With the imminent deadline of 29th March approaching, the level of concerns raised by businesses regarding Brexit is reaching its peak. Unfortunately, the only certainty appears to be the uncertainty that Parliament is continuously propagating. As a result, the contingency plans of several leading businesses have recently been in the spotlight, with measures such as stockpiling and rerouting supply networks.
Are you prepared?
When preparing for trading outside of the EU, businesses know there is no one-size-fits-all solution. Thoroughly assessing their individual business model by evaluating areas such as supply chains, people, expansion plans and currency, will help owner managers to discover their Brexit weak spots and plan accordingly.
Although not everyone has been struggling to perform strongly since the Brexit referendum, from April 2019, all businesses alike, will be exposed to uncharted territory. Regardless of whether they are directly involved in EU importing or exporting activities, changes in various aspects, such as trade tariffs, could impact costs further down the supply chain, potentially causing harm to profit margins in the long run. Therefore, in order to determine their exact risk exposure, owner managers should look beyond their everyday business processes.
For those aware of the potential risks, Brexit could present some valuable opportunities. For example, spotting red flags will allow businesses to build in contingencies designed to keep costs down, and avoid delays by switching from EU to local suppliers.
Managing the risks
As no one can predict how exactly Brexit will affect us, the use of certain techniques can be helpful for businesses to reduce the effects of cost pressures. When regularly updated with new scenarios and developments, approaches which combine financial data from the business’ balance sheets, profit and loss and cash flow information, such as three-way forecasting can accurately assess the future cash position of the business.
The time is now
Despite the UK’s uncertain trading position, owner managers can no longer ignore the need to plan for life outside of the EU. With the deadline approaching, businesses which have not yet taken the necessary precautions would be wise to do so now.
For advice on planning for Brexit, download the firm’s new report entitled “A Brexit Barometer for UK Manufacturers”
or please contact John Cullen our insolvency partner at JCullen@menzies.co.uk or +44 (0)2920 447510