DCA Q&A: SHOULD I LOOK FOR AN INVESTOR?

I have been running a small photography business in Galway for the last two years. Up until now I’ve managed to keep the company going through savings that I had myself and also by increasing the amount of clients I have. However, lately I’ve found myself in a tight spot when it comes to cash flow – there are plenty of outstanding invoices but people are taking a lot longer to pay: I’m generally waiting 90 days for payment on most of my accounts.

 

I also want to grow the business – now that I’ve created enough business to pay myself and more, I’m thinking of opening a studio in the city and taking on another photographer.

 

I’ve accepted that cash flow is going to be tight in terms of getting paid on time for the work I do so I’m considering looking for an investor to get me through. I think somewhere between €20,000-€30,000 would help me get to where I want to be. Is this the right road to take?

 

First of all, congratulations on setting up by yourself. It’s never easy to take that first step and, by the sounds of it, you’ve built a good company in a relatively short space of time.

 

Unfortunately, you’re not alone when it comes to outstanding invoices – 90 days (or more) seems to be the norm these days from what we have seen.

 

I’m not sure that finding an investor is the right thing to do here. If you manage to find someone who wants to invest in your business, which can be a difficult challenge in itself, you’ll have to give away equity in your company in return. Depending on how much business you’ve created and how much the company is valued at, that figure could be as high as 50%, meaning that all of the decision making about how the business is run is taken out of your hands. You’ll have someone else to consider when you’re making plans and end up drawing up a partnership agreement or shareholders agreement.

 

If, however, you feel that the investor can bring other opportunities (such as new contacts/potential customers) or expertise to your business and is not just a cash investor, then perhaps it’s worth taking it more seriously.

 

But I believe that the best route for you is to prepare some management accounts and cash flow projections and an outline of how your business is performing and apply for a business development loan with your bank – it’s likely that an investor will seek this information also and so it should not be a wasted exercise. Once your financials are in order, you will have a good chance of securing the money you need and can structure the repayments to suit. If your bank is closed for business, as some are these days, go to another lender. Just because you have an account with one institution, doesn’t mean you can’t approach another one. There are other options such as First Step Finance who provide loans to start-ups to €25,000 over three years. However, the interest rate is slightly higher here so you’ll end up repaying more than you would if you managed to secure the money through your bank.

 

Eamonn Garvey,

 

Partner,

 

DCA Accountants and Business Advisors

 

 

If you have a question that you would like answered, please email us at info@dca-ireland.com and we’ll get back to you.

Individual’s names and company names will not be published in our Q&A section to protect privacy.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

DCA Q&A: HOW CAN WE WIND DOWN OUR COMPANY?

I’ve been in business with four other business partners for roughly six years now. Things had been going well for us – we are suppliers of materials to the construction industry – until last year when our sales took a big drop.

 

We did everything any business would do to get through a difficult patch – we made cuts to our staff and tightened up on housekeeping where we could. It looked as if we were going to be ok but one of the directors of the company suggested that we delay our returns to the Revenue in an effort to sustain cash flow.

 

I was completely against the idea but was out-voted after we had discussed it at length. Since then we’ve decide to wind down the company but the other partners still do not want to pay the taxes that are owed given that we won’t be in business any longer. What should we do?

 

If you fail to file annual returns, the Companies Registration Office can shut down your company in what is known as an Involuntary Strike Off – the CRO has the power to do that if you miss even a single return so you and your business partners are playing with fire.

 

If you haven’t received a warning of this already, expect it to come soon. When it does arrive, bring it to the intention of all of the directors and make sure they are aware of the consequences of not paying their dues.

 

If you, as a board of directors, continue to ignore the warnings, the company will be struck off and any assets that you have will become the property of the State. What’s more, you will all lose your entitlement to limited liability – therefore you will no longer be protected and the debts of the company will become yours and your business partners. This is a pertinent point as even if the company is struck off by the CRO, the company’s creditors can take a case to the high court to have the company restored and a liquidator appointed – you will all be held personally responsible for any outstanding debts. Also, if you pursue this course, you may be disqualified from becoming a director of another company in the future.

