Posts Tagged ‘Mark Ryan’

Is the new personal insolvency legislation working?

May 22, 2014

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After a slow start we are starting to see some progress with the new insolvency arrangements (DRN/DSA & PIA) and also with the changes to the bankruptcy legislation.

The Insolvency Service of Ireland (ISI) recently issued their 1st quarterly report which showed mixed results. Since the ISI began accepting applications for the new personal insolvency arrangements 7 months ago, there have only been 55 schemes of arrangement approved by creditors (DRN 44/DSA 7/PIA 4).

Although the Debt Settlement Arrangement (DSA) scheme is working, only 7 have been approved and the average write down was 77%.The DSA scheme is for those debtors with unsecured debts of more than € 20,000 in total.

The scheme that is under the microscope is the Personal Insolvency Arrangements (PIA) which deals with the write down of secured (mortgages etc.) and unsecured debts. To date there have only been 4 PIA arrangements approved and the average write down was 19%.

To date, the Courts have issued 70 protective certificates to debtors. A protective certificate protects a debtor and their assets from their creditors, while the Personal Insolvency Practitioner (PIP) formulates a proposal for a DSA or a PIA. A protective certificate remains in force for 70 days, but may be extended in certain circumstances.

A PIPs role is to act as a referee/mediator between the parties and a PIP is committed to ensuring that where possible they will assist those with unsustainable debt return to solvency over a period of 5 to 6 years. There are currently circa. 130 individuals licensed to act as PIPs in the Republic of Ireland.

Since the ISI went live on the 9th September 2013 there has been over 500 new applications for a scheme of arrangement (DRN 82/DSA 121/PIA 320), representing almost 600 individual debtors, with 50 new applications being made to the ISI on a weekly basis so this seems to be progressing well.

New Protocol being developed

The ISI have recently set up a working group to develop a protocol between debtors, creditors and practitioners to streamline the process for DSA and PIA arrangements. This working group is initially dealing with the DSA protocol which will probably bring this scheme in line with the comparable IVA scheme in the UK. The introduction of protocols for DSA’s & PIA’s should assist in increasing the number of applications being approved by creditors.

What happens in Bankruptcy?

The position in bankruptcy is that once a debtor is adjudicated as a bankrupt all debts are written off but unfortunately the debtor loses all of their assets including their share of the family home.

In December 2013 the term for bankruptcy was reduced from 12 years to 3 years. As part of the bankruptcy proceedings the Official Assignee can apply for a payments order which could result in the bankrupt individual having to make a contribution to their creditors on a monthly basis for 5 years. In my opinion this period should be brought in line with the bankruptcy term and reduced from 5 to 3 years.

As part of the recent ISI report they noted that there were 66 bankruptcy cases to the 31st March 2014. This was in excess of the number of bankruptcies which took place on an annual basis in either of 2011 (33), 2012 (35) and 2013 (58). The total debt involved in bankruptcy adjudications in the first quarter of this year was almost €136 million.

ISI Quarterly Statistics Reports & Transparency

One of the main positives to the above statistics from the ISI is the level of transparency on the new legislation and the fact that the data is in the public domain. The ISI will be reporting on a quarterly basis so we will all get to see what is happening in this space and the progress that is being made. The feeling on the ground is that the number of applications to the ISI has increased significantly in the last number of months and the process is beginning to speed up as all the various stakeholders get more familiar with the systems and the legislation.

Creditor’s responsibility to their Shareholders

It mustn’t be forgotten that the leaders within the major financial institutions have a responsibility to their shareholders to ensure that they get the best return on the loans that they have and which they will provide in the future. In the majority of cases a personal insolvency arrangement (DSA or PIA) will give a better return to the creditor than forcing a debtor into bankruptcy, as in most bankruptcy cases the creditors will get nothing.

As part of a DSA/PIA proposal a PIP will provide the creditors with a comparison of the return they will make compared to under the bankruptcy process. In all cases the new personal insolvency legislation is a better alternative to bankruptcy for both parties.

