Cashflow, CapEx and post-COVID supports: are you prepared for 2022?

“The first six months of 2022 will tell a lot about a business owner’s decision to stay in business or cease trading.” Paul O’ Donovan in the Irish Examiner in 2021.

Christmas is almost here; it’s time to take stock and structure for success in the new year. If you haven’t done so already, we recommend contacting us for a year-end financial health check.

Financial health checks allow businesses to check their positioning and adjust as needed. Regular checks and adjustments have been particularly valuable in 2021. With the constant changes of Covid, cash flow management was an ongoing challenge for many businesses.

With that in mind, are your cashflow KPIs and budgets robust enough to steer you to success in 2022? What effect would a slowdown or scheme end have on your ability to pay suppliers and repay debt? What income streams and government support might be available to boost your business?

Cashflow management KPIs  

Businesses must build the winding-down of the various government supports into their cashflow forecasts for 2022, says Anthony Ahern, Senior Manager.

“Government supports have been vital to maintaining the cashflows of the SME sector since March 2020 but their phasing-out may cause issues in 2022. Are you prepared for the effects?”

To stay on top of cashflow, Anthony advises businesses to track and evaluate their cash/debtor collections and compare these to expected collections/credit terms. These statistics help maintain a successful accounts receivable department, improving cashflows.

In addition to evaluating 2021 performance, consider the changes needed in 2022. Forward planning is particularly important for capital expenditure. Anthony recommends outlining your CapEx plans for 2022 and planning the financing of these well in advance i.e., bank finance or cashflow.

As this year ends it’s important to look forward at how next year may be very different. Talk to your accountant today or, for more information on financial health checks and COVID KPIs, contact Anthony at anthony@paulodonovan.ie. Anthony is a senior manager with a particular focus in tax, advisory, financial planning and analysis.

COVID supports

Financial planning shouldn’t just look at the numbers once a year. It should be ongoing process with regular reviews of performance, goals, changes, threats – and opportunities.

The State has cushioned some of the impacts of Covid but it can be difficult to be sure you are staying on top of everything your business is entitled to.

Alice Flynn, junior manager at the firm, has advised many clients this year on supports and funding available to them, including debt warehousing, deferred payments and business restart schemes.

To take full advantage of supports Alice recommends talking to a specialist, who understands both your business and the complexities of the supports available. Things continue to change – two weeks ago, for example, the Minister for Finance announced targeted support for the hospitality sector – so staying in regular contact is vital to ensure that you are receiving all support possible.

Here’s some useful COVID supports currently in operation.

