Fractional CFO support for Ottawa consultancies and government suppliers

How much of next year is actually contracted

Public-sector work arrives through vehicles with defined terms, option years and ceilings, and it is easy to treat all of it as though it were secure. It is not equally secure. Work under a current task authorization with funds committed is one thing; work expected under an option year that has not been exercised is another; work anticipated from a recompete is a third.

Separating the pipeline into those categories and weighting each honestly gives a figure for contracted revenue that means something. It usually reveals that the firm is more exposed than it felt, because the comfort of a long-standing relationship is doing work that a signed commitment is not. That is precisely the sort of thing worth knowing twelve months out rather than three.

Bench cost is the largest number nobody tracks

Every hour an employed consultant is not assigned is paid for and produces nothing. In a firm with a dozen people, a utilization rate a few points below target represents a meaningful annual sum, and it does not appear as a line item anywhere — it is buried inside salary cost.

Measuring utilization by person and in aggregate, and converting the shortfall into a dollar figure, makes the trade-offs visible. Whether to carry a consultant through a gap or release them, whether to accept lower-margin work to keep people assigned, whether the firm is carrying more capacity than its pipeline supports — all of those become answerable questions rather than instincts.

Prime or subcontractor: different economics entirely

Working as a prime brings the full contract value, the client relationship and control of the engagement, along with the administrative load, the compliance obligations and the responsibility for paying subcontractors before being paid. Working as a subcontractor to another firm brings a narrower margin, no relationship with the end client, and a payment position dependent on the prime.

Firms often drift into one position without deciding. The analysis worth doing compares the margin actually realised in each role against the working capital each consumes and the risk each carries. A firm doing substantial subcontract work at a thin margin while funding the prime’s payment cycle may be better off doing less of it, or pricing it differently.

Building a rate card that covers everything

A defensible rate has to recover the consultant’s fully loaded cost, the non-billable time that is unavoidable, the firm’s overhead, the cost of business development and proposal writing, and a margin. Rates that were set against a published ceiling, or against what a competitor appeared to charge, frequently miss two or three of those.

Proposal cost deserves particular attention, because in public procurement it is substantial and it is incurred at a low win rate. A firm that does not load bid cost into its rate structure is funding its business development out of margin without seeing it happen, and that shows up as a firm that is busy and not especially profitable.

Concentration and the corporate structure question

Where a large share of revenue comes from one department or one prime, the exposure is real, and it interacts with a tax issue specific to this market: a corporation whose work resembles employment can be treated as a personal services business, with the small business deduction lost and most ordinary expenses disallowed.

The structural responses — broadening the client base, ensuring engagements are genuinely arm’s length in substance, taking on subcontractors, working through defined deliverables rather than open-ended hours — all take time to implement. They are worth examining before a pattern hardens rather than after a reassessment. See the personal services business guide and the year-end statements page.

When it is too early

If time is not recorded against engagements, utilization and bench cost cannot be measured and none of this works. A single-consultant corporation is also unlikely to gain much from formal financial oversight, since the owner holds the entire picture.

The threshold is usually growth into employed staff, a contract vehicle approaching expiry, a concentration that has become uncomfortable, or a year that was busy without being profitable. Absent one of those, accurate time recording and a timely year end are the better investment. See Ottawa consultant accounting.

How the engagement works

EverStone is a sole practitioner CPA firm with one office, in Abbotsford, British Columbia, and no Ottawa office. Work is delivered remotely through video calls, secure document exchange and electronic signature, with scope, cadence and cost agreed in writing before anything starts.

This suits incorporated management, technical and IT consultancies, engineering and policy advisory firms, and independent professionals contracting into the public sector. Ontario corporate income tax is administered federally for most corporations; see the Ontario tax facts page.