With the UK’s exit from the EU less than 5 months away, businesses have only a limited time to stabilise their finances to ensure that they’ll be ready to deal with the consequences, such as they may be. For SMEs, in particular, the change will offer a number of unique challenges as well as opportunities for innovation and growth.
Because the government has not achieved any clear agreements with the EU so far, it’s still unclear how businesses will interact with the EU and other foreign trading partners. Moreover, even businesses who only operate domestically don’t yet know to what extent Brexit will affect foreign-owned competitors. This ongoing uncertainty will favour those businesses who are best prepared to rapidly adapt to the new environment when a final agreement is reached. While large corporations will likely be slowed by their their own complex bureaucratic systems to implement changes, small, agile businesses will be limited by their ability to finance any necessary restructuring.
Without knowing what the UK’s post-Brexit regulatory and general business environment will look like, the most important thing that SMEs can do preemptively is to prepare for rapid change by securing stable financing options. To come out on top when the dust has settled, they need to ensure that they can reach compliance with new rules faster than their competitors.
Adaptability is key
The uncertainties that businesses face with regard to Brexit are manifold. As of today, businesses still can’t predict whether they’ll be able to retain their EU employees, whether they’ll be able to competitively export goods to the EU or other countries, how currency values might be affected, or what short-term effects any of these will have on foreign and domestic investment. This unpredictability is ultimately both the biggest threat, and the most important opportunity for UK businesses.
Well-prepared and financially stable SMEs are likely to be able to adapt to the new environment more quickly than their larger competitors, and return to something approaching business as usual. This may enable them to reach into new markets while erstwhile competitors are still catching up. Far more importantly, though, it will allow them to begin hiring skilled foreign workers, to build new business relationships, and to attract investors who otherwise might not take notice of them.
Keeping finances stable in an unstable situation
Since businesses don’t know what rules they’ll be operating under in 5 months, Brexit will likely disrupt cash flow to some extent for UK businesses who operate internationally in any capacity. Not only that, they’ll also need to pay to make changes that address those new rules and their associated costs. To maintain their financial stability, SMEs will need the proper financing tools to consolidate working capital, and to quickly raise additional funds to address short term cash flow issues as they arise.
Supply chain finance and trade finance
Using supply chain finance, a business can pay suppliers out of a third party fund, while deferring their own payments by up to 90 days. This makes it possible for businesses to keep operations running as normal even when incoming payments are delayed or disrupted in some way. Additionally, it can be used to free up funds that would otherwise have been used to pay suppliers for other uses, such as restructuring costs.
Beyond internal issues, businesses will be able to use supply chain finance and trade finance to ensure that both foreign and local UK suppliers continue to be paid on time. This will aid in keeping businesses’ supply chains stable, and allow for a much faster recovery from any operational disruptions that the transition may cause.
Unsecured business loans
Once businesses are fully aware of what changes will need to be made, they’ll need to act as quickly as possible to adapt. Applying for business loans and waiting weeks or months for an approval won’t be a viable option for many small businesses, who can’t afford to simply sit on their hands, and certainly can’t risk waiting only to receive a rejection. They need funds immediately. For this situation, unsecured business loans are an ideal solution. A decision on an application for an unsecured loan with Fifo Capital and similar financial institutions isn’t based on a business’ credit profile, but rather a direct examination of the business itself by the lender. This allows applications to be processed in just one or two days, instead of several weeks or longer.
These tools, and other similar financing solutions, are designed to address specific kinds of financial situations. Expert financial representatives can even work with business owners to mix and match solutions to better manage specific problems. This allows businesses to get access to the funds they need as soon as they need them, and to keep their operations running smoothly, even through potentially serious disruptions.