When a Squeeze Becomes a Pinch

The term ‘middle-class squeeze’ refers to the situation wherein increases in wage do not equate with inflation rates for middle income earners and the cost of living continues to increase. This leads to a perceived decline in actual wages which seems to primarily affect this middle level income earners. The ‘squeezed middle’ is something that we hear in general and political conversation quite a lot in Ireland these days as the issue continues to heat up alongside the ever increasing housing prices (both rental and purchase) and the increases in the cost of living.

In recent days, Junior Finance Minister Michael D’Arcy has taken note of these ongoing conversations and complaints and stated that this ‘squeezed middle’ are in dire need of some manner of assistance, going as far as to suggest that a third ‘middle’ rate of tax is now being considered. D’Arcy was quoted as saying:

“People accept at this stage the people in the working middle need to get something back. So what we now have to do is to help people who are in that mid-range. Both the Taoiseach and the finance minister are extremely eager to do something there. There is a train of thought that there should be a third middle rate of tax between the two rates at a lower space. We have to reduce the burden of income tax on those people.”

This will be welcome news to anyone currently floundering in the squeezed middle. The Junior Minister went on to outline that that this new tax level will rest somewhere in between the top and lower standard rates, stating that the entry point to the higher rate which is currently €33,800 is “damaging” to job creation as workers earning less than the average industrial wage (€45,075) can still be paying the top level of tax, which is an anomaly that seems to only be faced here.

Junior Minister D’Arcy also damned the culture of “welfare dependency” which has sprung up in Ireland as a result of these issues, with tax levels and the cost of living leaving many to believe that they will earn more on welfare than working when the cost of travel etc. is factored in and suggested that the strategy from this point will be to make sure that work done is paid for appropriately, and to possibly introduce this new tax bracket to allow mid-level earners to take home enough pay to live more comfortably.

As always we are available for any advice or guidance you may require on business or finance matters.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Bad Investment Makes no Cents.

We have spoken at length in the past about various forms of funding and investment in business and the importance of the availability of funding for all businesses in particular small and medium enterprises who may rely on outside funding. Something which is rarely touched upon is the importance of choosing the right investor for your business, and one which can go the distance alongside your company. Failure to choose a sustainable investor can cause serious problems for both your business and the investor.

This issue is especially important this week as it was revealed that many Irish investment firms have been found to have failed to meet the required standard of investors by the Central Bank of Ireland. The bank recently conducted a review of suitability requirements for investment firms and found many companies to be sorely lacking, which is not encouraging news for business owners wishing to secure funding. Michael Hodson, Director of Asset Management has been quoted as saying of the findings:

“The review highlighted that firms need to improve the quality of information collected and how this information is utilised in the suitability process. With the introduction of higher suitability standards, the quality of the information collected is all the more significant.  Boards are reminded that they are responsible for implementing an appropriate governance framework that meets the suitability regulatory requirements and embeds a client-centric culture across the firm.  Investor protection is at the core of the Central Bank’s mandate.” 

The review found that many firms were unable to demonstrate that the required suitability policies and procedures were implicated whilst also pointing out that many application forms were incomplete. Some firms were also found to be reliant on self-assessment alone and had little to no tools in place for assessing suitability for investment, relying heavily on technology. In perhaps the most worrying finding, many companies were found to have nothing in place for dealing with potentially vulnerable clients and companies.

Thankfully, the Central Bank assure companies that in any areas that the findings may be damaging to consumers formal supervisory requirements have been implemented which should reduce risk greatly for prospective clients.

As always we are available for any advice or guidance you may require on business or finance matters.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Never Ever Ever Getting Back Together?

It would be almost impossible to have escaped hearing the word ‘Brexit’ (meaning Britain’s impending exit from the European Union) in recent months as the disbelief at the result of the vote gave way to dismay and concern over what this event could mean for our own shores. There have been many concerns regarding Irish workers working in the UK and commuting home at the weekend and vice versa as well as worries about the possibility of there being more stringent borders in place which could very negatively impact Irish trade.

