New Year’s Day is a special time to reflect and set out personal goals, but the day could have life-changing significance for many business directors this year, especially when we need to realistically be preparing for brexit.
That’s because 1 January will be the first day that UK businesses will be operating outside of the EU’s single market as we know it.
For the past 12 months, Britain has been aiming to negotiate a trade deal ahead of the 31 December deadline – which, at the time of writing, has not yet been agreed and the outcome hangs in the balance.
There is concerning evidence though that some businesses aren’t truly preparing for brexit, let alone tuned in to the importance of the change.
Worryingly, some recent research by Intuit QuickBooks has revealed that only 34 per cent of small businesses were aware that changes will take place at New Year, and 26 per cent of small businesses don’t think they need to prepare for the end of the Brexit transition period.
Deal or no deal, there are going to be various changes that businesses will need to adapt to, but a no deal outcome in particular could have stark consequences on the cash flow of those companies that heavily rely on trading with EU countries
If a deal cannot be struck, it’s likely that UK businesses exporting to EU countries will have to pay additional taxes – known as tariffs – in order to carry on doing this.
Likewise, UK firms that rely on imports from EU countries may need to brace themselves with supply issues in the long-term, because EU-based suppliers to the UK may not take too kindly to having to pay more tax, prompting them to eventually look for custom elsewhere, or they may even ask British businesses to absorb the cost.
Whilst this is speculative at this stage – and a deal may be struck to minimise the financial impact – it is important that businesses are prudent in planning for unexpected costs triggered by the end of the Brexit transition period. If businesses don’t adopt the view of preparing for brexit, and there aren’t high sums of cash reserves tucked away, the risk of insolvency is likely to increase.
The good news is, there is still time for company directors to seek professional advice from one of Cavalry’s experienced insolvency practitioners, who can provide friendly and helpful advice on spotting financial warning signs and mitigating against long-term losses.
Cavalry is an independent firm of insolvency practitioners. We offer prompt, practical and cost-effective advice based on the needs of our clients. Our teams are based in seven locations across the UK.
For friendly, accessible help with finding a workable solution, get in touch.