What does the future hold for the new insolvency legislation?

The experience in the UK which has similar insolvency legislation is that it will take some time for the system to be fully functional. It will take all stakeholders in the process to act in good faith for the system to work. This involves all parties to the agreements Debtors-Creditors-Courts-ISI working together.

The 2nd quarterly report by the ISI which should be published in early July 2014 will make interesting reading and I would expect a fast response from government if the DSA/PIA scheme has not improved the number of cases being approved.

Unfortunately the start of the process hasn’t been as smooth as we would have liked but there are now 55 individuals who have started on the road to solvency. There maybe a few bumps on the road over the next 5/6 years for these individuals but at last there is a chink of light at the end of the tunnel.

Regards

Mark Ryan CPA

Personal Insolvency Practitioner (PIP)

Buy Irish – How €4 extra p/w on Irish products could create 6,200 jobs.

February 16, 2012

A report late last year by Guaranteed Irish stated that by spending just € 4 more per week on Irish goods we could create an additional 6,200 jobs in Ireland.

The report noted that there are 1.5million Irish households and they estimated that the average spend per household on Guaranteed Irish products and services is just under €16 per week.

If households increased their spend on Guaranteed Irish products to €20 per week, then that would create over 6,000 new jobs based on the turnover per employee of existing Guaranteed Irish members. Please click here to view the full report.

Enterprise Minister Richard Bruton speaking at the launch of the report with Executive Director of Guaranteed Irish, Tom Rea encouraged all citizens to support Irish businesses and to in turn help to create new jobs for the approx 500,000 people who are currently unemployed.

Can €4 really make a difference?

€4 per week seems such a small amount you would think that this would be a simple task but I would be interested to see if this initiative has had any impact on this average spend and in increasing jobs in the sector.

Given that the average weekly spend on household shopping for an Irish family could be anywhere between € 100 to € 300 it would seem that € 16 per week is a very small % of this weekly total and to increase this by € 4 per week could prove difficult.

Because we are Irish/Cheaper

The recent PR battle between Dunnes ‘We’re better because we are Irish’ and Tesco ‘We’re better because we are cheaper’ would sum up the consumers attitude to wanting to support Irish but also remaining price sensitive.

Also just because the larger multiples (Dunnes, Supervalu etc) are Irish companies doesn’t mean that they only stock Irish made produce or that they would have an alternative to a non Irish made product assuming that they were of similar quality and price. That said the large multiples do contribute to the economy through taxes and employment.

Check your receipt

The next time you do your weekly shop have a look at the bottom of the receipt to see the amount of Irish made goods that you have bought, I would imagine it would not be much. As far as I am aware there are very few supermarkets (Supervalu and Dunnes) that make the effort to show the total spent on Irish made goods/products

To assist consumers in deciding to support Irish businesses and the local community it should be compulsory that all receipts must identify the Irish made goods and also the total spent on them. This would identify the companies that are sourcing their stock locally and walking the walk when it comes to supporting the Irish economy.

This is the time for everyone to support ‘Team Ireland’ but we need an incentive to make a little bit more effort by being better informed before we will change our buying habits and part with any of our hard-earned cash. The vast majority of Irish consumers believe that it is important for Irish companies to highlight the fact that their products or services are made in Ireland.

Assuming that the product or service was of a similar quality and reasonably priced I  actively try to support local businesses and Irish made products or services especially if it maintains and/or create’s additional jobs.

Regards,

Mark Ryan

Mark is a Director at Quintas.

Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

The views expressed in this article  are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Are you entitled to a PRSI refund?

January 31, 2012

Joan Burton

There has been considerable confusion recently in relation to errors in the deduction of PRSI/Levies in the tax years prior (2008 , 2009 & 2010) to the introduction of the USC (Univeral Social Charge) on the 1st January 2011. 

