We here at Burke Accountants believe that pricing is one of the most important financial decisions a business makes, yet it is often one of the least reviewed. Many businesses increase prices only when costs rise significantly, leaving years of small cost increases, additional work and changing market conditions to quietly erode their margins. If your prices have not been reviewed recently, your business could be working harder for less profit.

The Hidden Impact of Underpricing

Underpricing can be difficult to recognise because it rarely creates an immediate crisis. Customers continue buying, sales remain strong and the business appears busy. The problem becomes visible when you look at what is left after all costs have been paid.

A product or service that generates €100 in revenue might appear successful. If the total cost of delivering it has increased from €60 to €75, however, the profit has fallen from €40 to €25. Multiply that reduction across hundreds of sales and the financial impact can become substantial.

Underpricing can also create a false sense of growth. Turnover may increase while profitability remains flat or even declines.

When Did You Last Review Your Prices?

Pricing should not be treated as a decision that is made once and forgotten. Costs change, suppliers increase their prices, wages rise, technology evolves and customer expectations develop.

Consider when you last reviewed:

• Supplier and material costs

• Staff and employment costs

• Rent, utilities and other overheads

• Insurance and professional fees

• Software and subscription costs

• Delivery and fulfilment expenses

• The amount of time required to deliver each service

• Your desired profit margin

If several of these have increased since your current prices were established, your margins may have deteriorated without you realising it.

Are You Charging for Your Time Properly?

For service businesses, underpricing is often linked to time.

A project may have been priced based on the expected work involved when it was first offered. Over time, additional meetings, phone calls, revisions, administration and client support can become part of the service without being reflected in the price.

For example, a service priced at €1,000 might initially have taken ten hours to complete. If changes to your process mean it now takes fifteen hours, the effective hourly return has fallen by one third.

This is why businesses should regularly assess the actual time and resources required to deliver their products and services. Your price needs to reflect the value you provide as well as the cost of providing it.

The Difference Between Price and Value

One of the biggest concerns business owners have about increasing prices is losing customers. That concern is understandable, but it should not automatically prevent a pricing review.

Customers do not always choose based solely on price. Reliability, expertise, quality, convenience, service and results can all influence purchasing decisions.

If your business provides significantly more value than competitors offering cheaper alternatives, competing solely on price may weaken your position.

A better question is often: What value does the customer receive, and does our current price properly reflect it?

Understanding this can help you move away from simply calculating costs and adding a small margin. Pricing should take account of the value of your offering and the position you want your business to occupy in the market.

The Cost of Being Too Cheap

There can also be strategic disadvantages to underpricing.

Low prices can attract customers who are highly price-sensitive and less loyal. They may move to another provider when they find a cheaper alternative. Meanwhile, a business with stronger margins has more capacity to invest in service, staff, technology and customer experience.

Underpricing can also put pressure on business owners. When margins are tight, there is less money available for unexpected expenses, investment or growth.

A sustainable business needs sufficient margin to absorb setbacks and fund its future.

Look at Profitability, Not Simply Sales

One of the most important questions to ask is whether each product or service is genuinely contributing to your bottom line.

A high-volume product with a low margin may generate substantial turnover but contribute less profit than a lower-volume service with stronger margins.

Reviewing your sales by product, service, customer or business area can reveal where your strongest returns are coming from.

You may discover that your most popular offering is not your most profitable. That insight could influence where you focus your marketing, sales activity and resources.

How to Review Your Pricing

A pricing review does not have to mean increasing every price immediately.

Start by understanding your numbers. Calculate the direct and indirect costs associated with each product or service and assess the margin being generated.

Then consider your competitors, your positioning and the value you provide. Look at how long your prices have remained unchanged and identify any significant changes in your costs.

You could then consider different pricing options, such as increasing prices gradually, introducing premium packages, charging separately for additional services or restructuring your offering.

The important point is to make the decision based on financial information rather than instinct alone.

Make Pricing Part of Your Financial Review

Pricing deserves regular attention, particularly when costs and market conditions are changing.

A business can have strong sales, loyal customers and an impressive turnover figure while still leaving significant profit on the table. Reviewing your pricing can help identify whether the work you are doing is generating an appropriate return.

Your accountant can also help you examine margins, profitability and financial forecasts, giving you a clearer picture of the impact different pricing decisions could have on the business.

The question is not simply whether customers are willing to pay your current price. The bigger question is whether your current price allows your business to remain profitable, resilient and capable of growing.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

If you would like to discuss your business, contact us by email liam@burke.ie or visit [$ur*l].

The post The Financial Cost of Underpricing: Are You Charging Enough for Your Products or Services? appeared first on Burke Accountants.

1. Review your expected taxable profits

One of the first steps should be to establish a realistic estimate of your company’s taxable profit for 2026.

Business owners often focus on turnover and net profit without considering how different expenses, capital expenditure, losses and tax adjustments affect the final taxable figure.

An updated forecast can help you understand the likely corporation tax liability and whether the business has sufficient funds set aside to meet it.

It can also highlight opportunities to make legitimate tax-efficient decisions before the year ends. These might include bringing forward necessary expenditure, reviewing outstanding expenses or considering planned investments.

The key is timing. A business should not spend money purely to reduce a tax bill. The expenditure should make commercial sense and support the wider objectives of the company.

2. Review capital expenditure and available allowances

If your business has been considering new equipment, machinery, vehicles or other qualifying assets, the tax treatment should form part of the investment decision.

Capital expenditure can potentially qualify for capital allowances, which may reduce taxable profits over time. The precise treatment depends on the type of asset, how it is used and the circumstances of the business.

Before making a significant purchase, consider both the commercial return and the tax implications.

For example, buying an asset solely because it provides tax relief may not be financially sensible if the business does not genuinely need it. Equally, delaying an investment that the business already needs could mean missing an opportunity to make use of available relief.

