The impact of Brexit on SMEs
2020 was an extremely challenging year for SMEs and the first few months of 2021 throw up the twin challenges of Brexit and the Covid19 pandemic.
As of 1 January 2021, businesses are getting to grips with the Trade and Corporation Agreement (TCA), the free trade agreement referred to colloquially as the trade deal. Along with other UK-EU agreements, this was announced just before Christmas 2020.
Importing goods to Great Britain from the EU has understandably changed following the end of the Brexit transition period. There are now customs and VAT considerations. This means there are significant and immediate changes for businesses trading with the EU and Northern Ireland.
Overcoming key challenges
Tariffs have been introduced on many imports and exports, having an impact on costs for businesses. Even with an agreed trade deal, there’s still significant changes to prepare for, such as additional checks and documentation on goods as required by both the UK and the EU.
The potential wide-ranging effects of Brexit on many businesses means it’s crucial that SMEs begin to take steps to prepare. Now is the time to take some practical steps to take to future-proof business, through the Brexit process and beyond.
We’ve put together points to consider below and an eBook with practical steps to help guide SMEs through key challenges: cash flow management, supplier and customer relationships and foreign exchange.
1. Supplier Relationships
Supplier relationships are key for all businesses and preparation is key to ensuring that your business is ready to deal with any issues before the product is shipped. Businesses should consult their Government’s guidance for SMEs post-Brexit and work out how VAT, tax and duty, and other regulatory changes will impact them and their supply chain. See links at the bottom of this page
For the past 40 years, we have benefitted from the ease of trade and free movement. Brexit is, in part a reverse for this, barriers being created rather than removed.
2. Customer Relationships
- Adjusted Prices
- Expected Delays
- Terms and Conditions
3. Foreign Exchange
The UK government is seeking new trade arrangements with countries outside of the EU/EEA. Many of these trade agreements are still in progress. Should they result in improved trade conditions for UK businesses, there may be first mover advantage in accessing these markets. One thing to consider when looking at new markets is to consider which currency you will invoice and be invoiced in.
Changes in the global political landscape have impacted currency markets significantly over the past year. For businesses that buy and sell overseas, currency fluctuations can affect input costs and eat into profit on a huge scale. It’s therefore important to keep an eye on currency and market fluctuations to protect against such impacts. Foreign Exchange providers can help by locking-in rates to protect against further currency movements.
Find out more about how we’re supporting our clients with our partners Clear Treasury.
4. Managing Cashflow
Download our Brexit eBook
We are excited to launch our very own Brexit eBook titled ‘Brexit and Beyond: A B2B’s guide on Brexit readiness for success’.
Our Brexit eBook acts as a useful checklist for you to consider when trading between the UK, Europe and beyond. Topics covered include: Supply Chain Relationships, Mitigating Foreign Exchange Risk, The Impact on Logistics and Managing Cash Flow.
The IEA represent the needs of it’s members in the development of policy, lobbying, intervention at government level and in the media. Brexit and the Diversification of Export Markets, Trade Compliance, Climate change & Sustainability and their impact on Irish exporters are core to its work.
Enterprise Ireland is the government organization responsible for the development and growth of Irish enterprises in world markets. It works in partnership with Irish enterprises to help them start, grow, innovate and win export sales in global markets. In this way, we support sustainable economic growth, regional development and secure employment.
GOV.UK provides supporting information for businesses and citizens to help them to manage the new rules that are in place as a result of Brexit.
The British Exporters Association (BExA) is an independent national trade association representing the interests of the export community and exists as a lobbying, promoting, educating and networking organisation for UK exporters and associated services providers.