Businesses may have learned to weather lockdown 2, but are they ready for Brexit, asks Complete Commercial Finance’s trade specialist Phil Ball
You will have seen the Government’s advertising campaign warning businesses, ‘Time is running out’ to get ready for Brexit.
From 1 January 2021, new rules will apply for trading overseas and the clock is certainly ticking for companies to ensure they are prepared.
International Trade Secretary and MP for South West Norfolk, Liz Truss signed a post-Brexit trade deal with Japan in October. Further deals are currently being negotiated with the United States, Australia, Canada and New Zealand. The aim is to secure agreements for 80 per cent of overseas trade deals by 2022.
The East of England has a good track record for the export of goods and services and, in 2018, recorded the second-highest regional growth of 15 per cent, year-on-year. Yet, in a recent survey by MHA Larking Gowen of 50 regional import and export businesses, only eight per cent said they were fully prepared for Brexit. Although a relatively small sample, this figure is likely to be representative of most companies, also still reeling from the trading performance impact of COVID-19, and yet to realise the full implications of Brexit in 2021 and beyond.
While the final details of any Brexit agreement are still to be decided, companies must take practical measures for trading internationally after we leave the EU. From January 1, 2021, any business trading with Europe will need an Economic Operators and Identification (EORI) number. This process typically takes a week, however, with current COVID-19 restrictions and the upcoming Christmas period, firms would be well-advised to make an early application a priority.
Any business importing goods will be subject to the new UK Global Tariff, which replaces the current common external tariff. It’s important to make checks to avoid fines or delayed charges as some exceptions and variations apply to the tariffs, depending on the items being brought into the country. This could impact business cashflow further down the line. Further adjustments may be necessary for cross-border supply chains or if your staff includes EU citizens.
COVID-19 and Brexit have served up a ‘double whammy’ of challenges for businesses. Support can be sought by recruiting a customs agent to organise an orderly Brexit transition, saving you precious time to concentrate on your business.
Alongside the practical issues, there are financial implications to Brexit too. If you are worried about your business’ supply chain, it may be tempting to stockpile in an effort to offset delays, but this approach could quickly erode cash reserves. With potentially challenging trading conditions ahead, the old adage, ‘Cash is king’ has never been more true.
Businesses should look beyond traditional overdraft and the current Bounce Back Loan facilities to ensure they are prepared financially and have a good working capital base. Over the years, I have worked closely with specialist lenders to help companies fund their international trade plans. Specialist lenders have an appetite to support businesses to export and import, and can act nimbly where traditional banks may be less agile. Documentary trade instruments such as a Letter of Credit or Performance Bonds can help to reduce the risks of trading internationally. The team at Complete Commercial Finance can help you understand what is required, as well as organise these facilities for local firms.
Over 35 years, I have seen first-hand how international trade can promote fresh opportunities and exponential growth. There are many new markets for UK businesses involving cross-border trade, however, Brexit has led to many firms delaying their overseas strategies. I believe 2021 will be a transformative year when many choose to move ahead with their plans. With interest rates so low, it is also an opportune time to invest in new equipment or premises that will help drive your business performance.
Given ever-changing markets, we may not be able to rely on the same opportunities post-Brexit. Take a look at your business and consider how it could be adapted to a global market. Open your eyes to new opportunities and let us work with you to secure the necessary funding required so your plans can move forward.
(CTA) Contact Complete Commercial Finance on 01553 611619 or visit ccf.finance