A year-end review of planned capital expenditure can therefore help ensure investment decisions are properly timed.

3. Review how profits are being extracted

For owner-managed companies, the way profits are taken from the business can have significant tax consequences.

Salary, bonuses, dividends and pension contributions can all have different implications depending on the circumstances of the company and its directors.

This makes year-end an appropriate time to review how profits have been extracted during 2026 and whether the approach remains suitable.

There may also be situations where retaining profits within the company is more appropriate, particularly where the business is planning investment, expansion or additional working capital requirements.

The important point is to consider personal and company finances together rather than treating profit extraction as a separate decision.

Any changes should be considered carefully, taking account of applicable tax rules and the company’s financial position.

4. Check whether all legitimate business expenses have been captured

A surprisingly common issue for SMEs is incomplete expense records.

During a busy year, smaller expenses can be overlooked, documentation can be misplaced and certain costs may not be recorded correctly.

Before the year ends, businesses should review their accounting records and ensure that legitimate business expenditure has been properly captured.

This could include professional fees, software subscriptions, business travel, training, insurance, utilities and other operating costs, depending on the nature of the business and the relevant tax rules.

Good record keeping is particularly important because claiming an expense generally requires appropriate supporting documentation.

A year-end review can also identify recurring costs that are no longer necessary. This has a benefit beyond taxation because reducing unnecessary expenditure can improve profitability as well as ensuring the accounts accurately reflect the cost of running the business.

5. Review pension and longer-term planning opportunities

Tax planning should not focus exclusively on the immediate tax bill.

For business owners and directors, pension contributions can form an important part of longer-term financial planning. Depending on the circumstances, pension contributions may also have tax advantages.

The rules surrounding pension contributions, limits and tax relief can be complex, so decisions should be made with appropriate professional advice.

It is also worth considering whether 2026 has changed the financial position of the business owner. Increased profits, a change in salary, the sale of an asset or a planned business exit could all affect the most appropriate approach.

Taking time to review these issues before year end can provide greater flexibility.

Do not confuse tax planning with tax avoidance

Effective tax planning should be based on understanding and using legitimate reliefs and allowances that apply to your circumstances.

There can be a temptation to make last-minute decisions purely because they appear to reduce the tax bill. This can result in unnecessary expenditure or decisions that are not commercially sensible.

A better approach is to start with the question: what does the business actually need?

If investment, recruitment, equipment or pension planning is already part of your strategy, understanding the tax treatment can help you make a better-informed decision about timing and structure.

Start before the year ends

Tax planning is most useful when it happens early enough to influence decisions.

By reviewing expected profits, capital expenditure, expenses, profit extraction and longer-term planning before the end of 2026, Irish SMEs can approach the year end with a clearer understanding of their financial position.

At Burke Accountants, we believe tax planning should form part of wider business planning rather than being treated as an annual exercise. The earlier potential issues and opportunities are identified, the more options a business owner is likely to have.

Professional advice should be sought before making significant tax or financial decisions, particularly where substantial investments, profit extraction or changes to the business structure are being considered.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post Top 5 Tax Planning Opportunities Irish SMEs Should Review Before the 2026 Year End appeared first on Burke Accountants.

Growth requires cash before it creates returns

One of the most common mistakes business owners make is focusing on the additional revenue that growth could generate without considering how much cash will be required to achieve it.

A business may win several new customers and see turnover increase substantially, but it may need to purchase additional stock, recruit employees, invest in equipment and increase marketing expenditure before those sales generate a meaningful return.

This creates a timing gap.

The business spends money today in anticipation of receiving additional income in the future. If that gap is underestimated, working capital can become stretched even when the business is profitable.

More sales can mean more working capital

Growth often increases the amount of money tied up in the day-to-day operation of a business.

Consider a company that previously invoiced €50,000 per month and then grows to €100,000. If customers take several weeks to pay, the amount owed to the business can increase significantly.

At the same time, suppliers and employees still need to be paid.

This means that doubling sales does not necessarily mean doubling available cash.

Before pursuing significant growth, SMEs should understand how increased turnover is likely to affect:

• Trade receivables

• Stock requirements

• Supplier payments

• Payroll

• VAT liabilities

• Operating expenses

• Short-term borrowing requirements

Working capital should be modelled alongside the expected increase in revenue.

Hiring creates a long-term commitment

Recruitment is another area where growth can create financial pressure.

A new employee represents considerably more than their annual salary. Employer PRSI, pension contributions, benefits, recruitment costs, training, equipment and other employment expenses can all increase the total cost.

There may also be a period before the employee reaches full productivity.

This makes recruitment an important financial decision.

Before hiring, businesses should consider how much additional gross profit the employee needs to generate to cover their total employment cost. This is particularly important where recruitment is being driven by anticipated growth rather than confirmed demand.

A business should have sufficient financial capacity to support the employee if growth takes longer than expected.

Larger premises can increase fixed costs

Expansion may also require additional premises.

Moving to a larger office, warehouse, workshop or retail location can increase rent, utilities, insurance, rates, maintenance and other overheads.

These costs can remain in place regardless of how much revenue the business generates.

This increases the break-even point.

Before committing to additional premises, calculate how much extra gross profit the business needs to generate each month to cover the additional fixed costs.

It is worth stress testing the decision against lower-than-expected sales. If revenue growth is 20% below the original forecast, can the business still comfortably carry the additional cost?

Growth can expose weaknesses in existing systems

A business that works well with ten employees and a manageable customer base may struggle when it becomes twice the size.

Processes that previously relied on informal communication may become inefficient. Financial reporting may no longer provide information quickly enough. Stock management can become more difficult and administrative errors can increase.

These problems have a financial cost.

Growth can therefore require investment in accounting systems, customer management systems, payroll processes, stock control and internal reporting.

Waiting until systems become overwhelmed can make the eventual transition more expensive.

