Posts

Covid-19

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It is currently impossible to avoid the news of the Covid-19 epidemic at the moment as the situation unfolds rapidly and becomes an increased risk of becoming a global pandemic. A pandemic is an issue that we in this country would be unlikely to have prepared for in a business sense and as a result we may see this virus affect our business landscapes in ways we may not have expected. As cases begin to grow in number and community transmission begins to become more apparent, it is important for businesses to have a plan in place for keeping their employees safe.

The Government have recently published an income support and economic stimulus package which outlines the following main points for companies who may find themselves on lock down or needing to self-isolate their staff or work from home or to reduce economic impact:

  • The 6 waiting days for sick pay with a medical cert will be waived.
  • The means test requirement for Supplementary Welfare Allowance for medically certified self-isolation will be removed.
  • Self-employed individuals will now be entitled to receive either illness benefit, or non-means tested supplementary welfare allowance.
  • A €200million liquidity support fund will be available for impacted firms.
  • The existing systematic short time working scheme is available for employees who may be placed on reduced working arrangements.

On a more global scale, it has been reported that businesses worldwide are changing and adapting practises to better cope with Covid-19. Many companies in Ireland, the United Kingdom and the United States have immediately implemented travel restrictions or a work from home policy for the foreseeable future in order to avoid community transmission within the office space. Unfortunately, these issues will naturally cause service issues for some.

From looking at the China model which involves the businesses who were first hit and continue to deal with the fallout of the virus, a few key pointers for other businesses worldwide have been outlined:

  • Plan ahead but be prepared for the need to be adaptable as the situation develops.
  • Keep employees informed consistently so that they feel safe and protected.
  • Relocate labour where possible. In situations where employees can work from home to prevent community transmission this can be effective as well as social distancing practises in roles that can not be completed at home.
  • Utilise social media and shift some operations to an online system where possible.
  • Prepare for recovery be it fast or slow moving.
  • Look for the positive points and identify where your business can improve in the face of adversity.
  • Use the situation to become more innovative and embrace innovation within your business and your employees. Thinking on your feet is essential in such a fast moving constantly unfolding landscape of change.

This will undoubtedly be a period of unease and difficulty for many on both a business and personal level, but through following the appropriate guidelines we can endeavour to keep all feeling safe.

 

How to Release Cash Flow from your Business

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Here at EcovisDCA we are constantly striving to ensure that our clients and friends have the most successful business and financial lives possible. We are not just a faceless company who talk the talk, we walk the walk. We know that your business is a labour of love and we endeavour to ensure the one-to-one advice and care you and your business deserve. With that in mind, we have decided to focus this week on ways in which you can release cash flow from your business. As you know, we are great supporters of Irish SMEs (Small and Medium Enterprises) and these businesses are often the first to suffer any ill-effects of a downturn and as such it is vital that they are protected. Cash doesn’t often flow readily in February after the excesses of the festive season and the January sales, so we are here to discuss the ways you can manage and release business cash flow.

Projections:

When projecting cash flow, the impulse is to assume regular income, however, the peaks and valleys of business life are often first seen through cashflow, so it is important to take this into account when projecting the year ahead regardless of the size or avenue of your business. Being armed with the knowledge of potential financial issues ahead and projecting a realistic cashflow cycle for the year ahead may allow you to avoid a cash shortage during tighter times.

Enforce Payment Terms:

The payment terms for your business should never be a casual affair, it is essential to create and enforce your payment terms. Create incentives for suppliers to meet your payment terms, and penalties for non-payment. It is worryingly becoming normal for payment terms and dates to be exceeded, if this becomes a problem, we advise strengthening these terms and consistently following up. Having suppliers be consistently late on payments can push you into debt. Enforcing terms will free up cash flow.

Marketing:

Marketing isn’t just a sales pitch; it is the creation of your brand and creates an image of your business in the minds of potential customers. It may seem counter intuitive to spew the adage “You have to spend money to make money” but in this case it is entirely true. Good or bad marketing can make or break your business, so it is worth investing time, money and resources in.

Keep it Simple:

Simplicity is often the key and we regularly find our cashflow tied up in long term projects which are offering no short-term return. Evaluate what are the essential projects your company is budgeted to work on and go from there. The same can be said for many business processes, are there ways your business can be more efficient, are you expending employee time in valuable or invaluable tasks?