 

If you are certain that the company needs to cease operating, then a voluntary strike off is by far the better option for you – at least this way you are in control of the situation. However, you can only apply for this as long as there are no assets or liabilities within the company and when all tax affairs are in order. This may involve the directors loaning the company money to pay up creditors and then writing that debt off.

 

 

If you go down this road, you will first need to make sure your CRO and revenue filings are all up to date. You then request a letter of no objection from the Revenue Commissioners. Click here to find out where to send your request and what to write.

 

 

Even after this is done, you have to place an advert in a national newspaper with details of your intentions – this must be done up to four weeks prior to the application for strike off. It seems outmoded but, to the CRO, it’s the most effective way to ‘smoke out’ any creditors of the company who might object to a voluntary strike-off.

 

In this situation, I wouldn’t advise a game of cat and mouse with the CRO – after all, there will only be one winner. You and your business partners, as the losers in the whole affair, could be getting yourselves into more trouble than you know.

 

Eamonn Garvey,

 

Partner,

 

DCA Accountants and Business Advisors

 

If you have a question that you would like answered, please email us at info@dca-ireland.com and we’ll get back to you.

Individual’s names and company names will not be published in our Q&A section to protect privacy.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

WAYS TO SAVE FOR YOUR COMPANY

Over the past 18 months or so, a number of our clients have asked our advice on how they can cut business costs without harming the day-to-day running of their company, or indeed productivity. Obviously, there is only so far one can go when it comes to making redundancies – a reduced workforce, after all, harms the capability of the business to produce or provide the product or service that they are in business for in the first place.

 

After a little research and some implementation into our own business, it struck us that there are a number of areas where non-detrimental cutbacks can be made. What’s more, most of these trimmings have a lasting effect on the bottom line.

 

When I delved into it a little further, I found the Sustainable Energy Authority of Ireland (www.seai.ie) to be a great resource for helping with energy costs. With a couple of clicks on the SEAI website, business owners can find the ‘Quick Wins’ section that offers helpful tips on how to ensure that you are making the most efficient use of energy in your business. The helpful people at SEAI have even broken it down by sector so you can see at a glance some useful hints relating very specifically to your own business.

 

That’s not even the best bit. There are grants available from SEAI for commercial entities to help companies introduce better and more efficient energy saving mechanisms. For more on financial help available from the Authority, click here.

 

Also, it seems that the SEAI are pushing hard to promote the use of electric vehicles. The Authority can help those companies with large fleets to make the transition with a grant towards the provision of electric vehicles. There’s also the added benefit that companies can make up to 33% savings in fuel costs by making the switch.

 

Cloud computing

 

We’ve also looked closely at introducing cloud computing into our operations at DCA Accountants and Business Advisors. The big advantage from a savings point of view is that cloud computing negates the need to maintain a main server. It also helps reduce the loss of man hours – staff can get access to their work information from anywhere, which also helps speed up the time it takes to carry out projects. Downloading information and files is also much quicker and more efficient than using a regular server. Introducing cloud computing to a business will save on IT maintenance costs in the long run too. There is also a decreased risk of downtime in the office if there is no longer a reliance on a server.

 

However, what one should be aware of here is that cloud computing is only available in an area where there is fibre optic cable as opposed to copper wiring. There have been giant strides made in getting businesses online throughout the country in recent years so if your area is not equipped with fibre optic cabling right now, it shouldn’t be too long before it is. There’s much more information here on the benefits of cloud computing.