You might have heard that there have been considerable refunds issued by Social Welfare in relation to a Prsi/Health Levy Refund.  It has been reported that up to €10m has been refunded to date in relation to this case.

The minister Joan Burton’s department of Social Protection today issued a notice on their website to try to clear up the confusion on who is entitled to a refund.

The fact is that it is actually a health Levy refund and it is in relation to the exemption threshold of €26,000 which has been around for many years.

If you earn under €26,000 (all Income) in a year, then you are exempt from the Health Levy. 

 This is €500 p/w.  However, if you earned > €500 in any one week in the year, you would be liable to the Health Levy (correctly at the time), but, at the end of the year if your earnings are < €26,000 cumulative, you can obtain a refund of the health levy charged during the year.

 The Prsi Section are swamped with applicants who are just submitting applications for the sake of it. 

You will ONLY be entitled to a refund IF YOU EARN < €26,000 P.A AND AT LEAST ONE OF THE WEEKS YOU EARNED > €500 AND PAID THE HEALTH LEVY.

It is critical that any application is made within four years of 31 December of the year you paid the contribution. For example, you must apply for a refund of Health Contributions paid in 2008 by 31st December 2012 and so on. Any contributions paid prior to 1 January 2008 are now outside the time limit for making a claim.

Please click here for more information and to make an application for a PRSI refund.

Regards,

Mark Ryan

Mark is a Director at Quintas.

Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

New Year Resolutions – have you set them for your business for 2012?

January 4, 2012

‘A goal without a plan is just a wish’ – Antoine de Saint-Exupery

As we face into the first couple of days of 2012 I am drawn back to the start of the year when I would have set my own personal and business goals and also assisted some of our clients in setting out their financial plans for 2011.

As we reflect on the year gone by we can sometimes get downhearted about what was not done rather than focus on what was achieved. In some cases there maybe areas where we will have to go back to the drawing board completely.

I have outlined below a few tips and suggestions that may help you to set your new year’s resolutions and business goals for 2012:

 Visualise & Record – setting goals will only be effective if you have a clear vision of what you want to achieve. Write them down and split between short term (6-12 months) to medium term (3-5 years),

 Review & Resolve – review the goals set out on a weekly or monthly basis with a trusted friend or advisor who you can discuss and resolve any problems that you maybe having,

 Business Plan – prepare financial budgets/projections taking into account the last 3 years and make sure to be realistic by comparing them to your industry/sector,

 Cashflows & KPI’s – set up a KPI reporting system that ensures that you can review the performance of the business on a weekly/monthly basis and to ensure that you can measure how you are performing compared to the budgets/cash flows,

 Growth – prepare a marketing plan and growth strategy where you outline how you plan to grow the business and increase turnover next year,

 Bonus Schemes – if you need to make wage adjustments consider putting a performance based bonus scheme in place so that you can motivate your staff and ensure that they can share in the growth of the business,

 Social Media – understand social media and work out where it can benefit your business be it on facebook, LinkedIn twitter etc,

 Website – ensure that this is up to date as the majority of customers do their research on line before they consider what company to buy from,

 Downtime – take some time every month to work on (rather than in) your business.

 Get out there – become a member of a networking group. It is a great way to meet new business contacts, promote your business and gain access to potential customers.

Finally, it is essential that you reward yourself for your successes and commit to work on the areas that have not yet been achieved.

The best of luck in your goal setting and for the year ahead.

Regards,

Mark Ryan

Mark is a Director at Quintas and heads up the Business Centre.

Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

 

Gold – where will prices go?

October 14, 2011

The price of gold recently topped $1,900 a troy ounce before falling back again. While jewellery consistently remains the largest source of global demand, gold’s safe haven status continues to influence prices.