Profitability can change as the business grows

Revenue growth can also alter the overall profitability of a business.

New customers may have different pricing requirements. Larger contracts may demand more support. Additional staff may increase overheads. New products may carry different margins.

This means businesses should avoid assuming that their existing profit margin will remain unchanged as turnover increases.

Track gross margin and operating margin regularly, ideally by product, service, customer or business division where the information is available.

A business can grow rapidly while its overall margin gradually deteriorates.

Tax and other liabilities can increase

Higher profits and increased activity can also result in larger tax and other financial obligations.

VAT liabilities, payroll-related payments and corporation tax should all be incorporated into financial forecasts.

The key issue is timing.

A business may generate additional profits during the year but still need to reserve cash for future liabilities. Spending all available cash on expansion can create problems when those obligations become due.

Tax planning and cash flow forecasting should therefore form part of the growth strategy.

Growth can increase customer concentration risk

A major new contract can transform a small business, but it can also increase dependency on a small number of customers.

If one customer becomes responsible for a substantial proportion of turnover, the business may become more vulnerable to changes in their purchasing decisions.

This can affect financial stability, particularly if the business has increased its costs and staffing levels specifically to service that customer.

Growth should therefore be assessed in terms of quality as well as quantity.

Build the financial plan before expanding

Successful growth requires more than a strong sales pipeline.

Before committing to expansion, SMEs should prepare realistic financial forecasts covering revenue, margins, employment costs, working capital, tax liabilities, capital expenditure and cash flow.

Scenario planning can also be valuable.

Ask what happens if sales are lower than expected, customers pay more slowly, costs increase or recruitment takes longer to produce the anticipated return.

The objective is not to discourage growth. It is to make sure the business can afford the journey.

Growth should strengthen the business

Growth is often celebrated as a sign that a business is succeeding. The more important question is whether the growth is improving the financial strength of the business.

A larger turnover, bigger team or expanded premises can create opportunities, but each comes with additional financial commitments.

Irish SMEs that understand those commitments in advance are better positioned to protect cash flow, maintain margins and make informed investment decisions.

The strongest growth is not necessarily the fastest. It is growth that the business has the financial capacity, systems and management structure to support.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post The Hidden Cost of Underestimating the Financial Impact of Business Growth appeared first on Burke Accountants.

Tax payments can create unexpected cash flow pressure

A business can be profitable throughout the year and still experience financial pressure when a significant tax payment becomes due.

This is because tax liabilities do not always arise at the same time as the cash required to meet them. A business may have generated strong sales, invested in stock, paid employees and funded expansion while accumulating a tax liability in the background.

When the payment deadline arrives, the business needs to have sufficient cash available.

This is why reviewing the tax payment schedule before year end is important. It gives the business an opportunity to understand what may be due and when, rather than discovering the requirement when cash is already committed elsewhere.

1. Identify upcoming tax liabilities

The first step is to establish a clear picture of the taxes the business may need to pay.

Depending on the structure and activities of the business, this could include corporation tax, VAT, PAYE and employer-related liabilities, as well as other taxes that may apply.

Business owners should review:

• Upcoming payment deadlines

• Estimated liabilities

• Previous payments

• Current year trading performance

• Outstanding Revenue liabilities

• Any expected changes in the level of tax payable

The objective is to create a realistic forward-looking picture.

A tax liability that appears manageable when considered on its own can become more difficult when several obligations fall within the same period.

2. Compare expected tax with available cash

Once potential liabilities have been identified, compare them with projected cash balances.

This is where tax planning connects directly with cash flow forecasting.

If the business expects a significant tax payment in the coming months, consider what else is likely to happen during the same period.

Are wages expected to increase? Is stock being purchased? Are major suppliers due to be paid? Is equipment being purchased? Are there planned dividends or capital investments?

A business should understand how these commitments interact.

Cash flow forecasting can help identify a potential shortfall early enough for the business to consider its options.

3. Check whether current forecasts are realistic

Tax planning depends on accurate financial information.

If profit forecasts are outdated, the expected tax liability may also be inaccurate.

This is particularly relevant for businesses that have experienced significant changes during the year. Revenue may have increased, margins may have changed or additional costs may have emerged.

Review the latest management accounts and compare actual performance with the original budget.

Questions worth considering include:

• Is turnover ahead of expectations?

• Have margins increased or fallen?

• Have overheads changed significantly?

• Has the business made substantial capital expenditure?

• Have there been changes to staffing levels?

• Are there unusual or one-off costs?

The more accurate the underlying financial information, the more useful the tax forecast will be.

4. Consider investments and capital expenditure

Year end tax planning can also be an appropriate time to review planned business investment.

If the business is considering purchasing equipment, vehicles, technology or other qualifying assets, it may be important to understand the potential tax treatment before making the investment.

Capital expenditure should never be undertaken solely to reduce a tax bill. Spending €10,000 to save a proportion of that amount in tax does not make financial sense unless the investment itself provides a genuine business benefit.

The better approach is to consider whether the investment is commercially justified and then understand the tax implications.

Timing can also matter, so businesses should obtain appropriate professional advice before making significant expenditure decisions.

5. Review previous tax payments and estimates

Another useful exercise is to compare previous tax payments with actual business performance.

If the business has consistently underestimated its liabilities, this may indicate that its forecasting process needs improvement.

Equally, if the business has regularly overestimated liabilities and maintained unnecessarily large cash reserves for tax payments, there may be an opportunity to improve cash management.

Historical information can provide useful insight into the relationship between profits, tax liabilities and cash requirements.

This can make future planning more accurate.

Do not overlook VAT and payroll liabilities

Corporation tax often receives the most attention when businesses discuss year-end tax planning, but other tax obligations can have an equally significant impact on cash flow.

VAT collected from customers is not business income in the traditional sense. A portion may ultimately need to be paid to Revenue.