 

There are obviously more immediate measures that can be taken to reduce costs that won’t alter in any way how you do business. By comparing mobile phone providers, or other utility suppliers like gas and electricity companies, businesses can shave a lot off their bi-monthly bills in one go. When making decisions on providers in all of these areas though, it’s wise to read the terms and conditions carefully and to carry out an analysis of what you would typically pay for electricity, for example, over a three year period. Armed with that information, you can make an informed decision on which supplier suits your company best. It’s also a good idea to have a housekeeping discussion with your staff and possibly introduce new policies on the use of printers, company telephones and other resources that are not necessarily for personal use.

 

Spending some time reviewing company outgoings every month is well worth the effort – most businesses that we’ve dealt with or spoken to have made savings as a result, some more than others obviously. Nevertheless, the more that is put back into the company, the more productive it will be in the long term.

 

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors.

 

If you have a question for our DCA Q&A section, please email us at info@dca-ireland.com and we’ll get back to you.

Individual names and company names will not be published to protect privacy.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

IS INVOICE DISCOUNTING A VIABLE OPTION FOR MY BUSINESS?

  1. I’m having real cashflow problems in my business at the moment – we’re still outstanding payment on some invoices going back as far as August last year, while others we’ve had to right off as bad debts and accept that the account won’t be paid for one reason or another. We are a small business with 10 employees in total. My wife and I are responsible for the accounts but now I’m worried that I won’t be able to meet the wage bill in March if the situation doesn’t improve quickly. I’ve looked at ways of getting cash in to help tide us over but the only option I think is open to me is invoice discounting with my bank. Should I go ahead with it?

 

  1. First off, you’re not alone. Hundreds of businesses like yours are struggling with cashflow right now. Sales may look good on paper but if you’re not getting paid on time, it can really harm your business, as you are finding out right now.

 

Invoice discounting can work in a situation like this but you need to enter into it with your eyes wide open – it’s certainly not a long term solution to your problems and it could end up costing you more than you initially think. A lot of business owners think that getting 80% of the value of an invoice is akin to getting cash up front – it’s not. You’ll be charged at least 3% as long as you make the repayment in time. If your debtors are dragging their heels, like they are in this situation, then you could end up being penalised even further and you’ll end up with another problem of your own making.

 

If you fail to meet your end of the bargain when it comes to repayments, your bank is likely to reduce the amount that they’re willing to give you on future invoices. You’ll find that you’ll receive a diminishing percentage of an invoice if you can’t meet your obligations and therefore cashflow becomes a problem again. You’ll also be hit with higher charges.

 

My advice to you is to talk to an expert in credit control before you make any decisions. You will probably be better off outsourcing that function in the long term – a professional services company in this area is much more likely to recoup payments than you are yourself given that it’s their area of expertise.

 

Invoice discounting can help and it can be beneficial to a company if it is in a situation where clients make more regular payments than you are experiencing now. However, in this case, I would advise you to explore other options, like speaking with a specialist in credit control, before going down this route.

 

Eamonn Garvey,

Partner,

DCA Accountants and Business Advisors.

 

If you have a question that you would like answered, please email us at info@dca-ireland.com and we’ll get back to you.

Individual’s names and company names will not be published in our Q&A section to protect privacy.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

 

DCA Q&A: HOW SHOULD WE SET A NEW COMPANY UP?

A client of ours wants us to go into business with him. He currently operates as a sole trader while our company is set up as a partnership agreement, with three partners involved. We’ve obviously discussed the opportunity at length between ourselves and it sounds like a great chance for us to grow our business. However, our client wants us to set up a new company so as to make everything transparent and above board. We’re fine with that but we were wondering how it effects our current situation. For example, are we exempt from corporation tax with the new company under the new rules despite the fact that we’ve been operating our own business for four years now? As I mentioned, we’re very keen to enter into business with this client but we want to make sure that we’ve set it up properly from the outset. Can you advise us on how we should go about it?

