Boris Johnson was just appointed as the new UK Prime Minister. What’s going to happen to your business?
As Boris Johnson was elected leader of the Conservative Party and subsequently appointed as Prime Minister by the Queen, British businesses found themselves confronting, once again, the prospect of a no-deal, “hard” Brexit.
The United Kingdom is now expected to leave the EU, with or without a deal to remain part of the economic zone, in October — only a little more than 3 months away.
It was earlier reported that UK businesses had been stockpiling for months prior to the then-expected March deadline for Brexit. However, according to Dave Lewis, Chief Executive of Tesco PLC, “October, from a retail point of view, will be much more challenging than March was. We’ll be building up for the Christmas peak, so the capacity in the supply chain in the U.K. will be more challenged.”
About 20% of U.K. retail sales are generated in November and December, according to the British Retail Consortium. Big grocers start preparing for Christmas in January and ramp up as the holiday nears, the WSJ reported.
Many in England fear that there just won’t be any warehousing space left by October in the entire country. Others worry that there will be a shortage of fruit and vegetables. Contingency plans (that may include stockpiling, temporary shutdowns, and emergency response planning) have already been implemented by 90% of UK businesses. 27% of them are planning even more ahead of October than they had previously done for March.
English, as well as European, businesses also worry about the future of their payments, and their ability to collect late invoices. Some are not sure whether they’ll be able to sell or buy on credit.
Our research found that 15% of European businesses reportedly intend to adjust to new credit management practices in 2019 and 2020, citing concerns about Brexit and its impact on receivables. Some 54% of all unpaid invoices can be attributed to banking inefficiency and payment procedures complexities — obstacles to trade that are expected to increase in a Post-Brexit Europe. Brexit may result in reduced cash flow, unexpected expenses, and increased foreign exchange losses.
Contingency plans to avoid being negatively impacted by late payments include factoring or invoice insurance.
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