How to plan for impact of Brexit on your business
QWhat risks does Brexit pose for my business? Can you give me some advice on how to plan for the impact it may have in the future?
A. There is no doubt that the Brexit vote by the UK electorate has caught many by surprise and has caused turmoil in the markets since. There are all sorts of new risks emerging that businesses now need to address. What is clear is that it will be a long time before any real decisions are made as the full impact emerges.
While many Irish Business Owners may be feeling less confident, it is important to remember that we remain part of the EU and Ireland’s economy is strong, performing at well above the Eurozone average, our Foreign Direct Investment flows continue and we have a very highly skilled and talented workforce. We have improving health in our public finances, our unemployment is falling, consumer confidence is picking up and our indigenous economy is showing signs of growth. Lots of positives but now with a very significant headwind of Brexit.
Businesses need to plan for the short-term and long-term risks now presented by Brexit, recognising that much of this is planning for unknown variables. Of course, Brexit will impact different sectors in different ways, but there will be common threads. Some factors for Business Owners to consider are: - Establishing the short-term financial impact of sterling exposure
- Identify any contracts in sterling and the margin impact for different levels of sterling exchange movements. There may be exit clauses to be considered - Evaluate any forward contracts the business may have - Consider the financial impact of any potential trade barriers and /or tariffs - Look at additional administrative cost burdens - Consider regulatory changes, with consequences around regulatory capital and costs
- Consider supply chain and Logistics, including routes into market
- Financial Documents and terms of business may need additional disclosures
- Operational changes in business models, for example, location, branches and subsidiaries
- Customs and trade and new administration, for example, new customs requirements
- Taxation changes across corporation tax, VAT and duties as well as cash flow implications of upfront VAT payable at point of importation of goods from the UK
- Legal issues, for example, invalid contract clauses and Intellectual property and data privacy may also be areas impacted
Business systems may also have to change–or at least to be capable of coping with change. The biggest issue of all is uncertainty on every level. Here are a few practical planning tips your business can adopt:
- Form a Brexit management team dedicated to tracking the impact in all areas of the business - Appoint a Brexit Leader in your business to track all the plans - Do a threat assessment for your business and make a list of the possible exposures? - Evaluate the potential impacts - Start the scenario planning where the impact or the potential options make that viable
- Stay informed as the situation develops