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BP SURVEY Accountants competitive, have stabilised. While clients always have one eye on price, the key influencing factor in choosing an advisor is nearly always based on the client’s confidence in receiving a highquality service delivered by experienced advisors. Our ability to demonstrate these qualities has ensured that we get a lot of repeat business and word-ofmouth referrals. Brian Conroy, Horwath Bastow Charleton Investment Incentive Scheme and Enterprise Ireland seed capital funds. While credit conditions have not deteriorated within the past year, the credit market is still extremely difficult. Banks are not in a lending mood as they try to contract their balance sheets and realign their debt to deposit ratios. There are few active lenders in the market and even then their lending criteria are onerous. The lack of a functioning debt market can be seen in Nama’s recent initiative for ‘staple finance’ as a means of generating sales in the commercial property market. Given the due diligence requirements of lenders, we advise our clients to prepare a comprehensive business plan setting out the rationale to support their funding requests. In our experience, fees, while still very Paul Wyse Smith & Williamson Freaney All sections of our business enjoyed some growth in 2011. We have increased our presence in the insolvency and restructuring marketplace and our insolvency team continues to grow. Competition is greater for everyone and although volume levels are increasing pricing and rates charged have decreased. We also put in place an investment management team of 12 people. This service is doing particularly well as many people have concerns about their savings due to the current lack of confidence in the banking sector and the eurozone generally. The economy appears to be bottoming out, though domestic economic conditions will remain challenging. It is still a very difficult trading environment for SMEs, especially those trading in the local Paul Wyse, Smith & Williamson Freaney market only. Renewing existing facilities continues to be challenging when dealing with the banks. Bank of Ireland appears to be more active than a year ago but it is still difficult to obtain credit from the banks generally. Insolvencies continue to have a detrimental effect on liquidity conditions and knowing your customer and their trading position is obviously critical in today’s market place. The banks need to be encouraged to deal with enterprises and individuals realistically where debt levels are currently unsustainable. The liquidity crisis has focused companies on shortterm strategies of cash preservation rather than longer-term growth strategies. By addressing the liquidity issues companies can then refocus their efforts on areas for and the financing of potential growth. 66
BP SURVEY Accountants What impact is the euro crisis having on your clients’ behaviour Terence O’Rourke (KPMG): It creates uncertainty and that isn’t welcome given the already challenging economic environment. Recent downgrading of growth forecasts shows just how important export markets are to the whole economy. Brain Conroy (Horwath Bastow Charleton): The euro crisis has given rise to complex issues for many clients. Our wealth management team in particular are being challenged by concerns surrounding sovereign risk and capital transaction taxes, which in effect appears to be a form of exchange control. These are prominent issues for pension funds and not-forprofit organisations. Paul Wyse (Smith & Williamson Freaney): There has certainly been a movement out of Irish euro into sterling, US dollar and German euro as a currency protection measure. This obviously reduces cash available for investment in the short term. Tadhg O’Sullivan (OSK): For many clients, the euro crisis does not directly affect their day-to-day business. However, the constant negative reporting surrounding the euro crisis affects business confidence. This lack of confidence results in clients putting certain investment decisions on hold until the crisis is over. Queries are arising in relation to gold, the BRIC economies etc, where previously it was all propertyrelated investment queries. is causing a slight delay in their decision-making processes. With regard to our domestic clients, we are certainly seeing them placing more cash on deposit in other currencies. Jim Mulqueen (RSM Farrell Grant Sparks): Our clients are not committing to any significant investment or expansion plans while the crisis in Europe persists. Multinational clients are concerned about any uncertainty regarding the Irish corporation tax rate, as well as general concerns about further expansion into Europe, currency exposures and how their Irish operations might be positioned if the eurozone were to break up. This uncertainty means that no major decisions are being made. Brendan Jennings (Deloitte): I believe that many Irish companies have proved themselves to be extremely adaptable. Operating in an uncertain marketplace is now the norm and they are becoming more and more adept at responding to the fluctuations that the marketplace presents. I believe this is extremely positive and bodes well for the future. Andy Quinn (Moore Stephens Nathans): In the main we find clients to be pretty resilient and they are continually looking to take an optimistic outlook as they strive to maintain, grow and expand their businesses where possible. improve our finances and both of these issues are significantly affected by the euro crisis. Mention of a crisis affects spending and confidence. Anne Brady (Anne Brady McQuillans DFK): Many clients are inquiring which currency would we recommend they change their savings to in order to safeguard their assets. Gerry McInerney (McInerney Saunders): Clients are cautious and risk averse. Those with cash assets have taken precautions to safeguard their assets through diversification ● ● ● ● ● ● ● into German treasury bills and German euro bank accounts. Mike McKerr (Ernst & Young): <strong>Business</strong>es are extremely cautious, recognising that resolution of the ongoing crisis is outside their control. Therefore, there is real reticence to take risk, with the need to survive driving corporate strategy. Hence, short-term cash preservation, continued focus on efficiency and cost reduction remain key priorities, often at the expense of capital investment or pursuit of a long-term growth strategy. Auditors and Accountants <strong>Business</strong> Advisors Taxation Consultants Corporate Finance Company Secretarial Outsourcing Insolvency Longboat, 56 Sir John Rogersons Quay, Dublin 2 Ph: +353 (1) 645 2002 Fax: +353 (1) 645 2049 Email: info@fmb.ie Web: www.fmb.ie Survey continued on page 68 Paul McCann (Grant Thornton): With our multinational clients, we have noticed the euro crisis Tony Carey (Cooney Carey): Ireland is relying on exports and inward investment to 67
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