Similarly, PAYE and employer-related liabilities arise as part of employing staff and need to be factored into cash flow planning.

Businesses should therefore avoid looking at tax payments in isolation.

The goal should be to understand the complete schedule of financial obligations over the coming months.

Build tax payments into your cash flow forecast

A useful approach is to include expected tax payments directly in the business’s rolling cash flow forecast.

This can help answer important questions before they become urgent.

Will there be enough cash available when the payment is due?

Will a planned investment create pressure at the same time?

Should spending plans be adjusted?

Does the business need to preserve more working capital?

Would revised forecasting provide a clearer picture of future obligations?

Having this information in advance gives business owners more time to make sensible decisions.

Make tax planning part of year-end planning

Tax should not be treated as an unexpected cost that appears after the financial year has finished.

For Irish SMEs, reviewing the expected tax position before year end can form an important part of wider financial planning. It can help business owners understand upcoming liabilities, protect working capital and avoid unnecessary surprises.

The strongest approach is to combine tax forecasting with management accounts, cash flow forecasting and business planning.

The aim is not simply to know how much tax may be payable. It is to understand when the cash will be required and how those payments fit into the wider financial position of the business.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post Why Irish SMEs Should Review Their Tax Payment Schedule Before Year End appeared first on Burke Accountants.

At Burke Accountants we believe that strong sales are only one part of building a financially resilient business. An SME can have an excellent relationship with a major customer or a highly successful product, but relying too heavily on one source of revenue can leave the business exposed when circumstances change. Understanding concentration risk and taking steps to reduce it can help protect long-term stability and growth.

When success creates a financial risk

Having a major customer is often a positive development. A large contract can provide predictable revenue, support employment and give a business the confidence to invest.

The risk arises when that customer becomes responsible for a disproportionate share of total income.

The same applies to revenue streams. A business may become heavily dependent on one product, service, market or sales channel because it has performed particularly well.

There is nothing inherently wrong with having a leading source of revenue. The concern is what would happen if that source suddenly weakened or disappeared.

A useful question for any SME owner is simple: If our largest customer or most important revenue stream disappeared tomorrow, how long could the business continue operating?

The answer can reveal a level of financial exposure that may otherwise go unnoticed.

The impact of losing a major customer

The immediate consequence of losing a major customer is reduced turnover. The wider impact can be considerably greater.

A business may have employees, premises, equipment and supplier commitments that were supported by the revenue generated from that customer. These costs may remain even after the income disappears.

There can also be a knock-on effect on cash flow.

If the business has invested in additional capacity to service the customer, it may suddenly find itself carrying costs that are no longer matched by revenue.

This is particularly important for SMEs with relatively high fixed costs. A significant reduction in sales can have a much greater impact on profitability than the percentage reduction in turnover might suggest.

Revenue concentration can affect business value

Customer concentration can also become relevant when an owner is considering selling the business or bringing in investment.

A potential buyer may question the sustainability of earnings if a large proportion of turnover comes from one customer.

The concern is straightforward. If the customer leaves after the transaction, the financial performance of the business could change significantly.

This does not mean that a business with a major customer cannot be attractive. Long-term contracts, strong relationships and high customer retention can provide reassurance. However, reducing dependence on individual customers can make the underlying business more resilient and potentially more attractive.

One product can create a similar problem

Customer concentration is not the only issue.

Imagine an SME where one product generates 70% of total sales. If a competitor launches a cheaper alternative, customer preferences change or the cost of producing that product increases significantly, the business could face considerable pressure.

The same principle applies to a particular market or sales channel.

For example, a business that relies heavily on one online marketplace, referral source or geographic market could find its revenue affected by changes outside its control.

The more concentrated the revenue base, the more important it becomes to understand the potential consequences of disruption.

Five ways to reduce concentration risk

1. Measure where your revenue actually comes from

Start with the numbers.

Review your revenue by customer, product, service, market and sales channel. You may discover that your business is more concentrated than you realised.

Look at both current figures and trends over time. A customer that represented 20% of revenue three years ago may now represent 40%.

2. Set realistic diversification targets

Diversification does not mean trying to acquire as many customers as possible.

A better approach is to identify areas where the business could gradually develop additional sources of sustainable revenue.

This might involve targeting a new customer segment, developing another service, entering a new geographic market or strengthening an underperforming sales channel.

The focus should remain on profitable revenue rather than turnover for its own sake.

3. Understand the profitability of major customers

A large customer is not automatically a highly profitable customer.

Review the revenue generated alongside the time, staffing, discounts, support and other costs associated with serving that customer.

A customer responsible for a significant percentage of turnover may contribute a much smaller percentage of profit.

This analysis can help determine whether your business is taking on excessive exposure without receiving an appropriate return.

4. Protect important relationships

Reducing concentration risk does not mean neglecting your largest customers.

Strong relationships remain valuable. Regular communication, service reviews and a clear understanding of customer needs can help improve retention.

Where appropriate, longer-term agreements can also provide greater visibility over future revenue, although the commercial and financial terms should be considered carefully.

5. Build financial resilience

Diversification takes time.

In the meantime, businesses should consider whether they have sufficient cash reserves, access to finance and cost flexibility to cope with a significant fall in revenue.

Scenario planning can be particularly useful.

What would happen if your largest customer reduced orders by 25%?

What if they stopped trading with you altogether?

What if your most profitable product experienced a significant decline in demand?

Working through these scenarios can highlight areas where action is needed.

Growth should not increase your exposure

There is a temptation to focus heavily on a successful customer or product because it is generating strong results.

Growth can then reinforce the concentration.

A business may hire more employees, purchase equipment or expand premises to support one major contract. If that contract later ends, the company can be left with a cost structure designed around revenue that no longer exists.

This is why growth should be assessed in terms of resilience as well as turnover.

A diversified revenue base may grow more slowly in some circumstances, but it can provide greater protection when individual customers, markets or products experience difficulties.