 

From the information that you have provided here I think the cleanest way of doing this is to set up a limited company whereby all parties involved decide on a share split. From a legal perspective, if things don’t work out or if the business doesn’t grow to where you would’ve liked it to after a certain period of time, it’s a lot easier to wind up. Hopefully that won’t be the case for you but as a legal entity, there are very defined constraints in terms of who owns what and what the company can actually do in an incorporated structure. If one party decides further down the line that they want out, it’s much easier to buy shares from a limited company than to organise a buy-out in a partnership arrangement, for example.

 

If you do decide to incorporate the company, ensure that there is a shareholders agreement in place from the outset. This basically sets out the rules and guidelines of how the business is run and in the event of a disagreement between the parties involved, it can prevent an escalation of legal proceedings as the rules are defined at the very beginning and everyone involved is aware of them.

 

Another option available to you is to set-up a Joint Venture (JV). Here, you will have to register another entity for tax. While, on the face of it, a JV is similar to a partnership, from a legal point of view they are very different things. For example, with a partnership, you have to make sure that all ends are tidied up – if it’s left open-ended and a partner hasn’t been moved on or hasn’t terminated his/her position within the company, in theory, he or she is entitled to a percentage of the profits earned for the rest of time. However, if the new company is set up as a JV, it protects both parties from the new business encroaching on the other companies that you both already have.

 

I would advise setting up a limited company here on the basis that it’s tidier and it’s easier to wind up if things don’t work out in the future. Also, it offers limited liability so nobody involved will be personally liable for the any debts accrued.

 

The downside is that a limited company is more expensive to run from an accounting and administration perspective – at the end of the year you can expect to add on an extra €1,000 for accounting services. However, there are a lot more tools available to lower tax liability with a limited company so the net financial gain will probably outweigh the extra costs.

 

You will also qualify for a corporation tax exemption given that you are setting up the company this year. Minister Noonan announced that the three-year exemption for start-ups is to be extended for companies that commence trading in 2012, 2013 and 2014 in an effort to encourage entrepreneurship.

 

Best of luck.

 

Declan Dolan,

 

Partner,

 

DCA Accountants and Business Advisors.

 

If you have a question that you would like answered, please email us at info@dca-ireland.com and we’ll get back to you.

Individual’s names and company names will not be published in our Q&A section to protect privacy.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

RELIEF FOR RESEARCH & DEVELOPMENT TAXES

Being the driving force of a smart economy, research and development is heavily encouraged in Irish business – so much so that there are tax incentives for conducting such activities.

 

Subject to certain conditions being met, Research & Development tax relief can return up to 25 per cent of a company’s qualifying expenditure either as a corporation tax credit or as a cash refund. This credit is in addition to the usual corporation tax deduction at the standard rate (12.5 per cent).

 

Many companies engaging in research and development are unaware that their expenses in this area could qualify for R&D tax relief. However, now is the time to take note, as changes to this scheme due to come into effect with the Finance Bill 2012 will be of particular benefit to SMEs with R&D portfolios.

 

Where relief was once calculated on an incremental basis using 2003 as a base year, the new bill will introduce a volume-based system for the first €100,000 of qualifying expenditure. This change is particularly appealing for SMEs as the base-year R&D spend will not be taken into account. Also of benefit to small businesses with limited in-house capabilities is the allowance for out-sourced R&D activities to universities or organisations.

 

R&D relief applies to expenses related to the research and development of new – or the improvement of existing – products and processes, which includes wages, related overheads, plant and machinery and buildings. For your R&D efforts to be considered eligible, they must be systematic, investigative or experimental; seeking to achieve scientific or technological advancement; and using basic or applied research, or experimental development. You must also be conducting research in an approved field of science or technology, which includes areas as varied as software development, pharmaceuticals, financial services and horticulture.

 

This tax credit can also apply to expenditure on premises used for research and development. As long as at least 35 per cent of all activities carried out on the site within a specified four-year period are R&D-based, credit can be claimed for the proportion of use of the building for these activities.