Recently, it has been reported that these concerns may well be directly addressed before the planned exit. It has been suggested that British Prime Minister Theresa May is set to publish a policy paper on Anglo-Irish relations to suggest that the two countries adopt what is known as a ‘Schengen Area’. This would mean that there would be a unique border between the UK and Ireland allowing for ease of movement and trade, effectively creating their own union. This could be welcome news to many Irish workers in the United Kingdom. The move would allow citizens of both countries to freely work in the other, whilst citizens from other countries in the European Union may require work permits to work in the UK following Brexit. Our own Taoiseach Leo Varadkar has however stated in the past that he does not want to create any form of border, so it remains to be seen how this will be implemented.

It has also been stated that Britain are on track for a ‘hard Brexit’ meaning that there will be no softening of rules or lingering methods of inclusion once they depart and will be seen by the European Union as being a third party outside of EU law and customs. The drawback to this supposed ‘hard Brexit’ is that it does not allow for safeguards to be put in place for businesses reliant on trade with Britain, so the proposed policy could be welcome news to some Irish businesses.

It has been reported that British officials are now eager to get the ball rolling on Brexit negotiations in order to cement plans for the future relationship between the UK and EU member states. Brexit Minister David Davis has stated recently that;

“We need to get on with negotiating the bigger issues around our future partnership to ensure we get a deal that delivers a strong UK and EU.”

It is hoped that whether by this new policy, or through the overall negotiations that an agreement can be put in place that does not isolate Irish businesses or workers.

As always we are available for any advice or guidance you may require on business or finance matters.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

I’ll Have What She’s Having

The supposed ‘Sunday Fear’ is something which has inspired countless jokes, memes and GIFs in recent years. As social media has become more of an inherent part of every day in much the same way as our morning dose of caffeine, the way in which we communicate our levels of stress, discomfort and job dissatisfaction in general has changed. Rather than being something we might bring up in general lunch time conversation, we have taken to posting memes about the dreaded Sunday Blues and what level of Monday we are currently at, while tagging friends and family members who may feel similarly. On the surface, these may seem like mere funny photos and videos and a coincidence as the thousands of shares rack up, recent findings suggest that not only is the ‘Sunday Fear’ a real phenomenon, but that employees are actively doing something about it.

According to data released recently by popular jobs search website Indeed, the current most popular time for a job search in Ireland is 1pm on a Monday, and this time seems to be similar across Europe, signifying that the dissatisfaction people feel going from Sunday into another week is something that is being dealt with at the earliest possible availability. Researchers for Indeed analysed the search patterns of jobseekers across five European countries to reveal this Monday trend.

Ireland                                     1pm Monday

United Kingdom                     1pm Monday

Germany                                 12pm Monday

France                                     11am Monday

Belgium                                   11am Monday

Whilst, France and Belgium might be the early birds, this is an interesting trend for Irish jobseekers, and the data is compiled from all searches whether they be via phone or desktop. The research also found that searches are not limited to these times by any means, with many also searching during weeknight evenings.

According to Mariano Mamertino, EMEA economist with Indeed:

“The power of the internet has transformed the way all of us look for a job. With just a few keystrokes or taps on our mobile device, we can view millions of vacancies whenever and wherever we want. […]”This reveals perhaps the emotional side of looking for a new job. Just as the start of January is a very popular time for people to consider a job change, so too the start of the working week.”

So our mobile devices aren’t just useful for scrolling through those Sunday and Monday memes, but can actually have an immense transformative effect on how we advertise for and gain employment, and social media is certainly an excellent tool to be harnessed in business.

As always we are available for any advice or guidance you may require on business or finance matters.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

High Risk, High Reward

We have spoken at length in the past about the importance of SMEs (Small and Medium Enterprises) are to the Irish economy. SMEs alone currently comprise over half of all Irish businesses, and have come to form the backbone of the ongoing economic recovery. As such, it has become increasingly important to protect and encourage these kinds of businesses.