Look beyond turnover

Revenue concentration is ultimately a risk management issue.

Every SME should understand where its income comes from, how profitable those sources are and what the consequences would be if one of them changed significantly.

At Burke Accountants, we believe that sustainable growth involves building a business that can withstand change. Reviewing customer and revenue concentration regularly can help identify vulnerabilities while there is still time to address them.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post What Happens When Your Business Depends Too Heavily on One Customer or Revenue Stream? appeared first on Burke Accountants.

1. Calculate the true profit margin

A contract worth €200,000 may look attractive on paper, but revenue alone tells you very little about its financial value.

Before signing, calculate the expected gross profit and contribution margin. Include all costs associated with delivering the contract, including materials, labour, subcontractors, transport, software, insurance and any additional overheads.

It is also worth considering whether taking on the customer will require additional employees or equipment. These costs may not appear in the initial quotation but could materially reduce the eventual return.

Ask yourself:

• What will it cost to fulfil the contract?

• What gross margin will it generate?

• Are all associated costs included in the pricing?

• Could costs increase during the contract period?

• Is the margin sufficient to justify the resources involved?

A large contract with a weak margin can consume significant management time and working capital while contributing relatively little to the bottom line.

2. Examine the payment terms carefully

One of the most important financial considerations is when you will actually receive the money.

A contract may generate substantial revenue while leaving the business waiting months for payment. This can create a significant working capital requirement, particularly where the business must pay employees, suppliers and subcontractors before receiving payment from the customer.

For example, a business could agree to a €300,000 contract but need to spend €100,000 or more on delivery costs before receiving a substantial proportion of the customer payment.

Review the proposed:

• Payment terms

• Deposit requirements

• Invoice dates

• Credit periods

• Milestone payments

• Retention arrangements

• Late payment provisions

Consider whether the payment structure matches the cash requirements of delivering the work.

If the contract requires substantial expenditure upfront, negotiate payment milestones where appropriate.

3. Stress test the contract

Financial projections often assume that everything goes according to plan. Businesses should also consider what happens when it does not.

Before signing, run several scenarios.

What happens if costs increase by 10%? What if delivery takes longer than expected? What if the customer pays 30 days later than anticipated? What if additional staff are required? What if the project generates more work than originally expected?

These scenarios can reveal whether the contract remains financially viable under pressure.

This is particularly important for SMEs because a major customer can represent a significant proportion of annual revenue. A problem with one contract can therefore have a disproportionate effect on the wider business.

Stress testing does not mean expecting the worst. It means understanding how much financial room the business has if circumstances change.

4. Assess the impact on your existing customers

A major contract can create an opportunity cost.

If your business has limited staff, production capacity or management resources, taking on a large customer could affect your ability to serve existing customers.

This matters financially because existing customers may already provide strong margins and reliable payment patterns.

Consider whether the new contract could result in:

• Existing work being delayed

• Overtime costs increasing

• Additional recruitment

• Reduced customer service

• Lost opportunities elsewhere

• Greater reliance on subcontractors

• Management becoming focused on one customer

A contract should therefore be assessed in the context of the whole business, rather than as an isolated sales opportunity.

Growth is valuable when it strengthens the business. Growth that creates dependency or pushes existing profitable work aside deserves closer scrutiny.

5. Review the financial and contractual risks

Before signing, examine the financial consequences if something goes wrong.

Pay particular attention to clauses relating to termination, penalties, warranties, liability, service levels, price increases and changes in scope.

A contract may also impose obligations that are not obvious from the headline price.

For example, a fixed-price agreement can become difficult if costs rise during the contract period. A contract with extensive service requirements may require additional employees or technology. A termination clause could leave the business with costs that cannot easily be recovered.

It is also important to consider customer concentration.

If one contract would account for a large percentage of your turnover, ask what would happen if the customer reduced its order, delayed payment or terminated the relationship.

A strong customer relationship can be valuable, but excessive reliance on one customer creates financial exposure.

Look beyond the headline contract value

Major contracts deserve more analysis than simply asking, “How much revenue will this generate?”

The better questions are:

How much profit will it generate?

How much cash will we need to deliver it?

When will we receive payment?

What resources will it require?

What happens if costs or delivery times change?

What financial exposure are we accepting?

These questions can help identify problems before a contract is signed.

For Irish SMEs, financial visibility becomes particularly important as contracts become larger and operations become more complex. A business may have the capacity to win a contract without having the financial capacity to deliver it comfortably.

Taking time to assess the numbers before committing can help protect margins, preserve cash flow and ensure that growth actually strengthens the business.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post Top 5 Financial Checks to Make Before Signing a Major Customer Contract appeared first on Burke Accountants.

The real cost of employing someone

When an SME is considering hiring, it is common to start with the proposed salary. A €40,000 salary, for example, may appear manageable when compared with expected additional revenue. The difficulty is that the salary is only one part of the overall employment cost.

Employer PRSI, pension obligations, benefits, recruitment costs, training, equipment and other employment expenses can all increase the amount a business needs to generate from an employee before that person becomes financially worthwhile.

There can also be less visible costs. A new employee may require management time, additional software, workspace, insurance, equipment and administrative support. During their first months, productivity may also be lower while they learn the business and their role.

For an SME operating with relatively tight margins, these additional costs can have a meaningful impact on profitability.

Rising employment costs can affect margins quickly

A business does not necessarily need to make a loss for employment costs to become a problem.

Suppose an SME generates €1 million in annual revenue and has a 15% operating profit margin. That produces €150,000 in operating profit.

If employment costs increase by €30,000 without a corresponding increase in revenue, the operating profit falls to €120,000. The business is still profitable, but its margin has fallen from 15% to 12%.

That change can become significant when repeated across several employees.

This is why business owners should look at employment costs as a percentage of revenue and gross profit, rather than considering individual salaries in isolation.

