With less than a month to go until the end of the Brexit transition period and the UK and EU still in the midst of talks to reach a deal, small business owners must ensure that they are doing all they can to minimise the impact of Brexit on their businesses. To help, listed below are five areas that business owners should focus their preparations on ahead of 1 January.
1. Cash flow and financing
Now is a really important time for business owners to consider whether they have enough cash within the business in order to safeguard against potential delays from overseas payments. Moreover, we could see a raft of new tariffs, price increases and currency fluctuations which may have a knock-on effect on businesses liquidity. If your business regularly trades with EU member states and is likely to be affected by delays and rising costs then it’s worth making an appointment with your accountant to discuss your options.
2. Legal documentation and contracting
With trade agreements and new tariffs being introduced you should take the time to review all of your current contracts whether that be with suppliers and distributors or even your customers. All contracts have the potential to contain clauses that before now have relied on the legal framework agreed by the EU. This means that some contracts may need to be renegotiated based on the outcome of the Brexit talks and others may become void altogether. However, this does provide businesses with an opportunity to revisit the fundamental terms of their trading relationship and negotiate a more equal agreement than they already have in place.
3. Understand stock levels
While in no way are we encouraging businesses to stockpile their supplies, you should make sure that you are holding enough of your key materials to be able to meet customer demand should there be teething problems in the first few weeks after the transition period ends. Where possible speak to your suppliers about the steps they are taking to ensure that deliveries still arrive on time. You could also research local suppliers from inside the UK that may find it easier to transport goods to you in the interim.
4. Consider trade credit insurance
Traditionally used by businesses to protect against if a customer or supplier fails to pay of fulfil a contract due to insolvency, trade credit insurance is something for businesses to consider ahead of what could be an uncertain few months. With businesses across the globe having to contend with Covid-19 and the possibility of a no-deal Brexit we could see more insolvencies occur. For business owners concerned about if their supply lines may be affected, taking out trade credit insurance will protect businesses in the immediate term.
5. Look for opportunities
Alongside the potential challenges up ahead, businesses should also think about the opportunities that Brexit will present whether that is access to new markets or finding more cost-effective suppliers within the UK. Particularly in response to Covid-19 when many businesses have adapted their processes to reach new customer bases, Brexit is another chance to re-evaluate your current business model and see how your business can evolve to embrace new ways of working or even establish new product lines. For more details on spotting opportunities for your business post-Brexit visit our latest article.
For the most up to date information on the Brexit transition and government announcements consult the Gov.uk/transition website, here you can find out everything from importing and exporting to Europe as well as living and working in the UK if you’re an EU citizen.