 

The Revenue Guidelines for Research and Development Tax Credit is a 33-page document available for download fromwww.revenue.ie. What it boils down to is that claims must be made within 12 months of the end of the accounting period in which the expenditure was incurred, and they are submitted within your corporation tax return.

 

Ensure that your claim has been compiled in accordance with all of the legislation before filing. Some businesspeople erringly believe that once the CT1 is in the post, the claim is complete. However, you must remain aware that a claim is generally not accepted by Revenue until they have audited it. In this case, Revenue has the right to audit the claim within four years of receiving it and, given that the R&D tax credit scheme is a cash-paying system, they are quite diligent when it comes to following up on these claims.

 

These audits can be rigorous and the penalties can be harmful, so be prepared. Uniquely, these claims are reviewed by a Revenue inspector and a technical expert with specialised knowledge in a relevant field to the R&D work undertaken. For your end, you must be sure that the activities undertaken comply with the statutory definition of R&D, and that you have records of expenditure incurred in carrying out these activities.

 

As with all things tax-related, it’s best to talk to a professional before proceeding with a claim. Give us a call on (01) 823 0000 and we’ll see what we can do to help.

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

HOW COUNTY AND CITY ENTERPRISE BOARDS CAN HELP YOUR BUSINESS

County and City Enterprise Boards (CEBs) exist to provide support to new and existing small businesses in the commercial sphere, and it’s important to know how to go about getting this help when it’s needed.

 

There are three types of financial support offered by CEBs: Priming Grants, Business Expansion Grants, and Feasibility Grants. Priming Grants are for businesses that are still in their start-up period and can only be granted within the first 18 months of a business setting up. Established businesses (over 18 months in action) can apply for a Business Expansion Grant; however, if you have previously availed of a Priming Grant you’ll have to wait another 18 months to apply.

 

The maximum amount payable for these grants is 50% of the investment up to €150,000. That said, grants over €80,000 are considered exceptional and generally only apply in the case of projects that clearly demonstrate potential to grow beyond micro-enterprise level and/or export internationally. Subject to the 50% limit, a maximum grant of €15,000 per full-time job created shall apply in respect of any employment support granted.

 

The third form of financial support, Feasibility Grants, is there to assist with market research to examine the sustainability of a product or service. This covers consultancy requirements, hiring of expertise from third level colleges, private specialists, design, patent costs and prototype development. In the Southern and Eastern regions, the maximum amount payable for a Feasibility Grant is 50% of the investment, up to €20,000, while for those in the Border, Midlands and West regions this rises to 60%.

 

CEBs are in a great position to help small businesses, due to their knowledge of enterprise in the catchment area and their understanding of local needs. The businesses they support are considered ‘micro-enterprises’ so, to qualify, your business must have no more than ten employees. CEBs receive many applications for funding but their priority is to support viable businesses that could create sustainable employment and have potential for expansion.

 

There are, of course, other criteria to be met, but a meeting with a CEB Business Advisor, where you can discuss your proposal in detail, should clear up the particulars. If this goes well, you will be asked to complete an application form and provide supplementary documentation to support your application. Enterprise Board staff are available to assist you with this, and the Business Advisor will review your application once it is complete to make sure nothing is amiss.

 

Your application will then be appraised by an Evaluation Committee comprising members of the business community, financial institutions and local authority. These committees usually meet every six weeks, so be prepared to wait for feedback.

 

Following this, a written recommendation from the Committee will be considered by the Board at their next meeting. At this point it may still be deemed necessary to defer a decision pending receipt of additional information, so it’s best to provide as much as you can with your original application.

 

When the Board has made a decision, you will hear from the CEO in writing. This will, hopefully, be a formal offer of grant aid along with the relevant terms and conditions.

 

There are certain projects that CEBs cannot grant funding to. For example, they won’t consider a proposal that could lead to job displacement or result in unfair competition, nor will they provide financial assistance that duplicates support available from an existing programme or agency. If it is believed that a project could be implemented without financial assistance from the CEB, then the application will not be approved.