Higher costs can expose weak pricing

One of the biggest questions for an SME facing rising employment costs is whether its current pricing remains sustainable.

If labour represents a significant proportion of the cost of delivering a product or service, increases in employment costs can quickly reduce gross margins.

This is particularly relevant for businesses that have allowed prices to remain unchanged for several years. A price that was profitable when wages and other employment costs were lower may no longer provide the same return.

Businesses should regularly review:

• Revenue generated per employee

• Gross profit per employee

• Labour cost as a percentage of revenue

• Labour cost as a percentage of gross profit

• Billable or productive hours

• Average revenue per working hour

• Overtime and additional staffing costs

These figures can provide a much clearer picture of whether the business is generating sufficient value from its workforce.

Productivity becomes increasingly important

Higher employment costs make productivity more important.

This does not necessarily mean asking employees to work longer hours. It means examining whether employees have the systems, processes, training and resources needed to perform effectively.

An employee spending several hours each week dealing with inefficient administration represents a real cost to the business.

For example, if five employees each lose two hours a week because of inefficient processes, that could represent hundreds of hours of lost productive capacity over a year.

Technology, automation and better processes may therefore have a financial value that is easy to overlook.

Before hiring additional staff, an SME should consider whether existing employees could become more productive through better systems or clearer processes.

Hiring should be based on financial capacity

Growth can create pressure to hire.

More customers may mean more work, and additional employees can be the right solution. The financial question is whether the business can comfortably absorb the cost before the expected return arrives.

A useful exercise is to calculate the break-even point for a proposed hire.

Consider the total annual cost of the employee, including salary and associated employment costs. Then estimate how much additional gross profit the employee needs to generate to cover that cost.

This provides a more realistic measure than asking whether the employee will generate enough revenue.

A salesperson generating €100,000 of additional sales may sound attractive, for example, but the business needs to consider the gross margin generated by those sales.

Revenue alone does not pay wages. Gross profit and cash flow do.

Cash flow matters as much as profitability

Employment costs are also different from many other business expenses because they are recurring commitments.

A business may be able to delay certain discretionary expenditure during a difficult period. Payroll obligations still need to be met.

This makes workforce planning particularly important for businesses with seasonal revenue.

An SME should consider whether it has sufficient working capital to maintain payroll during quieter periods. A profitable business can still experience financial pressure if cash inflows do not arrive at the same time as employment costs.

Regular cash flow forecasting can help identify potential pressure before it becomes a problem.

Consider the wider return on employment

Employment costs should not be viewed solely as an expense.

The right employee can increase sales, improve customer service, reduce errors, strengthen management capacity or allow an owner to focus on higher-value activities.

The important question is whether the overall financial return justifies the investment.

This means reviewing the performance of existing roles as well as proposed new hires. Some positions may generate revenue directly, while others provide essential operational support. Both can be valuable, but the business should understand how each contributes to its overall performance.

Review your employment costs before margins come under pressure

Irish SMEs cannot control every change affecting the cost of employment, but they can control how they respond.

Regular financial reviews can help business owners identify whether employment costs are increasing faster than revenue, whether pricing needs to change, whether productivity can improve and whether planned recruitment remains affordable.

The key is to act before rising costs have materially weakened profitability.

Employment decisions are among the most important financial decisions an SME makes. Looking beyond the headline salary and understanding the full cost of employment can help business owners make better decisions about recruitment, pricing, productivity and growth.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post How Rising Employment Costs Can Change the Profitability of an Irish SME appeared first on Burke Accountants.

At Burke Accountants we believe that strong credit control is essential for maintaining a healthy and predictable business. Late payments can appear to be an ordinary part of trading, but when overdue invoices become a pattern, they can put pressure on cash flow, increase administrative costs and restrict an SME’s ability to invest and grow.

Late payments are more than an inconvenience

For many Irish SMEs, securing new customers and generating sales are obvious priorities. Getting paid for those sales deserves the same attention.

A business can report healthy revenue and still experience significant financial pressure if customers consistently take too long to settle their invoices. The longer money remains outstanding, the longer the business is effectively financing its customers.

This can create a particularly difficult situation for growing businesses. More sales can mean more employees, stock, materials and operating costs, all of which may need to be paid before customers settle their invoices.

Credit control helps reduce this gap.

What is credit control?

Credit control is the process of managing customer accounts and ensuring invoices are paid within agreed terms.

It starts before a sale is made. Businesses should consider who they are offering credit to, what payment terms are appropriate and whether those terms are clearly communicated.

Once an invoice has been issued, effective credit control involves monitoring outstanding balances, following up overdue accounts and dealing with payment problems promptly.

The objective is not to create unnecessary tension with customers. It is to establish a consistent process that makes payment expectations clear.

The hidden financial cost of late payments

The obvious cost of late payment is the cash that remains tied up in outstanding invoices. There are several less visible costs too.

Employees may spend time chasing payments, sending reminders and reconciling customer accounts. Management may become involved when larger invoices remain unpaid. Businesses may also need additional borrowing or overdraft facilities to cover short-term cash requirements.

There can also be an opportunity cost.

Money tied up in unpaid invoices cannot easily be used to purchase equipment, recruit staff, invest in marketing or take advantage of new opportunities.

For a business with tight margins, even relatively small delays can have a meaningful impact.

Review your debtor days

One of the most useful measures for understanding credit control is debtor days.

Debtor days indicate approximately how long customers are taking to pay.

If your agreed payment terms are 30 days but your average debtor days are consistently closer to 50 or 60, there is a clear gap between the terms you have agreed and the reality of your cash collection.

Reviewing this figure regularly can help identify whether payment behaviour is improving or deteriorating.

It is also worth looking beyond the overall figure. A business may have an acceptable average debtor period while still having several individual customers with seriously overdue balances.

Five ways to strengthen credit control

1. Set clear payment terms

Customers should know when payment is expected before they commit to a purchase.

