Running your business
Your customers may be checking their supply chains and some of you report back that you're also putting in the ground work to ensure continuity of service. As a starting point:
- Have you carried out a supply chain mapping exercise?
- Do you know where your materials and inputs come from?
- Do you know what tariffs might apply to these after Brexit? (check tariffs here.)
- Do you need to change any contracts with suppliers, to take account of Brexit?
Government's no-deal partnership pack
This month the Government has published a pack for businesses to prepare for changes at the border in the event of a no-deal Brexit. It includes what to expect on Day 1 of a no-deal Brexit, including how to get UK Economic Operator Registration and Identification. It's a helpful heads-up, but don't worry - if the Withdrawal Bill doesn't go through we'll send more specific information about what to do.
Many of you have been contacted by customers seeking information about your Brexit plans. Top of their list of worries might be that you won't be able to continue to fulfil contracts in a timely way, or that your charges will increase. Some of these contacts have been informal queries, others have been comprehensive surveys with specific questions about steps you've taken to prepare. In such uncertainty, what can you do to set your customers' minds at rest?
1. Remember that your customers are probably very worried about how Brexit will impact them - and how they will meet their obligations in turn. Chances are they're contacting all their suppliers (see item 3) so don't feel you've been singled out!
2. Open a dialogue and clarify that you're aware of the need to prepare for Brexit, whether we leave the EU with or without a deal. Reassure that you're intent on mitigating risks, remaining competitive and continuing the usual good service.
3. Outline steps you're planning to take, sharing only the information you're happy to. For example:
a. You could let them know that you're checking your supply chains and contracts to ensure continuity. If you have Authorised Economic Operator Status, or are planning to apply, this can be help set minds at rest that goods will be flowing as smoothly as possible.
b. Your customers will be concerned that if tariffs are imposed, those costs will have to be passed on. While of course you can't guarantee against price rises, let them know that you're checking WTO tariffs that might be applied on your imports, noting that paper and board incur a 0% tariff.
c. Let them know that you're in touch with your trade association and are taking guidance regarding preparation. This includes on tariffs, non-tariff barriers such as customs delays, staffing (if you have EU staff) and so on.
4. Pledge to keep them updated, and ask to be included in their plans - for example, are they planning to place orders earlier than usual in 2019, ahead of exit?
5. As in all things, face-to-face contact is often the most effective way to build or improve trust so it could be a good time for a catch-up over a cup of coffee!
Managing currency risk
Following the postponement of the Brexit vote, the pound fell sharply again - it slumped to a 20-month low against the US dollar and an 18-month low against the euro. In fact, Brexit is the key factor contributing to the weakness of sterling, and the continuing uncertainty means exchange rates are likely to remain volatile. With a weaker currency making imports more expensive, you've voiced concerns about rising costs - so we've put together some tips to consider.
a. Use dual invoicing
Dual invoicing, simply put, is getting two prices for anything purchased from abroad - one in sterling and one in the supplier's domestic currency (then paying the cheaper).
How it helps:
- Saves you money and reduces currency conversion costs
- Gives you more information to choose the best international payment option
- Strengthens your company's buying power with international suppliers
b. Set forward contracts
A forward contract is an agreement with the bank to exchange an agreed amount of foreign currency on a specified date in the future, with the exchange rate fixed at the time the contract is entered into.
The benefits are:
- You know your cashflow in sterling terms, making budgeting and forecasting easier.
- You can take advantage of attractive foreign exchange rates prevailing in the market for delivery at a date in the future
On the other hand, you can't benefit from a favourable move in the exchange rate which happens after the date on which you entered into the contract.
c. Set up a multi-currency account
A multi-currency account allows you to hold multiple currencies within a single account (and one account number/set of login details!). It's even more convenient than having a number of accounts in different currencies.
- Helps you avoid paying excess foreign exchange fees
- Allows you to manage your different currencies all in one place - you can get paid by a customer in one currency and then pay suppliers or employees out in another.
- Can hold up to 20 or 30 currencies (depending on your provider) and often add a new currency using online banking
Electronic permits for post-Brexit travel
The European Commission has this month confirmed that visas will not be required for UK citizens to travel to EU countries, on short term visits, after Brexit. However, you will need what's called a an ETIAS (European Travel Information and Authorisation System) document. You'll be able to apply online (much like the US ESTA system) and it's likely to cost €7 every three years.
Business Readiness Website
A new 'business readiness' website has been launched by the Government. Run by the Department for Business, it includes a short survey about your business and brings together the guidance relevant to you (most of which we've featured in previous Bulletins and is on our website).
- Brexit Bulletins Catch up with all our Brexit Bulletins so far.
- Importing and Exporting All the latest information on tariffs and non-tariff barriers – if you import or export you’ll find helpful resources here.
- Northern Ireland Based in Northern Ireland, find more information here.
- No deal scenario Leaving the EU without a deal is unlikely, but - just in case - here’s what will happen in print-relevant areas.
- Employment Do you have staff from the EU? Here’s what you - and they - need to know.
- Funding The Welsh Government has launched a £1m Brexit Resilience Fund, available to Welsh businesses, to help them adapt to the changes in a post-Brexit Welsh economy.
- Other resources Everyone’s talking about Brexit. We’ve pulled together some of the more interesting publications out there.
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