Pay Debts:

Again, it seems counter-intuitive to insist on debt payment to release cash flow but once all company debt is paid, that cash becomes available and can be saved or re-invested into the business.

External Income:

Occasionally there will be times when it is not possible to finance your business internally. In these cases, applying to schemes, applying for grants or loans etc. can be the reason for the extended lifespan and rejuvenation of your company.

These are just a few of the ways in which you can better manage the cashflow of your business, should you have any concerns or questions about these or any business or financial matters, please do not hesitate to contact us here at EcovisDCA, where we will be happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Euro Currency

The National Minimum Wage Increase

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On the Up

As of February 1st, 2020, there will be an increase in the National Minimum Wage for employees over 20 years of age. The minimum wage for these workers has increased from €9.80 to €10.10 with immediate effect. It is advisable that you notify all employees currently receiving a minimum wage of this change before their next payslip to ensure that they know this change will be in effect immediately.

For all workers under the age of 20, there will also be an increase in line with the minimum wage guidelines. These new rates will be as follows:

  • Employees under the age of 18: €7.07 per hour.
  • Employees aged 18: €8.08 per hour.
  • Employees aged 19: €9.09 per hour.

Regina Doherty of the Department of Social Protection has said of the increase:

“Since 2016, a minimum wage employee working a 39-hour week has received a gross pay increase of €2,331. Since 2015, we have increased the minimum wage by 13.2% ahead of the rate of inflation.”

There is still a way to go before we are on par with the current living wage estimate of €12.30 per hour, but any increases are of course a step in the right direction for low-income workers and their families with our ever-increasing cost of living as we continue to see working people living under the poverty line. Chief Executive of Social Justice Ireland has stated that Ireland has one of the highest rates of low-paid employment in the OECD (The Organisation for Economic Co-Operation and Development).

It is also advised that in light of these increases, employers should take a look at their current rates for Sunday work as legislation states that employees should receive reasonable compensation for this work, whilst the amount is not specified it is suggested that a 25% premium may find its way into legislation and it may be wise to follow this template going forward.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

The Importance of a Personal Pension

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Back to the Future

We have been constantly told since childhood that it is important to cast an eye to the future and never to “spend it all in the one shop” and to “save for a rainy day”. These are refrains Irish ears are so used to hearing that we could likely finish these sentences from one word. There are ideologies that we have been raised on and yet it seems that very few Irish people take this on board.

A recent survey by Standard Life found that the majority of Irish workers (88%) believe that it is a good idea to hold a private pension as well as the state pension, however it has been revealed that just over half (51%) of Irish adults don’t own a pension at all, with male pension ownership being significantly higher than female ownership across both the public and private sectors. In the private sector, this discrepancy is a lot higher with 50% of men and only 30% of women owning a pension.

It is worth noting that pension ownership has increased in recent years from 46% to 49% from quarter to quarter, with private sector pension ownership increasing from 37% to 40%. As we have spoken about many times in the past, the cost of living in Ireland has been increasing each year and as a result this survey found that the most common reason for not owning a pension was being unable to afford to do so. Sinead McEvoy, Head of Technical Solutions with Standard Life has suggested that she does not think it is that simple as standard weekly number crunching and believes that it is a case of not looking to the future, stating that:

“We don’t believe it is the real reason for some. We think a combination of people wanting to start paying into a pension but not getting around to it, not understanding pensions, not knowing how to start one and being uncomfortable making retirement related decisions are all blockers. […] Once people understand how important it is to have their own pension, how beneficial the tax breaks are and how relatively easy it is to start a pension – they will take action. We think 2020 is a year to take pensions action and we encourage everyone to start talking and learning about how pensions work.”

With this in mind, we here at EcovisDCA would also encourage all Irish workers to look deeper into the pensions process and to ensure that they are paving the way for their futures.

Should you have any concerns or queries about any business or financial matters, please don’t hesitate to contact us.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

When Planning Ahead, Never Forget the Danger of Recession…

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As the summer season enters full swing and we begin to see the summer sale signs crop up in all the high street stores, it would be easy to fall into the trap of believing that Irish businesses are fully safe from the dangers of recession and financial instability for the foreseeable future. As we see consumer spending continue to remain strong, it is easy to overlook the many stores and businesses closing and falling victim to financial difficulty.