Payment terms should be clearly stated on quotations, contracts and invoices. Avoid relying on informal conversations where possible.

Clear terms give your business a stronger basis for following up when an invoice becomes overdue.

2. Invoice promptly

Delaying an invoice delays the opportunity to receive payment.

Where possible, issue invoices as soon as the relevant goods or services have been delivered. For businesses working on longer projects, consider whether staged or milestone invoicing is appropriate.

The timing of invoicing can have a direct impact on cash flow.

3. Monitor outstanding invoices

Do not wait until the end of the month to discover that several significant invoices are overdue.

Review your aged debtors regularly and identify which customers owe money, how much they owe and how long the balance has been outstanding.

Particular attention should be given to large balances and accounts that are becoming increasingly overdue.

4. Follow up consistently

Credit control works best when it is consistent.

A polite reminder before an invoice becomes due can help prevent it from being forgotten. Once an invoice is overdue, follow-up should take place according to a defined process.

Consistency also helps remove some of the discomfort business owners may feel about asking customers for payment.

5. Understand which customers create the greatest risk

Not every outstanding invoice represents the same level of risk.

A long-standing customer with a strong payment history may require a different approach from a new customer who has already missed several payment deadlines.

Consider customer concentration too. If a significant proportion of your outstanding debt is owed by one customer, the financial exposure could be considerable.

Should you offer credit to every customer?

This is worth challenging.

Many businesses assume that offering generous payment terms is necessary to win and retain customers. That may be true in some industries, but it is not universally the case.

Long payment terms can make a business less financially resilient. If customers are able to negotiate extended terms, the business may effectively become a source of finance for them.

Before agreeing to significant credit, consider the value of the customer, the likely margin, the cost of financing the delay and the potential consequences if payment is late.

The most valuable customer is not necessarily the one generating the highest turnover. Their payment behaviour matters too.

Protecting cash flow through better discipline

Good credit control is ultimately about financial discipline.

It does not mean chasing every customer aggressively. It means having clear terms, issuing invoices promptly, monitoring balances and responding when payments fall behind.

For Irish SMEs, this can provide greater visibility over available cash and reduce the risk of an unexpected funding gap.

At Burke Accountants, we believe that businesses should understand not only how much they are selling, but when that revenue is likely to become cash in the bank. Strong credit control can help bridge that gap and give business owners greater confidence when planning their next move.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post The Hidden Cost of Poor Credit Control: Protecting Your Business from Late Payments appeared first on Burke Accountants.

What Is a Business Emergency Fund?

A business emergency fund is a reserve of cash that is held specifically for unexpected financial pressures.

It is separate from the money needed for normal monthly operations and should not be treated as spare cash available for routine spending.

The purpose is to provide a financial buffer when circumstances change.

An emergency fund could help a business manage:

• Unexpected equipment repairs

• Sudden increases in operating costs

• Temporary reductions in sales

• Significant customer payment delays

• Unplanned tax liabilities

• Emergency professional or legal costs

• Essential technology or system failures

• Short-term disruption to trading

The appropriate level of reserves will vary considerably between businesses. A seasonal business may need a larger buffer than a business with highly predictable monthly income.

Why Cash Reserves Matter

A profitable business can still experience cash flow difficulties.

Customers may take longer to pay, stock may need to be purchased before sales are generated, or an unexpected expense may arise at precisely the wrong time.

Without sufficient reserves, the business may have to rely on an overdraft, credit card, additional borrowing or personal funds.

These options can be expensive and may not always be available when they are needed.

An emergency fund gives the business another option. It creates breathing space and can reduce the need to make rushed financial decisions during a difficult period.

How Much Should an SME Keep?

There is no universal figure that applies to every business.

A useful starting point is to understand the company’s essential monthly operating costs.

Consider the costs that would need to be paid even if revenue temporarily declined, such as:

• Wages

• Rent

• Utilities

• Insurance

• Finance repayments

• Essential software and systems

• Key supplier commitments

• Tax obligations

Once these costs are identified, consider how many months of essential expenditure the business would ideally be able to cover from available reserves.

The appropriate target depends on factors such as industry, revenue stability, customer concentration, seasonality and access to external finance.

The key is to establish a target based on the actual risk profile of the business rather than selecting an arbitrary amount.

Build the Fund Gradually

An emergency fund does not have to be created overnight.

For many SMEs, building a reserve gradually is more realistic.

A business could allocate a defined percentage of monthly cash generation towards its reserve until the target is reached.

This makes the process more manageable and creates a consistent financial discipline.

Strong trading periods can also provide an opportunity to strengthen reserves.

For example, rather than committing every additional euro of profit to increased overheads, the business could allocate part of its surplus towards improving its cash position.

Over time, this can create a meaningful financial buffer without requiring a significant one-off contribution.

Keep Emergency Cash Separate

An emergency fund should be easily identifiable.

Keeping it separate from the business’s normal operating account can make it easier to see how much is genuinely available for unexpected events.

It can also reduce the temptation to spend the reserve on routine expenditure.

The fund should remain accessible enough to respond to genuine emergencies, while the business should consider the financial implications of where reserves are held.

The priority should be accessibility, security and appropriate cash management rather than seeking high returns.

Do Not Confuse Reserves With Excess Cash

Building an emergency fund does not mean that every euro should remain sitting in a bank account indefinitely.

Once a business has established a suitable reserve, excess cash can potentially be considered for other purposes, such as investment, debt reduction, systems improvements or expansion.

The decision should depend on the company’s financial position and strategic priorities.

The important distinction is between cash that the business needs for resilience and cash that is genuinely available for other purposes.

A company that invests every available euro and leaves itself with little liquidity may become vulnerable when circumstances change.

Review Your Emergency Fund Regularly

Your ideal cash reserve can change as the business develops.

