It is just over a month since we left the EU and a lot has happened in the interim. Article 16 was invoked and then withdrawn in a dramatic few days of political wrangling over vaccine production and availability.
However away from politics and back to day-to-day activities and the predicted delays have occurred at borders.
There are many examples of exporters experiencing delays due to the increased paperwork; multiple documents for one item; compounded when shipments have multiple items; and the additional resource to complete it. These can take up valuable resources in a business or lead to additional resources brought in. It is needed to ensure all paperwork is completed correctly as any rejections on inspection just adds to delays.
Companies are having to shoulder these increased administrative tasks and costs whilst trying to maintain supply and not lose custom.
There are many additional checks for both exporters and exporters to make:
- Declaration of goods and do you need to appoint an intermediary to complete declarations on your behalf?
- Are there any new rules for your goods, such as licences, certificates, labelling and marketing standards?
- Are your logistic partners up to speed on the changes or if transporting yourself have you considered all the paperwork required? Especially when transporting multiple items in one container/trailer.
- Do you need to hold more stock to provide a contingency? Do you have the capacity to hold the additional stock?
- Can you source the stock from the UK instead and mitigate your supply risk?
- Can you meet increased orders from customer as they look to hold more stock and mitigate the supply risk;
- Can your customers start sourcing from elsewhere in the EU? How can you combat this?
- Have you fully costed the implications of VAT, customs, import costs and other administrative impacts associated with EU Transition?
This is not an exhaustive list, but the common theme is they all have an impact on cashflow.
At some point if it doesn’t improve or the costs can be passed on, businesses will need to decide if they continue to supply into the EU or find new markets for their products. Have you explored opportunities in new markets or is now the time to explore product or service diversification?
Finding new markets isn’t a quick fix and needs research, planning and more research, including feet on the ground, which is not that easy at the moment.
Department of International Trade (DIT) have a wealth of support to explore new overseas markets and some of the larger global banks have teams in place to assist businesses with exporting and can introduce them to local experts and potential customers.
This doesn’t mitigate the impact of the issues being faced now.
The cashflow impact of the addition administration and resources, coupled with the changes in supply chain, can be sizeable for some small businesses and not all will have the appropriate facilities in place to meet these. Will existing facilities provide the flexibility needed? Has the impact on the trade cycle and where the funding gaps are been considered?
Not easy when you are in the thick of it, but there are plenty of finance options available to help businesses, to manage these changes, and provide the best platform for stability and growth.
Please contact us for further information and advice on how to manage your cashflows.
By Diane Davies
Senior Commercial Manager