In order to do a “rich-cheap” analysis in terms of historical price levels, gold is often discounted to its “real” value using US inflation as a deflator. This way gold is trading near an all-time high. However this is not entirely appropriate as the US accounts for less than 10% of global gold demand. In China and India who account for over 50% of global demand, by discounting gold prices by nominal increases in wages in these countries, gold has remained more affordable. While the price of gold has increased, wages have also increased lessening the impact of higher prices. The general uptrend in gold prices over the past decade has more than any other factor been due to growth in Asia.

Since the onset of the financial crisis in 2007, western investors, who throughout the early to mid 2000s shunned gold, have returned through purchasing exchange traded funds, gold bars and coins. Central banks who were net sellers of gold over the same time period have also reversed that trend. While not the largest source of demand, both cases have put upward pressure on gold prices. Combined with high inflation in fast growing emerging economies and fears over the strength of the US dollar, these factors together may have elevated gold beyond its “fair” price, with investors in panic mode.

While our research suggests gold has the potential to increase due to growth in Asia and because of its safe haven status, it may be subject to sharp corrections. Gold may rebate if the European sovereign debt crisis is solved, if the US gets their own fiscal house in order or a slowdown in Asia. With this in mind gaining exposure to up or down movements in gold prices within a certain trading range may be an ideal way to play gold prices. Such a strategy can be replicated through the use of derivatives.

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

 

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Quintas Economic Review (Autumn 2011)

October 6, 2011

James McCarthy

While there has been a well publicized emphasis on a smart economy in Ireland, exporting traditional goods are not to be overlooked. High enrolement levels at universities is not necessarily required for a country to be economically successful. Germany has far fewer graduates than France yet has a higher GDP per capita. Many countries leading the way out of current financial difficulties have been countries such as China and Germany who have a strong manufacturing base. Those in most trouble are countries such as the US, the UK and Ireland all of whom concentrated on building jobs in the services sector over the past decade and outsourced many low to high-end manufacturing jobs. In Ireland, with spiraling wage costs during the past decade, we became uncompetitive and lost large parts of our manufacturing capabilities, which we are now trying to recreate to drive an export led recovery.

In 2010 the value of Irish exports reached €162.7bn, the largest figure ever for Ireland. One of the largest sector increases was for medical and pharmaceutical supplies, which increased by €24.3bn, a 15 per cent rise on the year before. Overall, almost two-thirds of Irish exports went to the US.

While Ireland remains in deep economic turmoil, we are still exporting mainly to developed countries such as the US and the UK, rather than selling our goods and services to developing nations, where economies are growing rapidly. Irish exports to China still only account for 3% of total merchandise exports. However with continued growth in the Chinese economy there is potential to take this up to 7% of total exports by 2015.

Annual External Trade

Geographical Area Exports Imports
EU 42% 29%
USA 23% 14%
Rest of World 19% 25%
UK 15% 32%

Source: CSO 2010

There are three major industrial sectors driving Irish exports – Chemical & Pharmaceutical, Information Communication Technology (ICT) and Agri-Food & Drink.

1. The Chemical and Pharmaceutical Sector: Exporters in this sector continue to be among the strongest performers in the Irish economy which together account for nearly two-thirds of all exports. In 2010 chemicals accounted for €22.8 billion or 25% of manufacturing output, pharmaceuticals €30.0 billion or 33%, and medical devices €4.3 billion or 4.8%.  Growth in this sector has driven Ireland’s strong export performance during our current difficulties. Johnson & Johnson is Ireland’s top exporter, shipping €8.5 billion worth of goods last year.

2. The Information and Communication Technology (ICT) Sector: This sector covers both hardware and services companies.  While contributing 8.5% of manufacturing exports, the ICT sector has reduced in importance over previous years, with exports falling by 36% to €7.6 billion in 2010. Like the Chemical and Pharmaceutical sector, the top exporting companies in this sector are non Irish companies and most are working in computer software and services rather than hardware manufacturing.  Microsoft is the second largest exporter in Ireland with exports of €8 billion in 2010, with Google being the third largest.

