The UK left the EU on 31st January 2020, and there is now a transition period until the end of 2020 while the UK and EU negotiate withdrawal arrangements. During the transition period, current rules and regulations on things like trade, travel and business will continue to apply. However, new rules will take effect on 1st January 2021.
This article will take you through what your business needs to consider to be better equipped to deal with the upcoming changes.
Plan to be flexible
Leaving the EU is causing a level of uncertainty in the political and economic landscape which are forecasted to stay around for a while. Whilst it’s imperative to stay on top of updates, SMEs do have the advantage of being more adaptable than larger organisations, due to the nature of having a smaller workforce and smaller-scale operations.
Remain alert to guidance that’s available. The gov.uk website, trade associations and professional bodies can all provide essential advice to steer you in the right direction as you navigate changes in your business.
It’s a good idea to elect a senior member of your business to be responsible for monitoring EU Exit updates, making sure they have good access to professional advice. This way, your business can be well-informed of any important updates and changes. Responsive planning is key at this stage.
Reassure your customers
It’s not just business owners who are anticipating the UK leaving the EU; customers are also considering how it will impact them.
Your customers could be concerned that you may not be able to supply them in the same timely manner, or that your prices may be affected. Reassure your customers that you are planning ahead to mitigate any risks; this may even increase your customers’ confidence in your business.
Prepare for impacts on your people
There are likely to be changes to employment regulations for non-UK EU employees. If you have any in your business, they may need reassurance to keep them in post.
Keep them fully up-to-date, and review your recruitment plan for any potential risks brought about by leaving the EU. It’s also a good idea to consider how your business will attract the right talent in the post-EU labour market.
The UK Settlement Scheme for EU workers is now open and available to take registrations.
Assess the risks in your supply chain
Negotiations may result in changes to tariffs on goods entering the UK from the EU, the speed of goods coming through the boarder, VAT, and the administration of moving goods. There also may be changes in the way goods move in and out of Northern Ireland.
By understanding the possible changes in your supply chain, you will be able to assess any risks and start to form a plan. It could be a good idea to consider contingency suppliers and to review stock levels. Could you look to source locally?
Review your contracts
Leaving the EU will mean that UK business contracts may no longer be subject to common EU law. In addition, as the UK withdraws from the EU legal system, contracts that have been negotiated prior to the EU referendum may need reviewing.
Review the contracts you have in place, look to renegotiate any potential negative impacts, and engage with your legal advisor to discuss any adjustments that may need to be made for future contracts.
Review your current trade data
It is critical that your trade data is accurate to help with changes in border controls. Ensure that your business has an Economic Operator Registration and Identification (EORI) number if you clear goods through UK customs or move goods in or out of the UK.
It’s a good idea to prepare and classify your trade data to ensure compliance with likely regulations.
Build your systems to capture the right trade data
When moving goods across EU borders after we leave the EU, data on the country of origin and value of goods will be required if there is no agreement around free trade. As a result, customs clearance declarations will be more extensive and more information about the goods being moved will be required.
Take time to scope out what additional data may be needed and adapt your ERP (Enterprise Resource Planning) system around the process changes.
Investigate existing government schemes
Businesses that have traded outside the EU are used to using government backed schemes such as ‘Trusted Trader’. This is a scheme where logistics and freight forwarders have Authorised Economic Operator (AEO) status, allowing them priority at border controls, accelerated customs treatment and lower safety control compliance.
Look at current initiatives like the ‘Trusted Trader’ scheme and warehousing and how your business can benefit when moving goods in and out of the EU. Also, consider registration or using a partner that has AEO status.
Prepare for currency volatility
The months following the EU referendum saw significant currency volatility and Sterling (£) lost value. Historically, currency fluctuates when there is political and economic uncertainty.
When Sterling is lower in value against the Euro and Dollar, your exports may look more attractive to your overseas customers. Financial planning, when there are swings in currency values, can be difficult and making wrong estimates can be commercially damaging.
There are finance products and options that can limit your risk, such as currency spot rates and forward contracts. Having pre-agreed exchange rates may add extra cost to your financial plan, but it may help to reduce your risk. Engage with your accountant, bank and currency specialists to look at products and processes to lower your exposure to currency exchange fluctuations.
Engage with your key business partners
As well as your supply chain, there may be other third parties who play a crucial role in your business. Banks, insurers and systems providers can all have a critical impact on your business, especially where they are also adjusting to their own challenges.
This is a key time to share information, share best practice and invest in developments together. Scenario planning and deployment of plans as a network can help share any burden. When trading in a disrupted market, consider joint ventures and cooperative approaches; there is a chance to be stronger together.
It is always best to be prepared. Keep your business up-to-date on information provided by gov.uk and professional bodies, speak to professionals such as legal advisors, banks and insurers, review your current operations, look out for your non-UK EU employees, and always make a plan. It’s imperative to keep on top of any changes to make the EU Exit transition as smooth as possible for your business.
For more information, helpful links and sector-specific support, check out our Growth Hub page dedicated to EU Exit advice. Thanks to PriceWaterhouse and the Manchester Growth Hub for providing supporting information.