If you take on additional employees, sign a larger premises lease, increase borrowing or become more dependent on a small number of customers, your financial exposure may increase.

Likewise, a business with lower fixed costs or more predictable income may require a different level of reserve.

Review the emergency fund alongside your annual budget and financial forecasts.

Consider whether your target remains appropriate and whether the reserve would be sufficient under a realistic downside scenario.

Resilience Creates Better Decisions

The biggest benefit of an emergency fund may not be the cash itself. It is the flexibility that the cash provides.

When a business has adequate reserves, the owner may have more time to respond to a problem, negotiate with customers or suppliers, assess financing options and make decisions based on what is best for the business.

Without that buffer, decisions can become driven by immediate cash pressure.

For Irish SMEs, building an emergency fund can therefore be viewed as part of wider financial planning rather than simply holding money back.

In 2026, financial resilience remains an important consideration for businesses of all sizes. A strong cash reserve cannot prevent every problem, but it can give a business valuable time and flexibility when unexpected challenges arise.

The objective is not to accumulate cash without purpose. It is to build enough financial resilience to protect the business while continuing to invest in its future.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post The Financial Case for Building a Business Emergency Fund in 2026 appeared first on Burke Accountants.

Growth Can Change Your VAT Position

For many businesses, VAT is something that is dealt with when returns are prepared. As an SME grows, however, its VAT position can become considerably more complicated.

An increase in turnover may bring the business closer to or beyond relevant VAT registration thresholds. Changes to the products or services being sold can also affect the VAT treatment of transactions.

Growth may also mean dealing with new customers, suppliers or markets. If the business begins trading internationally, additional VAT considerations can arise.

This means a VAT review is particularly valuable before a significant expansion rather than after the changes have already taken place.

1. Check Whether Your Registration Position Is Still Appropriate

One of the first areas to review is whether the business’s VAT registration remains appropriate based on its current and expected level of activity.

Irish VAT registration thresholds depend on the nature of the business and the supplies it makes. Businesses should monitor turnover carefully rather than waiting until year end to determine whether registration requirements have been triggered.

If you are expecting a substantial increase in sales, consider how this could affect your VAT obligations.

A growth forecast should therefore look at more than revenue and profit. It should also consider whether the business’s VAT position could change as turnover increases.

2. Review the VAT Treatment of What You Sell

Growth often brings new products and services.

A business may introduce additional service packages, add new products, change its pricing structure or start offering different types of contracts to customers.

Each change should be considered from a VAT perspective.

Do not assume that a new product or service will automatically receive the same VAT treatment as existing sales. The applicable rate can depend on the nature of the goods or services and the circumstances of the transaction.

This is particularly important when a business is expanding its range quickly.

A VAT review can help identify whether different rates, exemptions or other rules need to be considered before new offerings are launched.

3. Understand the Cash Flow Impact

VAT collected from customers is not the same as business income available for spending.

This distinction becomes increasingly important as a business grows.

When sales increase, the amount of VAT collected can increase significantly. Businesses need to ensure that sufficient funds are available when VAT liabilities become due.

Rapid growth can create a cash flow trap. A business may receive strong sales revenue but also experience higher stock purchases, payroll costs and other expenses at the same time.

If VAT obligations are not incorporated into cash flow forecasts, the business may find itself under pressure despite apparently strong trading.

For growing SMEs, VAT should therefore be incorporated into regular cash flow planning.

4. Review Your VAT Records and Processes

The administrative side of VAT can become more demanding as a business grows.

More customers, suppliers and transactions mean more invoices and greater scope for errors.

Review whether your accounting systems can cope with increased transaction volumes and whether VAT is being recorded consistently.

Consider:

• Whether sales invoices contain the required information

• Whether VAT rates are being applied correctly

• Whether supplier invoices are being recorded accurately

• Whether VAT records reconcile with the accounting system

• Whether credit notes are being handled correctly

• Whether VAT returns are reviewed before submission

• Whether supporting documentation is retained appropriately

Good systems become particularly important when a business moves through a period of rapid expansion.

A process that worked effectively for a small business may become inefficient once transaction volumes increase.

5. Consider International Growth

Expansion beyond Ireland can introduce additional VAT considerations.

Businesses selling goods or services to customers in other EU Member States or outside the EU may need to consider different VAT rules depending on what they are selling, where the customer is located and how the transaction is structured.

Likewise, purchasing goods or services from overseas suppliers can create additional considerations.

International expansion should therefore trigger a review of VAT processes before the new trading arrangements begin.

This is an area where assumptions can be particularly risky. The VAT treatment can depend on details that may not be immediately obvious from the transaction itself.

Growth Is the Right Time to Review, Not After a Problem

A VAT review is often most useful before a business reaches its next stage of growth.

If turnover is increasing, new services are being introduced, staff numbers are rising or the business is entering new markets, the financial and administrative implications should be considered as part of the expansion plan.

This can also provide an opportunity to review whether existing accounting systems and processes are suitable for the business’s future size.

The objective is not to make VAT unnecessarily complicated. It is to make sure the business understands its obligations and has processes capable of managing them.

Build VAT Into Your Growth Plan

Successful growth requires more than generating additional sales.

An SME needs to understand how expansion affects cash flow, profitability, staffing, systems, financing and taxation. VAT forms part of that wider picture.

By reviewing your VAT position before a major growth phase, you can identify potential issues early, improve cash flow planning and make sure your accounting processes are ready for increased activity.

For Irish SMEs, this is particularly important when growth involves significant changes to turnover, products, customers or international trading.

A proactive review can help ensure that VAT remains a manageable part of the business rather than becoming an unexpected source of financial or administrative pressure.

If you would like to discuss your business, contact us by email liam@burke.ie or visit burke.ie.

Disclaimer

This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.

The post Why Irish SMEs Should Review Their VAT Position Before the Next Growth Phase appeared first on Burke Accountants.