Ireland’s services sector continued to perform strongly in July, with the latest figures pointing to growing demand, increased employment and improving business confidence. For companies operating in the sector, however, stronger activity brings more than an opportunity to increase sales. It also creates additional financial and administrative responsibilities.

The AIB S&P Global Services Purchasing Managers’ Index (PMI) rose from 54.2 in June to 55.2 in July, comfortably above the 50 mark that separates growth from contraction. The Irish services sector also outperformed the flash PMI figures for the euro zone, Britain and the US.

Technology, Media & Telecoms remained the strongest-performing area, with a PMI of 61.4, representing its strongest expansion for almost three years. Business Services also performed well at 55.4, while Financial Services recorded more moderate growth at 52.6. Transport, Tourism & Leisure was the weakest-performing sector, recording 49.4.

For growing businesses, these figures are encouraging, but increased turnover does not necessarily mean increased profitability. Higher sales can bring greater staffing costs, supplier bills, tax liabilities and working capital requirements. Keeping accurate and up-to-date financial records becomes increasingly important as a business becomes more active.

Keeping on Top of the Numbers

The easing of inflationary pressure is another positive development. Input price inflation slowed for the third consecutive month, returning to a level broadly in line with the survey’s longer-term trend.

That does not mean costs have stopped rising, however, and businesses still need to understand exactly where their money is going. Transport, Tourism & Leisure recorded the largest increase in input prices, while Financial Services experienced the lowest rate of input price inflation in more than five years.

Good bookkeeping can make a significant difference in this environment. Regularly reconciled accounts, accurate records of income and expenditure, timely VAT and payroll returns, and clear management accounts can help business owners see whether increased activity is actually translating into improved margins.

Growth can also bring additional regulatory requirements. Taking on employees, expanding premises, investing in equipment or increasing turnover can all affect a company’s tax, payroll, reporting and compliance obligations. Keeping these matters under control is much easier when the underlying financial information is accurate and available when it is needed.

The improvement in business sentiment is certainly welcome. With business wins, new investment and expectations of wider economic growth supporting confidence, many companies may now be considering their next stage of expansion. Before making those decisions, it pays to understand the numbers behind the growth.

Our team can help businesses keep their bookkeeping, accounts, tax and regulatory obligations under control, while providing the financial information and advice needed to make confident decisions as the business grows. Contact us if you need that help.