Although it has now been many years since the height of the recession and we often find ourselves thinking of it as a long distant memory, it has recently been suggested that the woes of recession may not be as far in the rear view mirror for us as we may like to believe. The CEO of the National Treasury Management Agency Conor O’Kelly has suggested that the chances of Ireland being hit by another recession are 100%. He has suggested that a combination of Brexit concerns, changes to taxation and other thus far unforeseen issues are likely to plunge our small Ireland into another recession in the future.

In terms of having country wide safeguards in place for Brexit, Mr. O’Kelly concluded that Ireland may not be sufficiently protected from the negative impact of worldwide trade around us in the shadow of so much uncertainty. He also suggested that a contingency plan needs to be put in place going forward to better assist us in navigating these issues.

“I suppose whether Brexit, Italy, corporate tax or some other challenge that we have Ireland is a small, open economy, highly indebted, relies on international investors for 90pc of its borrowings. […] People talk about whether the bond market is predicting recession or who’s predicting a recession. I’ll give you a prediction of recession. The chance of a recession in Ireland is 100pc. So, we can’t afford not to have a contingency in place. We have to remain vigilant to that and we do that by having significant cash buffers at all times, smoothing out the profile of the debt to make sure we minimise the refinancing risks in the future.”

It has been suggested while there are some safeguards and rainy-day funds in place, more will need to be done to ensure that we do not leave ourselves entirely vulnerable to threat and that although this prediction seems bleak, that it is not a certainty regarding Brexit etc. Rather it is a suggestion for some point in the future that a recession in Ireland is once again a future inevitability. The possibility of a Hard Brexit however does place us in a precarious position and ensure that as a country we are unfortunately more vulnerable than we would otherwise have been to financial instability.

As always, our advice is to safeguard your own business and finances in any way possible going forward and to remain vigilant of any possible threats.

Should you have any concerns or queries, please don’t hesitate to contact us here at EcovisDCA where we are always happy to be of service.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

The Irish Economy’s Debt Situation

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As we have previously discussed, there is still an atmosphere of fear surrounding the possibility of another financial crisis or recession in Ireland. With the news that financial experts predict that it is almost a certainty that another financial crisis will hit Ireland in the future based on current figures, it is difficult to avoid the reality that despite major improvements in recent years, financially speaking Ireland is not out of the woods just yet.

As we are all aware, the debt on Ireland’s shoulders still remains, but recent reports have queried who is truly to blame for the level of debt we find ourselves in? It has been reported that at the peak of the financial crisis, spending was approximately €23billion more per year than what was taken in. The Irish economic debt situation of €205billion has long been blamed on the elusive villain known only as “The Bankers” in that the bailing out of bank debt was the sole cause of the financial crisis, which is not the case in actuality as only just over a quarter of this debt can be attributed to the bailing out of the banks, a figure which stands at €60billion.

In reality we are all aware of the heyday of the Celtic Tiger and its series of mishaps that lead us to the point of no return. Far from the bailing out of the banks being the only cause of the financial collapse, it is estimated that a little over €100billion of the Irish debt relates to governmental mismanagement of public funds, budget deficits and a desperate attempt by the then government to cover for lavish spending and plug a hole in the debt before it inevitably began to spiral. In order to stem the haemorrhage of funds, the government had used windfall tax revenues from the property sector.

Naturally, these funds were by no means bottomless and so when they were no longer available we began to see our budget deficits grow exponentially. It has been reported that at the height of the crisis in 2009, the State was spending approximately €23billion more than it was taking in each year before they began borrowing in earnest which found us in the midst of massive debt.

As we discussed recently, there is always the danger of finding ourselves in this position again, and as such safeguards need to be put in place, in the same way we would suggest safeguarding your business, it is vital that we safeguard our country’s finances. With this in mine, the Irish Fiscal Advisory Council has begun to criticise the government over their spending and has suggested that current spending and debt has “worrying echoes” of the past. It is hoped that change will be implemented and safeguards put in place to ensure that we do not snowball into harms way once more but as always we recomment being vigilant with your own finances and business and ensuring that you are as protected as possible.

Should you have any queries, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Funding Reluctance from SMEs

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As you will no doubt know by now, we are massive supporters of Irish Small and Medium Enterprises (SMEs). These small and often unsung heroes of the Irish business world form the backbone of Irish business and make up more than half of all Irish businesses. As such, we have long been supporters of these businesses and championed their successes. In recent months we have spoken about funding opportunities available to these forms of business as well as the ways in which they can be protected and encouraged to grow.

The term Brexit is one which has been utilised so much in recent months that it has almost lost all meaning entirely. Terms like “hard Brexit” strike fear into the hearts of many Irish businesses who have dealings with the UK, and the constant shifting of deadlines and back and forth makes it difficult for businesses to implement sufficient safeguards for their businesses.

Reports this week suggest that Irish SMEs are becoming somewhat reluctant to borrow at present which may show a level of wariness in the looming shadow of uncertainty that is Brexit at present. The Strategic Banking Corporation (SCBI) was started in 2014 in others to allow access to credit for SMEs and functioned by channelling credit through other avenues. This has often been a popular choice for SMEs seeking to fund their business activities, but in the last year we have seen a major slump in uptake on this funding which even an additional Brexit loan to the scheme couldn’t fix. Figures show that 2018 saw only approximately a third of the funding taken up as was accessed in 2017. This shows that in the current climate, Irish SMEs are becoming increasingly reluctant to take their chances on accessing funding.

The SCBI themselves have said of the issues:

“The modest deployment in the nine months to end-December 2018 is a clear reflection of SMEs remaining reluctant to invest in an environment of increased uncertainty and risk as Brexit approaches.”

As things stand we remain almost none the wiser on how the Brexit issue will play out and as always, we advise having a plan in place and safeguarding your business as much as possible in advance. The current advice remains that old Irish refrain that fell from the lips of all parents at one point or another: “Hope for the best, prepare for the worst.” In this way, your business will be protected against all eventualities and in the best position possible to flourish in the face of challenge and adversity in the current uncertain climate.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we will be happy to help in any way possible.

 

 

Revenue Irish Tax Firm

Revenue Commissioners New Debt Management System (DMS)

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Onward, to the Future

The past number of months have been a time of increasing change for Irish businesses. From large scale changes to payroll systems to the clamping down of Revenue on all forms of tax evasion and tax fraud. These have been major changes to the ways in which Irish companies do business day-to-day and are hoped to be a solution to some long-term issues facing Irish business life, as it is hoped it will all lead to smoother business operations and less issues facing the Irish tax system.

The season of change continues onwards as it was recently announced that The Revenue Commissioners were set to release a new system for debt management, one which will be more technologically advanced than previous iterations and which will assist them in chasing down more unpaid tax, particularly in the sector of SMEs (Small and Medium Enterprises).

Revenue’s new system entitled DMS (Debt Management Services) was launched just recently and promises to utilise high-tech means to target and deal with a wider range of tax payer. Whilst this may seem like a frightening prospect for SMEs, it is in fact a positive step towards ensuring that all Irish businesses are compliant, and that smaller business need not suffer the consequences of the failures of their larger brethren. The system will be able to target businesses and individuals who may previously have been too expensive to identify and pursue.

A spokesperson for Revenue has stated of the new DMS system that it will:

“Deliver significant increased capacity to manage and support compliance and tackle non-compliance” and will “enable Revenue to review customers with lower turnarounds on a more regular basis”.

So, whilst this means that SME’s will of course naturally fall under the Revenue microscope more often than previous, it is a step in the right direction for the future of business in Ireland, as it is set to join the Payroll Modernisation system in making it easier and more transparent for businesses to submit documentation and queries as the spokes person went on to say:

“The new system is fully online, allowing documentation to be uploaded electronically. It gives customers greater flexibility to manage their payment schedule and make certain alterations to suit their circumstances.

We as always advise to ensure that all your documentation and tax files are in order well ahead of time to ensure that you do not face further issues going forward. Should you have any queries or concerns, our doors are always open here at EcovisDCA.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Budget 2019

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We constantly hear about how fast Christmas comes around each year and already selection boxes are appearing in our grocery stores and social media posts are being put up about how many weeks remain until Christmas. However, does anything really come around quicker than the Government’s yearly budget? It seems like only yesterday that we were giving you the main points on last year’s budget and now here we are again to break down the key points of this year’s budget. Indeed this year’s budget seems to have entirely crept up on us all, and slid into the world without much of a fanfare. So, what does Budget 2019 have in store for us all in the coming year?

SMEs

As you are aware, we are huge supporters of Irish Small and Medium Businesses so there was some welcome news announced in the budget.

A future Growth Loan Scheme for SMEs and those in the agriculture sector will be launched.

€110million in Brexit measures will be put in place.

Taxes and Wages:

  • There will be a reduction in the third rate of Universal Social Charge (USC) from 4.75 to 4.5%
  • The second rate band threshold for USC will increase from €19,372 to €19,874
  • An increase in the tax free threshold on transfers between parents of children will take the threshold from €310,000 to €320,000.
  • Weekly threshold for higher rate of employer’s PRSI will increase from €376 to €386.
  • Minimum wage to increase to €9.80 from January 1st.
  • VAT to increase from 9 to 13.5%.
  • Self-Employed individuals will receive a further €200 to their earned income tax credit.

Housing:

This has been a hot topic this year and something that has hit the headlines on numerous occasions. What action are the government implementing?

  • There will be €2.3billion allocated to the housing programme.
  • An additional €121million will be allocated to the Housing Assistance Payment.
  • €60million allocated to funding emergency accommodation and €30million allocated to homelessness services.
  • There will be funds allocated to a ‘Serviced Sites Fund’ which will aim to have local authorities begin to provide affordable housing.
  • Mortgage interest relied to be increased to 100% for landlords.

Social:

  • All weekly social welfare payments will increase by €5 from next March.
  • Christmas bonus to be fully restored this year.
  • From November 2019 a new parental leave scheme will offer 2 extra weeks leave to all parents in the first year of the child’s life. The aim will be to increase this to 7 weeks over time to bring Ireland more in line with other European countries.

The government have come under fire for this budget as it has been suggested that it doesn’t go far enough on crucial matters from climate change to tourism and national debt. This is however the first time that we have seen the national books balanced since 2007 so it is hopefully a step in the right direction.

Should you have any concerns, queries or require further information on these or any other business and financial matters please don’t hesitate to contact us we are always available to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

PCP – The Good, the Bad and the Ugly

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Personal Contract Plan (PCP) – The Good, the Bad and the Ugly

Recently, we spoke about PCP (Personal Contract Plan) finance options which have recently become so widely available. With today’s increasing cost of living this may be an incredibly attractive option for the majority who cannot afford an upfront payment on such luxury options as cars. This week, we have decided to follow up on this, with a view from the other side of the coin.

Whilst PCP Finance may seem like the ideal option, with its low deposit, low but long term repayments and the possibility of starting all over again with a new model at the end of your payment term. As we have recently discussed, these financing plans have become increasingly popular and more widely available in recent months, but while they are an attractive option, they are also unregulated and as recent reports suggest, may be heading into dangerous territory.

New research conducted recently by the Central bank seems to suggest that the model of PCP Financing may begin to create a finance bubble due to the wildly increasing popularity of this model over other financing options and cash purchase. It is estimated that at present, one in three cars is purchased via a PCP and we have certainly seen a larger amount of new cars drive off the forecourt since this option came about.

The issue arises once we consider the level of loans outstanding via these financing plans. In Ireland, it has been estimated that there is currently €1.5billion outstanding debt in car finance alone, an eye watering figure that makes a car purchasing bubble loom ever closer. It has recently been suggested that this industry needs to be regulated in order to prevent issues going forward, as we are already seeing issues arise in the housing market which we do not want to see repeated across the board. At present, PCP is the biggest growth market in the country (not including mortgage credit) and this creates an atmosphere of nervousness for an unregulated industry, particularly as the industry is not covered under the Central Bank’s Consumer Protection Code.

These are of course just the concerns which arise from our little island having been in the position of economic crisis in the past. We will always have a level of wary concern for anything that seems too good to be true. As always our advice remains to do your research before agreeing to any financing options, and ensure that the deal you get is the best deal for you and one which you can afford long term to avoid any issues.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY