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How to prepare your business for Brexit


By Jake Trask, FX Research Director at international payments company OFX

With Brexit nearly upon us, some small British businesses may feel paralysed with uncertainty with so many unknown variables still up in the air. But while it may seem like a good idea to wait and see how negotiations resolve, putting a plan in place now can really make a difference to how your business copes with life after Brexit, particularly when it comes to global trade.

Approximately 43 per cent of British trade is between the UK and EU, generating a total export revenue of £235 billion. And with 40 per cent of UK SMEs expecting to increase international sales this year, according to a recent OFX survey, it is clear the EU will remain an important trade partner for UK businesses, regardless of the outcome of Brexit.

With the likelihood of a Brexit deal still uncertain, preparing for the worst will give your business the best chance of sailing through the transition, no matter the outcome of negotiations. 

Changing trade rules

If Britain does crash out of the European Union in March 2019 without a deal, the negotiated two-year transition period will be lost, and the expectation is that trade will abruptly revert to World Trade Organisation (WTO) rules.

Currently, goods moving between the EU and UK don’t need to be checked at borders and have no tariffs imposed. Under WTO rules, goods would be subject to customs checks and tariffs, increasing costs and leading to slower processing times on the border.

The additional “red tape” is predicted to cost UK firms up to £27 billion in total. The actual impact of these tariffs will vary between industries. British farmers, for example, will face the highest charges – up to 40 per cent in some cases.

Ensuring that your current pricing structure is robust and thinking about how you can streamline your operations for greater efficiency and cost-effectiveness will help your business absorb at least some of the increased costs. 

Manage your supply chain

With 60 per cent of UK businesses whose suppliers are in the EU reporting that currency fluctuations have already made their supply chains more expensive, looking at which products you could source from within the UK could minimise any further disruption going forward.

Sourcing within the UK will help protect your bottom line, as payments and invoices would be paid in one currency, reducing the risk of uncertainty.

If sourcing locally is not an option, focus on strengthening your relationships with existing suppliers to help you negotiate strong trading terms in the future. You could also consider paying your suppliers in their local currency from a global currency account, which is a smart way to get around some volatility.

The short-term impact of a no-deal Brexit will likely be chaotic but planning for logistical difficulties ahead of time will help your business be as prepared as possible. 

Avoid currency uncertainty

Currency fluctuations have become the new norm so taking steps to protect against currency volatility is a good way to safeguard your business against the impacts of Brexit.

Currency experts can work with you to develop a specialised currency strategy, helping you ensure you’re bringing as much money home as possible. Setting up a forward contract lets you lock in favourable exchange rates for a future date, making it easier to plan your international payment costs in advance and budget accordingly. Hedging a portion of your overseas earnings in this way reduces the risk of uncertain exchange rates and could make a real difference for your business as negotiations continue.

Specialist payments providers are also the best way to find the most competitive foreign exchange rates and can offer advice on how to manage your international payments.

Know your target markets

Although the EU will remain an important trading partner for the UK, taking some time to focus on your pricing and marketing strategy in your home market could help boost sales and provide a buffer against potential short-term impacts on international sales.

Expanding your reach to markets outside of Europe, such as the US, China and Australia, could also provide an opportunity for growth, and could soften the blow of leaving the single market. Canada has also shown interest in UK exports, and a growing appetite for “Brand Britain” means there’s a great deal of opportunities for UK businesses to trade on their “Britishness” overseas.

The UK is home to the third largest ecommerce market in the world, and marketplaces like Amazon and China’s Alibaba are an easy way to reach a wealth of new international customers. Marketplaces offer customers a sense of security when buying online from cross-border suppliers and getting online is something you can take advantage of now while negotiations are still up in the air.

Despite the uncertainty surrounding Brexit, UK businesses remain upbeat about international trade, with 62 per cent saying they feel confident about doing business overseas in a recent survey. Trade with foreign markets will continue in one way or another, so get started now to give your business the best chance of sailing through Brexit, no matter how negotiations pan out.