Mid-year financial review 2024 – what’s coming in Q3 and Q4 2024?

As we approach the mid-point of the year, how has 2024 been going for Irish businesses so far and what can we expect from the rest of the year? 

Siobhan Gibson FCCA, accountant and senior manager in Paul O’Donovan and Associates, shares some insights.

2024 in Ireland so far: a midyear financial review

From what we have seen so far, the first months of 2024 has been positive for many Irish businesses. Footfall is good for retail and hospitality, and we haven’t seen a dip in trade when compared to the same period in 2023. 

There are certainly rising costs of doing business, however. Irish businesses do need to be careful to ensure that they have the correct pricing strategy and that margins are being achieved, as they are facing various financial and cash flow pressures including:

• VAT rate increases;
• Minimum wages hikes;
• Payroll regulation changes, such as ERR reporting and pensions autoenrollment; and
• Warehoused revenue liabilities phased payment plan obligations.

It is vital that businesses check their second quarter financial projections accurately account for the wage cost hikes and other overheads. Comparing results so far to projections, and then altering future projections for any adjusting variables, is absolutely key for business success in Ireland at the moment.

Businesses must know what their key performance indicators (KPIs) are and what’s needed in order to breakeven. They will need to revisit their pricing strategy if they feel that their breakeven projected results will not be met.

Managing rising employment costs, AE and ERR

The cost of employing people for small businesses in Ireland has escalated in the first half of 2024 and will continue to rise. Employers are finding it very difficult to attract and maintain good, experienced staff.

For employers, the imminent auto-enrolment (AE) implementation requires careful consideration. Businesses must balance the financial implications with their employees’ needs, choosing between the State’s AE model and adapting existing pension plans. Employers face the challenges of managing additional costs, compliance, and providing support and advice to employees. 

We are also nearing June 30th, the date from which Revenue will seek to apply penalties for non-compliance with ERR reporting. Most businesses are aware of the new ERR reporting requirements. These, and the new pension autoenrollment obligations for employers, are putting many businesses under pressure in tackling the increased payroll administration burden. Outsourcing your payroll function is one approach that could help here.

Accounting for warehoused debt repayments

Many businesses are relieved to now have a 0% phased payment arrangement in place to meet any old debt warehoused revenue liabilities. They now need to ensure these repayments are included in projected cashflows, along with current revenue liabilities. 

One of the main terms of the phased payment arrangement with Revenue is that current and future taxes are kept up to date. Businesses who do run into difficulty with future Revenue liabilities must be proactive in their approach; for example, accountants and advisors should be alerted as early as possible regarding the difficulties in order to negotiate effectively with Revenue on their behalf.

Retail must take stock of their options

As employment costs rise, knowing your stock levels and stock value is an absolute must. Many retail businesses have moved to more efficient stocktaking methods, but plenty still rely on paper records or a spreadsheet – both of which require a physical count of inventory and are subject to error. 

With the diversity of sales channels available today (retail outlets, ecommerce sites, social media, marketplace platforms, and more), having accurate inventory information for your products has never been more important.

Ineffective inventory management can impact your cash flow, customer experience, and ultimately your bottom line. If businesses are struggling with stock control, it could be time to invest in your operational efficiency by switching to one of the powerful inventory management platforms on the market.

Second ICOB grant for the Hospitality and the Retail sector

The Increased Cost of Business (ICOB) Grant Scheme, which closed on May 29th 2024, was welcomed by the business community. Every little helps.

Businesses operating in the Hospitality and the Retail sectors are now eligible for a second grant payment of the same amount as the initial grant. For businesses already registered in these sectors, there is no need to re-register and you will receive another email when your second grant payment is processed. 

Getting ahead of Q3 and Q4 2024

Whatever the rest of 2024 holds, now is the time to double your check your Q1/2 results and update your financial projections. 

Businesses need to be proactive in looking at their 2024 performance; assuming it’s “business as usual” without reviewing and adapting your projections can have serious cost flow implications.

With rising wage, wholesale and other overhead costs, it’s important to ensure your business is on top of its numbers. Grants and favourable loan options are available, especially in the area of sustainability.

Ensure your business is informed and claiming everything it is entitled to, and set up for a strong finish to 2024.