In recent months we have seen the beginnings of a welcome change in the availability and range of funding and assistance options for SMEs which has shown a real shift in focus towards taking note of the importance of our Small and Medium Enterprises as well as our entrepreneurs.

Something which is rarely focused on is support for the financial backers of these seemingly higher risk enterprises and companies. The Government have created a scheme to act as an incentive for such financial backers called the Enterprise Investment Scheme. This scheme allows qualifying companies access to investment from shareholders, and in turn offers these shareholders tax breaks as incentive.

The purpose of the scheme is to assist some small and higher risk SMEs to raise capital where this may ordinarily be difficult or almost impossible. This will help to reduce the amount of SMEs forced to wind down due to a lack of financial investment.

It is hoped that this scheme will encourage investors to back what may be perceived as higher risk companies, in order to act as a buffer for these companies and increase their chance of continued survival. As these would be a higher risk investment, there are of course a number of enterprises which do not qualify, these are as follows:

Land shares, goods (except normal retail etc.), financial, legal and accountancy, property development, hotels and nursing homes, agriculture and power, etc.

There is also a time limit of two years applied during which the invested capital must be utilised and the investor must never have been previously connected with the business prior to investment.

Companies wishing to avail of this scheme must be EII certified and must directly seek certification from the Revenue Commissioners.

As always we are available for any advice or guidance you may require on business or finance matters.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Hope for the Best, Prepare for the Worst

Enterprise Ireland are endeavouring to ensure that Irish businesses are prepared for any eventuality during the Brexit transition. Their advice, and ours is to ensure that you are well prepared and have planned for these changes in advance. We all think we know our company and our business inside and out but with so much change on the horizon it is essential that you understand how your business will respond to any outcome.

Enterprise Ireland have created a free tool to ensure that you and your business are prepared and informed ahead of Brexit. The Enterprise Ireland SME Scorecard is a tool which will help any exporters from Ireland to the UK plan in advance and will give a detailed analysis of how prepared your business is for Brexit. Whilst you may know the ins and outs of your daily business well, this tool will allow you a glimpse into the future of how your business will respond to these coming changes.

The following six areas have been identified as the most important areas to prepare in advance of Brexit.

  • Business Strategy is essential in all areas of business, but in particular when change looms on the horizon it is essential to have a strategy in place and identify any areas of weakness in advance.
  • Operations relates to the day to day running of your business and it is vital to prepare for how this might change or if there are any existing issues that need to be modified.
  • Innovation is one of the main ways that Irish businesses can capitalise on the changes ahead with Brexit as improved services and innovative products can identify Ireland as a key player in the times ahead.
  • Sales and Marketing have always been a key aspect of business, and with Brexit these will become increasingly important in order to set your business apart to offset any downfall.
  • Finance is the backbone of any business so it is essential to assess your businesses financial strengths and weaknesses before Brexit comes into play to identify potential problems before they occur.
  • People Management has been identified as a key area to assess before Brexit as with such major changes ahead your team will be the ones at the battlefront.

As well as this free scorecard tool, Enterprise Ireland are allowing SMEs apply for a grant of up to €5000 to be used to prepare for Brexit and the changes it will bring. This will free up other cash flow to be used to otherwise further your business whilst the grant is used to buffer any weaker areas identified through the scorecard tool.

As always we are available for any advice or guidance you may require on business or finance matters.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Who’s going to Drive You Home?

During the economic downturn, there was a significant period of time in which seeing a brand new car straight off the forecourt could have been seen as a novelty. Oftentimes people looked out for brand new cars on the roads, just to take a look and see what new treats loomed on the horizon of hope. In more recent times however amidst Ireland’s continuing recovery it is becoming more and more common to see brand new cars on the roads, particularly since the licence plates are now split into two halves of the year and it is easier to distinguish the latest models. This might lead us to believe that there is more disposable income available to workers, but the reality may be quite different.

