Managing expectations is a key tool when dealing with uncertainty and the UK’s transition out of the EU is no different. Managing customer relationships will help businesses to reduce any potential delays in payment and/or changes to terms and conditions which might arise as a consequence of Brexit.
Regardless of whether we leave the EU with a deal or not, the chances are quite high that there will be increased costs for goods being imported to and exported from the UK. Tariffs are anticipated to apply to certain goods, and the treatment of VAT may change, at least in the short term. In addition, there may also be an increase in duty which will need to be incorporated into the costs of any goods sold. Reviewing these potential costs will help you to ascertain whether you need to increase your prices or whether, in fact, you are able to absorb them without the need to pass them on to the end user.
Using a cash flow forecast to understand the impact of any additional costs will help you to identify whether you need to update your pricing strategy. If you find that you will need to increase your prices, then agree a strategy to communicate that to customers.
The final exit from the EU is not anticipated to be free from challenges, with potential for issues within the supply chain which may impact upon your ability to meet your normal timeframe for delivery. Understand from your supply chain where they foresee there being difficulties and review these difficulties alongside your order book. If there are steps you can take to reduce those delays, then consider what those actions may look like and the associated cost implications. If the delays are going to be unavoidable, then you should consider updating your customers to reduce the risk of any surprises later on – remember that managing expectations will be important.
Review your existing contracts with your customers to make sure that you can still meet all of the agreed terms from your perspective. Where customer contracts have clauses that could cost your business (through no direct fault of your own) seek legal advice and ask your lawyer to review the terms. In particular, breaching contracts as a consequence of delays might lead to damages being imposed, especially if you are part of a supply chain, so taking advice will be key. In addition, seeking advice around the transfer of personal data would also be beneficial, as the implications for breaching the data protection regulations can be high.
Whilst there are undoubtedly going to be businesses that either retract from the UK (where they have a base outside of the UK) or decide to close down, there are always those who are able to find opportunities, especially when the economy is in a downturn. The changes to the rules following our exit from Europe may see an increase in competition in your sector, and being aware of any potential new entrants will help you keep ahead of the competition.
Your customers are a critical part of your business so you should keep them informed if any changes to the normal service are identified. Having said that, you should also look to protect your business and seeking advice from your professional advisors will be a worthwhile exercise.