3. The Food and Drink Sector:  This sector has long been the traditional backbone of Irish exports. In contrast to the chemical, pharmaceutical and ICT sectors, Irish owned companies are more dominant than foreign multinationals, with companies such as Kerry Group and Glanbia being well known and established players. Food and drink makes up 14 per cent of all Irish exports. Because of the highly labour intensive nature of the sector it remains a vital part of the Irish economy, currently employing over 43,000 people. Importantly, employment in the sector has a wide regional spread, providing jobs not only in urban centres but also in rural areas.

The largest indigenous food and drink exporter is Kerry Group followed by the Swiss-based Aryzta, the Irish Dairy Board Co-op and Glanbia. Prospects for the sector remain positive, helped by strong global demand for exports expected to grow by 40% over the next decade.  According to Bord Bia’s food industry survey (December 2010), Irish food and drink manufacturers were more optimistic and showed a more positive outlook for 2011, which is reflected in the increase in exports so far this year.

The Future

With the current economic problems facing Ireland we now realise the significance of having a well diversified economy. As Ireland competes in the global marketplace for a limited number of jobs, we had little control to hold onto our manufacturing base due to decisions by previous governments. However in an increasingly volatile world, where possible, government policy should be encouraging and supporting indigenous Irish firms. Globalization has provided companies with opportunities to outsource and lower their costs by relocating to low tax countries or countries where labour costs are lower.Ireland has traditionally been a large benefactor of this. With current economic difficulties in many countries, protectionism is increasingly talked about as a solution to problems and in some ways is pursued either directly or indirectly, particularly through currency depreciation. Recently, Intel co-founder Andy Grove, when talking about US outsourcing of manufacturing jobs asked “…what kind of a society are we going to have if it consists of highly paid people doing high-value-added work – – and masses of unemployed?”  

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

This article was included in our Autumn 2011 quarterly newsletter.

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Ireland and the Comeback Economy

September 14, 2011
Frank Ryan

Frank Ryan - CEO EI

 This is an extract of a speech given by Frank Ryan (CEO-Enterprise Ireland) at a Cork Chamber Business Breakfast earlier this year. Frank kindly allowed us to include his speech in our Summer 2011 Quarterly Newsletter.

Considering all the negative news at home and abroad at present I thought it would be a good time to remind ourselves of what we in Ireland are great at and why we can be proud to call ourselves Irish. We are a young, dynamic, entrepreneurial country and we continue to punch above our weight relative to our population.

There is still a tough road ahead for all of us over the remainder of 2011 and into 2012 but we can only become the comeback economy if we focus on the positive’s about Ireland Inc and commit to remaining steadfast in our belief that we will survive and thrive in the future.

Cork Chamber Business Breakfast(March 2011) Frank Ryan CEO, Enterprise Ireland

I don’t do doom and gloom, I do ‘reality’ instead and the economic position we find ourselves in warrants some reflection.  We are the authors of our own destiny and it’s an awesome responsibility when you think about it. Our individual and collective behaviour and actions will decideIreland’s future.

While the intervention of the IMF, the ECB and the EU will contribute to the stability of our finances it does not address that which is imperative, namely economic growth.  As citizens of this Republic we must be the architects of Ireland’s future.

The Industrial Development Agency (IDA) and Enterprise Ireland (EI) have been hugely successful in attracting Foreign Direct Investment to Ireland. Household names such as Intel, Microsoft, Pfizer, Centocor, Google, Facebook are all based here for good reason. 

Story telling is a most powerful means of communication and we in Ireland don’t do enough of it. Germans talk about the performance of German Companies, we in Ireland have to value our own companies more.  I encourage you to be active story tellers of the growing success of Irish companies in worldwide markets.

When Ireland is viewed from afar we are involved in so much of what goes on around the world however we just don’t publicise it enough. By way of example a local company Abtran is involved in Business Process Outsourcing which in reality is Services Innovation, among their clients are BSkyB and Prometric.

