Businesses are being advised to put a number of preparatory steps in place to deal with the financial and cashflow implications of Brexit.
Britain is scheduled to leave the EU at the end of this month when an eleven month transition period begins.
The Banking and Payments Federation has produced a useful checklist of essential items for businesses preparing for Brexit.
The Federation says there is evidence of significant gaps in preparedness that need to be closed.
“85% of businesses say they could be impacted but are not as prepared as they could be,” Marian McCarville, Head of Funding and Resolution with the BPFI said.
“Half of SMEs say they will be impacted by the need for customs declarations, but only 10% have taken action. 14% of SMEs say they could face currency issues but only 3% have put steps in place for dealing with that,” Ms McCarville said.
The Federation is encouraging businesses to talk to Revenue about getting customs declarations in place and talking to their financial provider.
“The first step, of course, is to get an EORI number from Revenue. If traders need comprehensive customs guarantees, they will have to get the bank to provide guarantees to Revenue in support of those facilities.”
The BPFI is reminding businesses that the comprehensive guarantee applies to businesses using the landbridge to get goods to the EU, as well as those trading directly with the UK.
Importing goods from the UK will attract import taxes which are payable before the release of goods having a potential knock-on impact on cashflow.
“It will result in increased costs to their business, depending on the shape of the end agreement. In terms of working capital, they need to ask themselves if they need a buffer or a standby facility to make sure they have adequate working capital,” Ms McCarville explained.
There are a number of Brexit loans schemes on offer that are backed by the state, but the take-up of these facilities has been quite slow.
The Federation is advising business to look at such schemes, but at the very least prepare some initial financial plans.
“These are easy things to address. They’re going to need guarantees regardless of the final shape of Brexit. They will need foreign exchange facilities and they may need additional working capital.
“Get those in place as quickly as possible. They don’t have to draw the facilities down, but bring them so far as to get the ball rolling and be ready to go when you need them. What they need to avoid is disruption to business,” she concluded.
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