 

An ideal project for CEB funding is one that is commercial and capable of attaining economic viability without ongoing support. Be sure that you can demonstrate a definite market and evidence of adequate finance to fund the project in the long-term. You must show that you have the necessary management and technical capacity to implement your proposal and that the project can sustain or – even better – create employment. Essentially, your project must be seen to have value, and be of economic benefit to the locality.

 

As well as financial support, CEBs can also provide small businesses with information, advice, training, mentoring and technical assistance. To find your local CEB, visit www.enterpriseboards.ie.

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

 

HOW ACCOUNTING CAN SAVE YOU CASH

With the first month of the year drawing to a close, businesses everywhere, as we know from our clients, are still looking at ways of cutting costs. Thankfully the numbers of redundancies has slowed down when compared to a last year and the year before as business owners seek new ways of trimming the monthly bill.

 

This, of course, includes fees for accountancy work carried out on a company’s behalf by its preferred firm. Depending on the size of the company and the amount of people it employees, fees can seem to vary wildly when one business owner talks to another. At the same time, though, the amount of work that goes into managing a particular company’s books can be drastically different than another.

 

However, there is one common component that all businesses should share – they should seek advice from an experienced accountant on how to set up their accounts. This applies to start-ups and established companies who are finding it hard to keep track of sales and purchasing invoices using their current system. After all, the more work you ask your accountant to do, the more it’s going to cost you. By being organised, by operating a proper filing system and by being aware of how that system interacts with the accounting system that you have in place, you’re much more likely to save in the long run.

 

In recent years it’s become more noticeable to us that many companies do not have a dedicated in-house accounts person whose responsibility is ensure that all paperwork relating to the company’s sales and purchases is administered correctly. Add to that the work involved in preparing wage slips, ensuring VAT and other taxes are kept up to date, and it’s easy to see why some business owners can’t find the time to manage to piece together a proper paper trail every month.

 

Some accountancy firms, as part of an ongoing agreement with their client, will assign an expert to manage all relevant paperwork for that business on a weekly basis. It’s a practice that we’ve become accustomed to at DCA for two reasons – firstly, it makes our job of preparing monthly accounts much less onerous and, secondly, it ends up costing the client less as information is much easier to come by and decipher.

 

For business owners, the first and foremost priority must be driving sales – their prime responsibility is developing and maintaining activity on a daily basis. Building an efficient and cost effective team around that activity comes next. At the core of that team should be a voice in accounts who can look dispassionately at whether or not a project makes financial sense for the firm in the long run. Also, by managing the company accounts more wisely from the outset, businesses can save money all year long.

 

Eamonn Garvey,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

NETWORKING’S A NUMBERS GAME

Many business owners dread this time of year – it’s the time of year that despite best laid plans, the year ahead can seem uncertain, especially if there’s less work to do than there was in the lead up to Christmas. However, while it may be a quiet time for day-to-day operations, this month provides the perfect opportunity to get out and sell your business.

 

Of course, it’s not an easy thing to do and it’s often difficult to know where to start, but with a little research, finding a good networking event can be a major boon for your business. If you’ve done your homework and are well prepared in advance, you’ll find that you can generate high-quality leads and find new opportunities that you may not have considered to date. Even if you don’t manage to develop any new or meaningful business relationships, talking to like-minded people can often give you a different perspective on the direction of your company. On the other hand, if you feel like you’ve wasted time going along to a pointless event, it’s unlikely that you’ll give over more time when the next meeting comes around. It’s also likely that you haven’t done your homework properly or followed the very simple and straightforward rules of networking in the first place.

