2021 is already set to be a busy year full of change. The UK has now officially left the European Union, and the changes it is set to bring are already showing. Over the next few weeks, we are expected to see more changes, and as a business owner it is important to prepare. Uncertainty and confusion are the last things you want for the security of your business, and so we have compiled some tips to help you begin preparing for Brexit.
1. Trade
Leaving the European Union brings a number of new trade legislations we need to follow, to ensure trade is happening legally and safely. The EU is a no tariff, single market, with arrangements made between members – so, what happens now we have parted ways? Trade with the EU equates to nearly 45% of the UKs exports, so Brexit may lead to some unwanted extra costs that will affect your business cash flow.
Now we are officially out of the EU, you will need an EORI (Economic Operators Registration and Identification) number if you provide services between the UK and the EU. You can apply for your EOIR number here.
2. Invoice Finance
In times of uncertainty, such as we find ourselves in with Brexit, you are bound to see more and more late or irregular invoices coming in. So, how can invoice financing help manage your finances as we prepare for Brexit? Invoice finance is an asset-based financing facility, where businesses sell invoices to a third-party company for a percentage. This is an extremely useful tool for those whose business growth is bound to invoice payments, resulting in a slow payment hindering growth. Basically, invoice financing helps give you access to unpaid invoices and bridges the gap between working capital. By using these invoices as a means of security, the business will find it a lot harder to borrow beyond their existing capital and result in financially stable cash flow.
To find out more about invoice finance, get in contact with Funding Bay, and we can access you invoice finance from one of our lenders such as Nucleus or Ultimate Finance.
3. Supply Chain Finance
Another step towards preparing for Brexit may be Supply chain finance. It may make sense to take advantage of buyer supply chain finance (SCF) schemes to build a stockpile of cash to manage through the leaner times ahead of Brexit. SCF is a business loan that maximises working capital for businesses by managing payments to their supply chain. SCF facilities vary from lender to lender, and they can be either buyer or supplier led. Buyer led facilities typically involve the buyer incurring the costs and extending the creditor payment terms with the lender. Supplier led facilities involve the supplier incurring the cost of early discount. Supply Chain Financing provides cash to the business, as a way to pay suppliers.
This form of financing is an all-round winner for both buyer and supplier for many reasons. One of the main reasons is the fact that it helps to improve your business cash flow, allowing you to lengthen payment terms with a supplier, while also meaning they get paid early – this results in minimal risk across the whole supply chain, as the buyer increases working capital, while the supplier generates cash flow.
4. Look into CBILS
The government backed loan scheme, CBILS (Coronavirus Business Interruption Loan Scheme) has been set up to support SMEs who have financially struggled because of the pandemic. The scheme offers loans between £50,000 and £5 million, with the first-year charges for free. If your business has faced a tough year, chances are you do not want to risk more threats to your cash flow. The combination of COVID and Brexit is cause for an anxious period of uncertainty. The government backed CBILS loan can provide some financial stability, whilst also contributing to growth and expansion.
To find out more about financial stability and security, take a look at our blog on how small businesses can financially get ahead this year.
Funding Bay work alongside a team of the 44 accredited CBILS lenders. To get in touch and find out more visit Funding Bay.
As previously mentioned, this year brings with it a lot of uncertainty with both COVID-19 and Brexit to contend with. If you have any questions regarding your business’s future and finances, don’t hesitate to contact Funding Bay.
Check out our business loans calculator here.
