LOOKING AFTER YOUR FINANCES – PERSONAL AND BUSINESS
As we face into these very difficult days, weeks and months, we are all quite rightly taking all the necessary measures to protect the health of ourselves and our loved ones. But many of us will be worried about other issues not least our finances either our personal finances or those of our business. As a Financial Consultant who specialises in Debt Resolution and Corporate Finance, I thought it appropriate to set down to some key thoughts that I hope might be of assistance to you personally or for your business. Please note that this is a general note and should be read as such. At the bottom of these notes I will list useful points of contacts that you can refer to if you need more specific help. You can email me at michael@caflpartners.com, with any queries.
The first thing to remember is that if you or your business is in difficulty help is out there. All the stakeholders are required to assist those experiencing difficulties. There are four general points that you must focus.
- REVIEW – review your financial position, once you know your financial position you can concentrate on what needs to be done.
- COMMUNICATE – and communicate early do not wait for problems to mount up. In fact your creditors will appreciate this and will welcome contact.
- PLAN – set out exactly what your objectives are and how you plan to meet them
- ACT – be proactive and engage with creditors and they will co –operate
I will address options under two headings personal and business.
PERSONAL
If you are facing financial difficulty personally there is help at hand. Paschal Donohoe, Minister for Finance and the Minister for Public Expenditure and Reform, recently announced that he had reached agreement with the five main banks that those impacted by Covid – 19 would be able to avail of a three month moratorium on mortgage, loan and other financial repayments and/or other assistance. The statement issued was very general and it will not be a blanket moratorium and looking past the headline the measures that were agreed were as follows:
- Implement a payment break up to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviews depending on the scale and extent of the situation. Customers wishing to avail of a payment break should contact their respective bank.
- The banks agree there is a need for a simplified application process to make it as easy as possible for businesses and personal customers impacted by Covid-19 to receive support from their banks. They are working with all member banks to achieve this.
- The banks want to ensure that any Covid-19 application for a payment break and further reviews will not adversely impact the customer’s credit record, and the banks reporting of these facilities. Banks want to avoid this and are meeting with the Central Bank of Ireland to urgently achieve a solution in this regard.
- Banks will also defer court proceedings for three months.
- The banking system stands ready to provide working capital support.
So, taking the four steps outlined above:
- REVIEW – there is a standard document that should be completed called a Standard Financial Statement – it can be very easily downloaded – Here
- COMMUNICATE – in the case of a personal borrower simply write a very short letter advising that as a result of Covid – 19 you are facing financial difficulty and wish to avail of a deferment of repayments for three months. The financial institution will follow up on this.
- PLAN – will a three month deferment be enough to get you through this temporary situation as a result of Covid – 19. If not then you may need to look at a longer term plan or solution. There are many options out there to assist you and you should get advice and again there are many options such as the Money and Advice Budgeting Service (mabs.ie) or the Insolvency Service of Ireland (www.isi.gov.ie)
- ACT – don’t delay
BUSINESS – specifically I am referring to SME business. SME stands for Small and Medium Enterprises, but the term includes Micro enterprises as well. Broadly speaking, if your business has 249 or fewer employees, it is an SME. In the first instance we should just note the framework that is currently being put in place, as follows;
- Revenue guidelines regarding ongoing tax returns and payments:
- Employment payments and assistance from Government:
- Banking initiatives and suggested protocols to follow in working with your bank where additional working capital finance may be required during this uncertain period:
- Enterprise Ireland/IDA/Local Enterprise Board initiatives to assist business facing financial difficulties as a result of measures and Covid – 19 initiatives generally
So, again taking the four key points:
REVIEW – what did the business look like prior to Covid – 19? Contact your accountant and get a copy of your last full set of accounts, while they are historical you can simply take the headline figures (Sales/Gross Profit/Wages/Rent) and estimate how the business was trading up until the outbreak. Then you need to estimate your cash flow for the next three months – what is coming in, what is going out – how do they match up.
COMMUNICATE – who do you need to pay, who needs to pay you? In the case of banks they are putting in place a process to assist your business, deferments, and overdrafts. Revenue have advised that they will not charge interest and penalties on late payments as long as you file the required returns. Government agencies such as Microfinance Ireland, Local Enterprise Boards and Enterprise Ireland are currently working on solutions. Look up their websites, send them an email requesting information on what supports and imitative they are putting in place. If you communicate with suppliers and other creditors they will be able to work with you because of the engagement you have made with them they can make their own plans.
PLAN – as we begin to get through this business will begin to return to some kind of normality, how will your business be, where will you get turnover from. What steps will you need to take to generate business, get paid? You may need to revert to banks, suppliers and clients and put in place longer term arrangements.
ACT – don’t delay
CONCLUSION
There is help and support out there. Most of it free and driven by Government and state agencies. Whether financial difficulties are being experienced on a personal or corporate basis follow the four steps:
- REVIEW
- COMMUNICATE
- PLAN
- ACT
I hope that all members of IIBN and their families are keeping as well and as safe as possible and if I can help in any way please do not hesitate to contact me.
Michael Gilhooly- michael@caflpartners.com
USEFUL CONTACTS
- PERSONAL – Insolvency Service of Ireland – isi.gov.ie
- PERSONAL – Money and Advice Budgeting Service – mabs.ie
- BUSINESS – Local Enterprise Office – localenterprise.ie
- BUSINESS- Enterprise Ireland – enterprise.ie/ireland
- BUSINESS -Revenue – revenue.ie
- BUSINESS – Microfinance Ireland – microfinance.ie
