manufacturing sectors in Ontario. The $500 million dollar provincial program focuses on:

• industrial R&D
• design/prototyping/engineering
• new/ advanced products/materials
• advanced manufacturing processes
• robotics/software development
• waste reduction
• energy conservation

AMIS, when granting a loan, can provide up to 30% of the total eligible costs of a project (up to a limit of $10M). This funding is given in the form of a repayable loan. The loan is interest free and principal free for up to five years, providing the company receiving it meets job and investment targets mutually agreed upon between the company and the province. After that period, the repayment rate is the province’s cost of borrowing, plus an additional 1%.

To be eligible, projects must create and/or retain at least 50 jobs. Alternatively, the projects must invest $10 million over the 5 year period. The costs eligible for the loan (excluding ongoing costs of production or operations) include:

• research and development
• equipment and machinery
• materials
• construction/facility improvements
• training
• overhead
• labour (one time only)

The terms for the loan are negotiated individually. After completing the application process, most companies receive word of the province’s decision within a relatively speedy 45 calendar days. This sometimes may take longer for the more complicated applications. The Minister of Finance, along with the Minister of Economic Development, approve or deny applications based on the guidelines of the AMIS Assessment Committee.

What’s more, for those manufacturers who regularly claim for SR&ED, receiving an AMIS loan has no impact on SR&ED eligibility. The AMIS loan is not affected if a business has already received an SR&ED return or income tax credits.  Companies that have received AMIS funding often include extra cash procured by SR&ED towards their projects. In fact, any business that has received SR&ED credits is more likely to be meeting the AMIS eligibility requirements.

For more information about AMIS, visit http://www.ontariocanada.com/ontcan/en/progserv_amis_en.jsp

For several industries, there is little to no chance of a significant sales increase in the near future. With businesses grasping at straws to stay afloat in this downturn, it is more critical than ever to find a way to increase revenue.

Canada is internationally heralded as a leader in R&D funding for domestic-owned small to medium sized enterprises. The SR&ED program (Scientific Research & Experimental Development) is one avenue that businesses, especially manufacturers, can pursue to improve their bottom line. The goal of the federal SR&ED program is to encourage experimentation and technological advancements within Canadian companies, and this is of particular benefit in the recovery of our economy.

“Companies need to sit back and assess their individual circumstances. It’s time for a second look at the SR&ED process, whether you’ve claimed previously or not.” says Ajay Sinha, VP Operations with Northbridge Consultants. “That old adage is true – knowledge is power. In regards to capitalizing on the benefits of SR&ED, it is worthwhile to seek assistance from a reputable SR&ED consultant.” Sinha is reminding clients that the CRA has hired more auditing staff and made many revisions to the T661 and filing process. He emphasizes that navigating the maze of technicalities correctly is imperative to maximize the size of your claim, and increase the rate of approval to enlarge the dollar amount of returns or tax credits. “It’s a sink or swim situation.”

Sinha mentions that “For those who have had a negative experience or have been disappointed with the results, it is often due to qualifying activities that have been overlooked, and thus not claimed for, resulting in a much smaller return, or in some cases, rejection of the claim.”

Many companies use their SR&ED returns of offset incurred development costs. Alternatively, funds can be invested in new equipment and materials, new hires, or even facility expansion. Sinha adds “We also teach our clients how to track their future eligible activities to make documentation for claims easier and more substantial. This promotes repeated success with the program in the future. The extra resources to put towards the advancement of technology also give Canadians that edge above competitors internationally.”

For more information, email info@northbridgeconsultants.com or call us at (519) 623-2486.

It is now more important than ever to have strong, solid, properly documented projects and to know one’s way through the maze that is the new T661 forms.  When it comes to describing project activities, you are now limited to 1400 words as opposed to a full twelve page narrative.  If the necessary requirements of technological uncertainty and advancement are not adequately supported, claims run the risk of being rejected, or at least of having certain activities disqualified, thus reducing the size of any return received.

Fortunately for rejected claims, if the 18 month period after fiscal year end claimed for has not expired, an objection can be submitted to the CRA within 90 days of receiving the notice of assessment.  if you feel that your project does in fact meet SR&ED requirements, it may very well be worthwhile to pursue an appeal.  The CRA outlines the appeals process on their website at:

http://www.cra-arc.gc.ca/txcrdt/sred-rsde/pblctns/p2000-02r-eng.html#tphp

All in all, the hassle of submitting objections and pursuing an appeal is time consuming.  This can be avoided altogether with the use of a consulting expert.  An experienced SR&ED consultant assess projects and handle the filing for you can be extremely valuable.  In addition, should claims be called to review, Northbridge Consultants readily will accompany you to the CRA review location.  While it is necessary that you attend and represent your projects, Northbridge provides assistance in the defense of any activities or documentation that may be disputed by the auditor.

Here are some of my ideas on how to increase your cashflow:

• Call in your Account Receivables the moment they’re due. Waiting to collect your AR reduces your cash flow substantially.
• Collect a portion of the payment up-front, prior to services being rendered.
• Stretch out the amount of time you take to pay your Accounts Payables (AP).  Pay at the last moment possible to maximize your cashflow.
• Review your AP records for overpayments and ensure that all sales taxes are fully recovered.
• Empower your employees to develop cost-cutting operational efficiencies.
• Strive for increased operational efficiencies in order to reduce inventory. Just In Time (JIT) or Lean manufacturing processes reduces inventory and increase cash flow.
• Liquidate excess inventory. Excess inventory is a double-negative because it not only requires extra warehousing/overhead/insurance costs to storehouse, but it also ties up cash flow.
• Take advantage of federal programs like IRAP and SRED.
• Barter with companies to achieve trade efficiencies through small business bartering.