On 27th of August our Managing Partner and Foreign Direct Investment (FDI) specialist, Gerry Collins, participated as a panellist in an Enterprise Ireland event in Dublin, to share his insights on how International, UK and Irish businesses can prepare for life after Brexit.
With over half of the Fortune 500 companies having their European headquarters in the UK and Foreign Direct Investment being one of the most significant contributors to the UK economy, bringing in around £140 billion in capital over the last three years; no one can deny the critical need for international businesses to develop strategies that will help them navigate through the post-Brexit landscape.
As part of his contribution to the event, Gerry identified several key actions that companies looking to expand or fortify their position within the UK market need to implement to be Brexit-ready.
- Figure out Customs and Entry point actions
If you are a company that imports goods into the UK and you are looking to protect your market share, you need to understand customs. For instance, first of all you will need to have an Economic Operator Registration Identification (EORI) number or you may suffer increased costs and delays.
Another item to consider is the Transitional Simplified Procedure (TSP) concession, as HRMC has announced that companies looking to import and export goods, will be able to transport goods from the EU into the UK without having to make a full customs declaration at the border, and will be able to postpone paying any import duties. The caveat is that this simplified process is only for those companies with a legal presence in the UK. There certainly are pros and cons to establishing an entity in the UK, but in terms of navigating in the UK market after Brexit, it might be time to start weighing those options.
- Perform a Supply Chain Audit
Is your company working within the UK? If the answer is ‘yes’, you might need to carry out a Supply Chain Audit. This will help you establish a solid understanding of the necessary steps and precautions you will need to implement throughout your operations to ensure that Brexit does not impact in your flow of supplies, resources or goods. You need to understand the impact of dealing with longer lead times or potential hold-ups at ports and borders, and how they can affect your supply process.
- Adjust the Recruitment Process
Brexit does not only restrict movement of goods, but also movement of people. There has been a lot of ambiguity around the post-Brexit relationship between EU citizens and the UK. Although EU citizens living in the UK can apply for settlement to stay, status for those who are living outside the EU still needs planning.
An alternative that some companies might want to consider is hiring non-EU talent, in which case, they would need to understand the process to hiring international talent, as it may be less straightforward than they are used to. Whatever the implications on the hiring process may be, companies need to consider adjusting their recruitment process by taking timelines, costs, eligibility, and duration of visa application into consideration.
- Secure Funding
Any company planning on increasing or retaining their market share in the UK, might need to consider external funding at some point. They need to ascertain how potential investors or financial institutions will evaluate their company. They need to consider if their business will be seen as either Brexit-proof or Brexit-susceptible.
An inherent risk associated with Brexit is the decrease in value of the Pound sterling, which means that companies will need to strategise potential actions to minimise this effect in order to appease invertors’ doubts.
- Think about a pricing strategy
Brexit might also impact most businesses with additional costs for producing and delivering their goods or services. Defining a post-Brexit pricing strategy is another key action most companies should implement to prepare themselves adequately. If higher costs are a result of Brexit, they might want to consider either absorbing those costs in order to not produce a disadvantage for themselves in the market or pass the cost directly onto the consumer.
- Have Plans B through Z
Ultimately, companies with a post-Brexit plan have the upper hand and will secure their place in the market much quicker and with little to no complications. A sound post-Brexit plan allows them to be agile and act promptly regardless of any outcome. On the other hand, companies who don’t have a plan could face more challenges leading to a decrease in their market share.
Consider different Brexit outcomes and plan accordingly. Start by identifying the risks that your business would face in terms of customers, funding, supply procurement, operations, recruitment, etc. Then, come up with realistic measures to avoid or minimise those risks and finally construct several plans for all possible outcomes.
Facing Brexit might seem daunting, but here at Ecovis Wingrave Yeats we do not see it as a threat to companies, but rather as an opportunity for growth. With more than 30 years of experience and over 50 professionals in Accounting, Audit and Tax Compliance, and Business Advisory, we are ready to help companies entering the UK market, UK companies looking to maintain their market share and those UK entities looking to expand overseas.
Please get in touch and find out how we can help you.