 

It might seem obvious, but don’t turn up to a networking event in a crumpled suit, or worse, casual wear. Make sure you have more business cards than you’re likely to need too. More importantly though, it’s crucial that you have a clear plan of what it is you want to achieve with every conversation that you have, so if you’re looking to get your foot in the door, keep in mind that you’ll need a clear and concise outline of what your company does – you may only get a limited amount of time to get your elevator pitch across. If you can’t give an outline of your business and what you do in 30 seconds, you’re not explaining it correctly and your unique selling point (whatever that may be) won’t be clear.

 

Be mindful that you need to leave time to answer any questions and to listen to your conversation partner’s pitch. If you constantly talk about your business without giving the other person a chance, you won’t come across well and any possible relationship will be a non-starter. Remember that they are attending the event to build links and find possible opportunities too. Even if you don’t think you could do business together, either of you may have developed other connections that could help the other.

 

Networking events will give you the opportunity to meet with potential clients, possible business partners or even future investors, but it is a numbers game. That’s why it’s vital that you spread yourself out and don’t spend the entire evening talking to just one or two people – the more conversations you have, the more you’re building up your own network and spreading the word about your company. Speed networking, where you have five or ten minutes per conversation, is becoming increasingly popular. However, if you find yourself in a less structured environment, don’t hesitate to end a conversation politely when it’s appropriate.

 

After the event, make sure to get in touch with everyone that has given you a business card, even if you haven’t identified some of them as a potential business opportunity. It’s nice to be polite after all, and they could well advocate your product or services further down the line. But prioritise – if you’ve been given the opportunity to pitch as a direct result of the event, make sure you do so while the memory of the meeting is still fresh.

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

DEALING WITH INSOLVENCY

You may have noticed the National Competitiveness Council’s Annual Report was released earlier this week. In it, the Council said that the cost base has not fallen nearly enough in Ireland to return the country to a position of competitiveness. It offered suggestions and recommendations to help the Government boost competitiveness – however, most of the suggestions revolve around cutting costs and public sector reform, which we’ve all heard before. In fairness to the Council, in their report, they did highlight issues such as the non-implementation of the Local Authority Efficiency Review Group’s report, which could save €500m every year. However, as costs continue to remain high, the truth is that Ireland cannot maintain or indeed create any position of advantage in the international market.

 

Translate this on a smaller scale to your business and you’ll get a real understanding of the situation. Last year, according to The Insolvency Journal, 1,638 businesses found themselves to be insolvent – up over 100 from the year before. As more and more companies here feel the pinch, whether it’s through declining sales and, by association, decreased revenue, it’s becoming clear that more companies are getting into trouble and going to the wall when perhaps, in a lot of cases, there is no need to.

To know whether or not your company is insolvent or likely to head that way, ask yourself the following questions: Am I getting more calls from irate creditors than I used to? Has my sales stream declined since the last quarter? Are we making as much money as we used to? How has the decline in the economy affected my business and can we stay afloat if it falls further? If you don’t like the answers that you’re giving yourself, your company is most likely headed for trouble.

 

In such a situation, it’s very easy to panic – after all, most business owners worry about paying salaries at the end of every month and bury their heads with that particular problem without dealing with the wider issues. By ignoring calls from creditors, for example, you could be putting your supply chain at risk which will, in turn, hinder any chance that you have of recovery. If you have no suppliers or can’t get credit because you’ve developed a reputation rating within the industry, you can’t operate your business. Instead, talk to your creditors, and explain the situation to them – in most cases, we have found, they’ll be happy to work with you as long as they know what’s going on.

 

Probably the most important piece of advice we can give you is that it’s senseless trying to deal with an insolvency issue yourself or with business partners who don’t have the necessary expertise to help you get out of trouble. Get professional advice as soon as you can – you may think that it’ll cost you more when the debts are already piling up but a good insolvency expert should be able to tell you within half a day where your business stands as long as they have all of the relevant information available to them. What’s more, they can help you put a plan in place to get your business in a solvent position again or prevent a disaster before it happens.

 

Eamonn Garvey,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.