Personal Contract Purchase (PCP) finance has fast become one of the most popular methods of car financing available in Ireland. PCP is an increasingly popular method of car finance due to the low repayments offered. Utilising a perceived expected residual value at the end of the term to reduce monthly payments, it seems a much cheaper and easier option for many car buyers. Many dealers also offer the option to upgrade to a new car at the end of the term using the expected value left on the previous, making this a popular option for anyone hoping to upgrade on a regular basis without having to empty their pockets on the spot.

Recently, The Society of the Irish Motor Industry (SIMI) has commissioned a report on PCP finance to be completed by Grant Thornton. In the US defaulting on these types of loans has spiked in recent years and there is a fear that falling into the same traps could have serious negative results for the Irish car market. This fear is expounded by the fact that PCP finance is done through car dealers and not through the usual financial avenues. There are no specific regulations for PCP finance in Ireland and this increases the worry around this product, and it is often left in the hands of either dealer or borrower to ensure that all parties are fully informed. Naturally, seeing a brand new car at a low monthly cost can often cloud judgement, sometimes leaving buyers in more debt than the car was worth. This lack of regulation is troubling for both buyers and dealers as Fianna Fáil finance spokesman Michael McGrath recently stated:

“As of now, nobody in the CCPC [the Competition and Consumer Protection Commission], Central Bank or Department of Finance knows how many PCPs exist and, crucially, how many customers are defaulting.”

As with all industries there is the fear that a lack of regulations may lead to a serious slip in standards. PCP is obviously an attractive option for those wishing to stay abreast of the latest models and stay loyal to one manufacturer, but with so much uncertainty plaguing the ideologies of this finance option there can be no guarantees. Our advice is to ensure that you have all of the information available and if in doubt get a second opinion on the deal you are being offered to ensure that the payments are feasible and you will not be left struggling.

Should you require any help, guidance or assistance on any business or financial matters please don’t hesitate to contact us here at EcovisDCA where we will be delighted to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Dublin in the Blue Corner

The now infamous term ‘Brexit’ (meaning Britain’s exit from the European Union for anyone that may have been actively avoiding the news in recent months) is one that has long been met with apprehension and uncertainty from our shores. As a relatively small country we find ourselves somewhat reliant on our larger neighbour for certain amounts of trade and, as such we have been unsure of what this move would mean for Ireland’s continuing recovery as well as our own trade options.

There seems to be good news on the horizon this week however, as it was announced that according to research from Ernst & Young’s London office, Dublin is now the most preferred Brexit location for financial services companies. A move in this direction would be an incredibly positive one for Ireland, with Dublin already being somewhat of tech hub with companies like social media giant Facebook choosing to have their European head office here. This also places Dublin ahead of Europe’s current financial centre, Frankfurt which is a major boost to how Dublin is perceived in the financial sector.

Whilst Dublin may only be slightly ahead of Frankfurt, this is a significant indicator of positive movement following Brexit as the survey included 222 banks and other institutions, showing that Dublin is being considered as a real and viable option for European trading following Britain’s imminent departure from the European Union. It is reported that 19 companies mentioned Dublin as a potential destination they would consider moving operations to following Brexit.

In recent months, Ireland has already won out over our competitor Frankfurt in securing banking giants such as Barclays to our shores. There is of course no commitment attached to these findings, but it is encouraging to know that Ireland is one of the first options to come to mind for financial services companies in these uncertain times.

It is both a time of excitement and uncertainty for Ireland as Brexit approaches and should these companies put their contingency plan into action we may well see some positive changes for our country come as a result of this upheaval.

Should you require any help, guidance or assistance on any business or financial matters please don’t hesitate to get in touch with us here at EcovisDCA, or pay a visit to our new office where we are now all settled in and ready to be of assistance.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Unemployment Rates: How Low Can We Go?

