N EWS E XTRA BREXIT - are you ready to get out?
Whether you voted in or out, to stay or to go, businesses need to prepare themselves for the world post-Brexit, says Adam Bernstein.
No matter where you stand on Brexit, we are at pre- sent involved in a ‘phoney war’ where nothing of any substance, apart from bluff and bluster, is happening. However, change is coming and merchants need to carry out what is effectively a corporate health check. Indeed, the November ad- ministration of Hewden, just weeks after the company announced that it had been “impacted by market uncer- tainty following the vote to leave the EU”, shows that the threat is real.
Currency issues
Whether you import or just sell what others distribute you cannot have escaped the drop in the value of sterling.
David Johnson, director at Halo Financial, says that for outside of the UK “there are steps that can be taken to ensure the worst of the currency problems are miti- gated or even removed. The which allows companies to buy their currencies against the pound at pre-deter- mined exchange rates for up to two years ahead.” There will be those who seek to manage risk but take advantage of any positive developments. For them the best path might be to use automated tools more commonly deployed by investors.
Budgets
according to Phil Foster, managing director of Love Energy Savings, is to rein in spending where it’s not necessary. He says: “Some of the biggest culprits are business insurance, card service providers and en- ergy bills.” He thinks that switching energy suppliers to one with lower tariffs or better terms, while also examining if savings can
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be made on insurance products, will bring large savings.
Ian Cass, managing direc- tor of the Forum of Private Business (FPB) goes further and suggests comparing bank charges while also looking at joining a buy- ing group - “no matter how good a negotiator you are you are limited by size.” Cass notes that many large companies will try to pass costs down to suppli- ers via delayed payments. and make sure you have a good relationship with your clients. “If you only ring them when payments are late you will be treated like all the other small suppliers, so treat your payment strat- egy like a sales or market- ing function. Ring them and form a relationship.”
Finance
Another area to consider are the terms and products ensuring that you get paid in a manner that suits you. For example, Cass suggests outside of the UK that they set up to pay and receive in both sterling and the overseas currency to take Cass says the UK now has a healthy alternative funding market and “the issue is education and small businesses taking the time to learn about what options are out there.”
Lastly, debt recovery should be revisited as once Late Payment Directive (for cross border payments). One solution is to seek out the services of a credit reference agency.
Protecting contracts Will laws and regulations remain unchanged, or will key European legislation fall away? Will we face new trade tariffs? Will we be able
to rely on labour from the EU? How will multi-jurisdic- tional groups be affected? As Ed Rimmell, partner in the Brexit planning team of Veale Wasbrough Vizards, points out, the grandly titled Great Repeal Bill “might give us some comfort as to the process, but change at the point of Brexit, and in the years following, is inevitable.”
He says: “Predicting the post Brexit landscape is a fool’s game. But prepar- ing for it as best you can contractual arrangements, and by anticipating change where possible, is a must. “Consider whether con- tracts - particularly long term contracts, give the nec- as the landscape changes. Companies should try to push for the right in new contracts to make amend- ments.”
He suggests being able to adjust terms or end the con- tract if the consequences of Brexit materially affect the cost or the viability of the arrangement; and writing in a mechanism to renegoti- ate key provisions where the contract is affected by changes to legislation or regulation associated with Brexit.
Some might be working on the basis that the gov- ernment has said that Brexit will not reduce the rights of employees that Europe has given us - paid holiday, ma- ternity pay, rest breaks and the maximum working week for example – and so as-
sume that as far as employ- ment is concerned, there’s nothing to worry about. The reality could be quite different according to Lee Ashwood, a senior associate in the employment depart- “Firstly, companies should ask themselves how much they rely upon employees who are from the European Economic Area. He says that if freedom of move- ment is restricted, those employees may no longer have the right to work in the UK and so would have to be dismissed. The risk is themselves without key members of staff. Prudent employers need to plan for this eventuality.
“Whilst thankfully not common, there have been re- ports that British employees have been verbally attacking their EEA colleagues since Brexit.” He notes that an Employment Tribunal would and, if the company has not done anything to prohibit such attacks, would most probably hold the company liable for the discriminatory attack made by its British employees.
He also suggests that employers should provide reassurance to immigrant employees. Employers may want to consider offering guidance or access to exter- nal advice on how to gain residency or citizenship and, perhaps, giving practical as- sistance to staff taking the English language and life in the UK tests.
- sider is, says Ashwood, at the root of every good business – communica- tion. “The absence of good communication can lead to rumours, lower morale and disengagement. Companies should consider inform- ing all employees that it is preparing for Brexit while discussing all of the pos- sible scenarios and issues that arise from it.”
January 2017 BMJ
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