1. PUP        https://www.gov.ie/en/service/be74d3-covid-19-pandemic-unemployment-payment/
2. Short-time work support                              http://www.gov.ie/en/service/c20e1b-short-time-work-support
3. Targeted Support scheme for the hospitality sector –   new schemewill give a weekly payment to eligible businesses to supplement the EWSS support they already get
4. EWSS          https://www.revenue.ie/en/corporate/communications/stimulus/employment-wage-subsidy-scheme.aspx
5. Covid 19 Credit Guarantee Scheme          https://enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/Access-to-Finance/SME-Credit-Guarantee-Scheme/Credit-Guarantee-Scheme-COVID-19-FAQ.html
6. Covid 19 Business Loans                              https://enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/Microfinance-Ireland-COVID-19-Business-Loan.html
7. Covid 19 Working Capital Scheme             https://enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/Access-to-Finance/COVID-19-Working-Capital-Scheme/SBCI-Covid19-Working-Capital-Scheme-FAQ.html
8. Future Growth Loan Scheme                      https://enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/Access-to-Finance/Future-Growth-Loan-Scheme/
9. Pandemic Stabilisation Recovery Fund     https://isif.ie/psrf
10. Covid Restrictions Support Scheme          https://www.revenue.ie/en/self-assessment-and-self-employment/crss/index.aspx
11. Enterprise Support Grant                             https://www.gov.ie/en/service/739f3-enterprise-support-grant-for-buisnesses-impacted-by-covid-19/
12. Trading Online Voucher                               https://www.localenterprise.ie/Discover-Business-Supports/Trading-Online-Voucher-Scheme/
13. Lean for Micro                                                https://www.localenterprise.ie/Find-Your-Local-Enterprise-Office/
14. Covid 19 Business Financial Planning Grant           https://www.enterprise-ireland.com/en/funding-supports/Company/Esetablish-SME-Funding/Covid-19-Business-Financial-Planning-Grant.html
15. E-merge programme                                     https://intertradeireland.com/sales-growth/covid-19-supports/covid-19-e-merge/
16. Code of Conduct for commercial rents               https://enterprise.gov.ie/en/Publications/Code-of-Conduct-between-Landlords-and-Tenants-for-Commercial-Rents.html
17. Covid 19 Products Scheme                          https://www.idaireland.com/how-we-help/covid19-support-and-updates
18. Commercial rates waiver                             https://www.gov.ie/en/publication/3ac02-support-for-businesses-impacted-by-covid-19-through-the-commercial-rates-waiver/
19. ‘Warehousing’ of deferred tax debts        https://www.revenue.ie/en/covid-19-information/tax-clearance-filing-returns-and-paying-taxes/debt-management-and-debt-warehousing/index.aspx
20. VAT rate deductions from 13.5% to 9%   A VAT rate reduction from 13.5% to 9% applies from 1 November 2020 in recognition of the unprecedented challenges facing the hospitality and tourism sector.
21. MFI Covid 19 Business Loans €5,000 – €25,000 https://www.localenterprise.ie/Discover-Business-Supports/Financial-Supports/Microfinance-Loans/
22. SEAI’s new Support Scheme for Energy Audits (SSEA) offers financial support for small and medium enterprises (SMEs) to get an energy audit https://www.seai.ie/blog/support-for-energy-audits/
23. Covid 19 Deferred Payment arrangement  – Businesses with verified financial difficulties caused by the COVID-19 emergency measures will get support as they deal with potential additional statutory redundancy costs.
24. Digitalisation Voucher    https://www.enterprise-ireland.com/en/Productivity/Digital-Innovation/Digitalisation-Voucher/
25. Sustaining Enterprise Fund           https://www.enterprise-ireland.com/en/funding-supports/Company/Esetablish-SME-Funding/Sustaining-Enterprise-Fund.html
26. Apprenticeship Incentivisation Scheme   https://apprenticeship.ie/news-events/news/apprenticeship-incentivisation-scheme-for-employers
27. Cross Border Companies               https://intertradeireland.com/covid-19-supports/emergency-business-solutions
28. Outdoor Service Enhancement Scheme   https://www.gov.ie/en/press-release/1cf55-new-outdoor-service-supports-announced-for-the-hospitality-industry/ The law has been updated to allow licensed premises to sell alcohol for consumption in their outdoor seating areas (where the seating area has been permitted by the relevant local authority).
29. Accelerated Recovery Fund         https://www.enterprise-ireland.com/en/funding-supports/company/esetablish-sme-funding/accelerated-recovery-fund.html
30. Waiving of licence fees for street furniture            https://www.gov.ie/en/press-release/db807-minister-obrien-welcomes-support-of-regulations-to-assist-restaurants-cafes/
31. Waiving of court fees and excise duties for vintners               https://www.gov.ie/en/press-release/44ebc-government-waives-court-fees-and-excise-duties-for-vintners-for-2021/
32. Small Public Service Vehicle renewal fees waived for the calendar year 2022 https://www.nationaltransport.ie/approved-small-public-service-vehicle-covid-19-emergency-measures-2021/

It’s a long list and more supports are both expected and in development. Talk to your accountant so they can best guide you through this whole changing situation and your own circumstances.

For more information contact Alice at Alice@paulodonovan.ie. Alice is a junior manager with a particular focus in financial reporting, management accounting, personal and corporate taxation, financial planning and analysis.