Over the past couple of years the signs of Ireland’s recovery following the economic crisis have been increasingly positive. One important cornerstone of recovery is of course employment. Previously, we saw a situation in which there was an increasing rate of unemployment and an increase in qualified people seeking employment on other shores or taking on unpaid work they were overqualified for on our own shores in a desperate attempt to seek stable employment. This is a situation that both employers and workers would be loath to recreate.

In recent months, the unemployment rate in Ireland has been dropping at a steady rate which shows positive movement for Ireland’s continuing recovery, even in the wake of the Brexit panic. In June, the unemployment rate continued its downward trend going from May’s figure of 6.4% to 6.3%, which is a significant positive movement over the course of one month. Over the twelve months between June 2016 and June 2017 however, this figure has dropped from 8.3% to 6.3% according to the Central Statistics Office (CSO) report.

In terms of actual figures, the unemployment rate has dropped by 42,100 people over the course of one year which is of course a move in the right direction for all. EMEA economist for Indeed, Mariano Mamertino has been quoted as saying that the Irish unemployment rate is on track to fall below 6%:

“Ireland remains on a clear trajectory for unemployment to fall below 6pc in the coming months, which bodes well in terms of the likelihood of increased consumer spending and retails sales as more people take home a weekly pay cheque.”

This, of course is encouraging news for all businesses particularly those in the retail sector who are expected to see an increase in business in the coming months. The unemployment rate in Ireland remains lower than some EU countries, but is moving in the right direction for recovery.

Naturally, the swift and continuing downward movement of the unemployment rate causes some minor concerns as Finance Minister Paschal Donohoe has stated his concern over the possibility of more jobs being available than there are workers to fill them in the future. In his opinion, the unemployment rate looks likely to fall below 5.5% which would be both an “extraordinary achievement” and a cause for concern as it would be possible Ireland would “experience capacity constraints.” It has however been stated that this is merely a potential situation and not one that is envisioned to come to pass, so we can carry on celebrating the continuing recovery of our economy

Should you require any help, guidance or information on these or any other financial and business matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

 

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Business, Size Matters

We are constantly reiterating the importance of Small and Medium Enterprises (SMEs) to the Irish economy, and with good reason. SMEs make up over half of all Irish business and have begun to form the backbone of our economy in recent years. Unfortunately SMEs are also often the most difficult businesses to get off the ground and keep running in the current changing economic climate. This is why our recent newsletter focus has been largely targeted to providing information on newly available funding and assistance for these vital businesses. Today we will be discussing the new Companies (Accounting) Act of 2017 and what this means for SMEs.

The Companies (Accounting) Act 2017 was brought into effect as of Friday, June 9th 2017. According to the Department of Jobs, Enterprise and Innovation this new act may free up some much needed time for SMEs as it should reduce their financial reporting obligations allowing this time to be used to further the business in other ways.

Importantly and interestingly for owners of small businesses, this Act is due to create significant changes to the creation of what is known as a ‘Micro Company’. In order to be classified as a Micro Company, a business must not have a turnover exceeding €700,000, a balance sheet exceeding €350,000 or average employee numbers exceeding 10. In return, being classified as a Micro Company offers the company a number of benefits including there being no obligation to file a director’s report and exemptions from disclosing director’s remuneration.

Some companies previously defined as Medium may under this act be redefined as Small whilst some companies previously defined as small may be redefined as Micro due to a change in the thresholds for qualification for these categories. In addition, any companies which are redefined as Small Businesses will need only file abridged financial statements, provided their turnover does not exceed €12million, their balance sheet does not exceed €6million and their average number of employees does not exceed 50.

It is possible that conversely, some Medium and Large companies may find themselves with a greater level of financial reporting than previous under these new thresholds so we would heavily advise studying the changes this act poses in detail and knowing the new status of your business thoroughly as well as the new financial reporting requirements associated with this definition.

Should you require any further information, guidance or assistance on these or any other business or financial issues please don’t hesitate to get in touch with us here at EcovisDCA where we are always happy to be of assistance.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY