Kieran Horgan shares his insight and advice.
Increasing costs and regulations, and debt warehousing coming due – many Irish businesses are clearly feeling the pressure in 2024. While prominent closures in the hospitality industry are continuing to dominate the news, it’s not the only sector facing a challenging start to the year. Many Irish SMEs are grappling with a tricky start to 2024.
Recent changes and issues in Ireland include minimum wage hikes, VAT changes, regulation changes, inflation, as well as supply chain issues. What can be done and what should you be doing now?
Check your 2024 budgets
No matter what industry they are in, Irish businesses need to review if their 2024 budgets are working, especially with regards to cash flow management. Most businesses would have set their 2024 budgets in October and a lot has changed. So it’s time to review Q1 numbers against those budgets and make adjustments accordingly, so they have a clear picture of where they’re at now. I suggest then businesses would certainly need to be doing – at a minimum – bi-monthly management accounts, if not monthly management accounts, to compare what they’ve budgeted with what’s actually happening.
Effectively, if there are issues, this means they’re pinpointing it as early as possible and that that they’re getting the right advice implemented as fast as possible.
Debt warehousing and Q1 and Q2 cash flow
As it stands at the moment, those that have their debt warehoused are going to have to start to repay from 1 st May. Businesses need to be in negotiation with Revenue now to understand what payment structures they can achieve. This ensures a smoother ride with regard to cash flow and budgeting, versus Revenue putting them under pressure. Businesses that put their head in the sand could find that they’re not able to meet their current liabilities because of their debt warehouse liability. That in turn causes their debt warehouse liability to arrangement to be ceased, and they then get called on the full payment immediately (I think some of the closures in the last few months can be attributed to these looming liabilities)
There’s a bit of a chicken and egg scenario – payments have to be kept up-to-date in order to avail yourself of whatever arrangement with Revenue regarding the payment of the arrears.
What can Irish businesses expect in 2024?
Announcements of popular restaurant closures certainly send shivers down everyone’s spine but there’s plenty of opportunity out there for growth too. When it comes to growth, there are favorable interest rates and loan options, such as SBCI. However, housing shortages remain the biggest threat to staffing and growth, with more sustainable development urgently needed.
For businesses who can stay on top of Q1 and Q2, 2024 has plenty of potential.