If you travel to London and you shop in Harrods and present your credit card, the Dynamic Currency Conversion Software that handles that transaction is supplied by Fexco, an Irish company based in Kerry.

Over the last 24 months developments in Ireland have diminished our international reputation. 

At the same time we in Ireland failed to sufficiently communicate Ireland’s positive performance. Some of our key achievements are:

  • 1st for Corporate Taxes that do not discourage entrepreneurial activity;
  • 4th for the availability of skilled Labour;
  • 4th for having a culture that is open to new ideas;           
  • 6th for labour productivity;
  • 9th for the flexibility and adaptability of people;
  • 9th across the EU in terms of innovative activity (EU);
  • 8th in the world for ease of doing business and 1st in the Eurozone.’

(Source: The World Competitiveness Year Book 2010)   

In future all of us must communicate to our customers, business associates and key influencers evidence based and contextualised information in a professional manner.  This I believe represents the key first step in the journey to restore our international reputation.  We are now an export driven economy and we must trade our way forward. Our main markets US, UK and Germany are out of recession, the World Market is up 4%, the context exists for further export growth in 2011 to build on 2010.

We have much to be proud of in Ireland. Today,Ireland is a nation of global reach, we are:

§  The largest exporter of infant formula in the World;

§  The largest net exporter of pharmaceuticals in the world;

§  The 2nd largest exporter of computer and IT services in the world;

§  The 5th  largest exporter of beef in the World;

§  In Financial Services, 1.7 trillion Euro of funds are administered from Ireland.

All this, from a nation with a resident population equal to that of the greater Boston area or half the population of Sweden, Switzerland or Austria.

The importance of the Irish diaspora should not be underestimated.  The Irish are in key positions of influence in business and in government. Some fared less well and they are no less important, no less Irish, no less part of our family. 

Now Ireland must develop an additional diaspora through the education of overseas students in Ireland.  Most importantly these overseas students are the future leaders, entrepreneurs and decision makers in their own countries.

Ireland is regarded by international buyers as being a source of sophisticated products and services. Exports sustain and create jobs, most importantly jobs in Ireland.  Increasingly they will come from Entrepreneurship – High Potential Start Up’s and Small to Medium enterprise in the following growth sectors: life sciences, public procurement, cleantech, internationally traded services and construction services.  Because every job is important Micro Enterprise is important and a valuable asset to our society. We must recognise the work of County and City Enterprise Boards in this regard.

Ireland is a nation with a proud history of meeting challenges, surviving, recovering, growing, achieving and being great. All the things that made Ireland great before still exist. Now, we are more capable than ever, with one of the most highly educated workforces in the world.  Now, is the time to be in business in Ireland.

Ireland is a great Country and we will continue to be great. Ireland can be the comeback Economy of Europe.  But we must again dream those dreams. Once again ambition must characterise our actions.

Regards,

Frank Ryan.

For more examples of positives about Ireland please click on this link to a 3 minute video by IBEC called Ireland by the Numbers.

Regards,

Mark Ryan

Mark is a Director at Quintas and heads up the Business Centre.

Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Debt Forgiveness – Who will fund this scheme?

September 1, 2011

Minister warns that debt forgiveness from state-owned banks will not happen.

There has been so much debate in the media recently that the Minister for Finance Michael Noonan today warned struggling mortgage holders that there will be no extensive debt forgiveness programme for borrowers.

Michael Noonan said the government would work to help those who cannot pay their loans but he said nobody should think there will be a big pool of money which would be handed out in substitute for the lottery.

Mr. Noonaan did say that action would be taken as soon as an expert group examining the issue delivers its report to the government at the end of the month. Until then we will just have to wait and see what the experts have to say in their report.

Debt forgiveness- who will pay for this?

The problem for government is that if they decide to pursue a policy of debt forgiveness where will the funds for the bank write downs come from? Given that the Irish banks are state owned and that Ireland Inc is relying on financial support from the ECB/EU/IMF it is difficult to see where the funding will be available.

A series of recent articles have stated that a €6bn debt forgiveness scheme for struggling mortgage holders would plug the gap in the ever increasing arrears and put those in negative equity back on track from a property value and loan repayment perspective.

It is estimated that the €6bn would be used to write off some of the debts of at least 40,000 people unable to pay their mortgages. There were warnings that such a scheme could encourage some of the 746,000 people making “great sacrifices” to pay their loans to start defaulting.

I would have thought that best practice would be that those in arrears and in default on their mortgages should be dealt with on a case by case basis. I would imagine that this fund could be put to better use by creating and retaining jobs for these home owners as it is likely that unemployment is one of the main factors that they are no longer able to meet their debts.

Should there be a debt forgiveness scheme for everyone?

If it is a case that government decide to go ahead with a debt forgiveness scheme for home owners, will there then be a case from those people who invested in property or who borrowed to purchase or set up a business during the boom years to be ‘bailed out’?

Rather than becoming bogged down in trying to finance a mini-NAMA, government should start devising new and creative initiatives to kick start the economy and provide real access to bank funding for business so that they can raise working capital to expand their business if required or to support their business over the next 18 months until such time as our economy eventually begins to recover.

Where could the money be better spent?

The recent Jobs initiative (funded by a levy on private pension funds) is a good start but there must be further support mechanisms for business and entrepreneurs to ensure that the domestic economy recovers and that we aren’t relying solely on the export sector for economic growth. There are ongoing discussions at present in relation to an Enterprise Loan Guarantee Scheme but realistically this is unlikely to come into place until 2012.

The main problem over the last number of years from a business perspective has been the lack of funding available from banks and the delay in the timeframe for decisions on loan applications, if they happen at all.

This was a point made by Ian Talbot (chief executive-Chambers Ireland) who recently stated that the delay in banking decisions was due to “ Banks having gone back to a standard of documentation and verification that they should never have left. Bank are dusting off the 1980’s manuals for loans based on future cashflow and for a lot of bank officials, cashflow lending is a new process” Also the level of financial and personal documentation required to support loan applications has increased considerably from the days of lending based on property values and deeds.

As recently as last week John Trethowan (head of the Credit Review Office) agreed that lending was taking more time, but he said that he felt that the banks were improving.

Whether this is the case or not is debatable but it crucial that our banks start to get there act together and implement government policy, to ensure that viable businesses can borrow to invest in new markets and ultimately create and retain more jobs for the future.

As long as the domestic economy continues to stagnate and the number of mortgages in arrears continues to increase, the debate over whether or not some form of debt forgiveness scheme needs to be put in place for home owners will continue to rage.

Regards,

Mark Ryan

Mark is a Director at Quintas and heads up the Business Centre.

Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Quintas Business Tip – The Importance of Cashflow

August 16, 2011

I recently took part in a social media campaign called Sage Business Tips which they are using to promote the launch of their new Sage one accounting package.

Given the lack of liquidity and access to bank credit in the economy, Cashflow management will be one of the key safeguards that will ensure that a business will protect its brand and survive and prosper in the future.

For more Business Tips from Sage please click on the links below:

Sage Ireland YouTube page please click here

Sage Ireland Facebook page please click here

Regards,

 Mark Ryan

 Mark is a Director at Quintas and heads up the Business Centre.

 Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.

Jobs Initiative (July 2011) – what are the benefits to your business?

June 29, 2011

Creating Jobs

From the 1st July 2011 the government jobs initiative will commence which will help your business to improve competitiveness, revenue, profitability and reduce labour costs.

Whether or not you agree with the merits of the recent jobs initiative and the methods used by government to ensure that the scheme is revenue neutral (by applying a levy of 0.6% to private pension funds) you must ensure that your business achieves the maximum benefits from the scheme over the next 4 years.

 The Jobs Initiative included a number of measures dealing with business and employment taxes, including:

  • Abolition of Employer’s PRSI charge on share based remuneration
  • Temporary halving of the lower rate of Employer’s PRSI from the 2nd July 2011 (which was included in the Social Welfare Bill published in early June)
  • Amendment of the R&D tax credit regime to enhance flexibility in how companies can account for the credit
  • Temporary reduction in the 13.5% rate of VAT to 9% in respect of tourism-related services
  • Introduction of a 0.6% levy on the capital value of pension funds to fund the job creation measures
  • No Change to the 12.5% corporate tax rate
  • The minimum wage will be increased from €7.65 back to the previous level of €8.65 per week from 1 July 2011.

I have included below a brief explanation on the key initiatives that will benefit your business from the 1st July 2011:

1.            Introduction of a 2nd reduced rate of VAT of 9%

To support the tourism industry, a new temporary second reduced rate of VAT of 9% will be introduced with effect from 1 July 2011 until end-December 2013.

The new 9% rate will apply mainly to restaurant and catering services, hotel and holiday accommodation, admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions, fairgrounds or amusement park services, the use of sporting facilities, hairdressing services, printed matter such as brochures, maps, programmes, leaflets, catalogues, magazines and newspapers.

All other goods and services to which a reduced rate currently applies will remain subject to the 13.5% rate.

Please click here for a link to revenue’s website which lists the specific goods and services that can avail of the reduced vat rate of 9%.

 2.            Employer PRSI changes

To support employment and incentive employers to invest in employees there are two significant changes to Employers PRSI.

Firstly, the lower rate of Employers PRSI is to be halved from 8.5% to 4.25% for all workers with earnings of less than € 356.00 per week or € 9.13 per hour. This will lead to a reduction in labour costs for employers and it will go in some way to offsetting the cost of the re-introduction of the minimum wage rate of € 8.65 per hour.

This is a temporary measure which will take effect from the 1st July 2011 to the end of 2013.

The second measure related to the reversal of the Budget 2011 decision which imposed the full employers PRSI charge of 10.75% on share benefits awarded to employees. The reversal of this decision should hopefully send an important signal aboutIreland’s commitment to remain an attractive location for FDI given that the awarding of shares to employees is an important part of the incentives to staff being offered by our multinational friends.

3.            Air Travel Tax

The controversial €3 air travel tax will be abolished. The removal of the air travel tax is, however, dependant on airlines, which will be required to open new routes and boost passenger numbers. The tax will remain on the statue books and will be reinstated if this does not happen.

4.            National Internship Scheme

This scheme begins on the 1st  July and the two-year JobBridge programme will offer work placements to 5,000 people who are on the Live Register. The jobs will be offered in a range of companies in the private, public, community and voluntary sector.

The placements will last between six and nine months and participants will be paid €50 extra a week on top of their existing social welfare payments. They will retain all of their additional benefits and it is open to anyone who has been signing-on for at least three months.

Companies offering places must have at least one full-time employee and the intern cannot displace an existing worker. The maximum internships an organization can provide depends on their number of full time employees.

A host organisation may have an allocation of Interns as well as an allocation of Work Placement Programme participants at the same time. However, the combined number of Interns and Work Placement Programme participants cannot exceed the total number of employees.

The above government initiatives are being put in place to improve our economic competitiveness, encourage employment, entrepreneurship and targeting the tourism sector to make a substantial contribution toIreland’s economic recovery.

Although our economy has a long road to recovery let’s hope that this is the start of some real government schemes that will support businesses as they try to recover from the serious difficulties of the last few years.

 Regards,

 Mark Ryan

 Mark is a Director at Quintas and heads up the Business Centre.

 Quintas Business Centre provide outsourced ‘Financial Management, Accounting, Bookkeeping, Vat, RCT  and Payroll Services’.