Ed Rimmer, group managing director of independent finance facility provider 1pm plc, says it’s vital that SMEs consider all their finance options to minimise the negative effects of Brexit

This article is the view of the author and not necessarily of Ready for Brexit

As the nation eagerly awaits the final outcome of the Brexit deal negotiations, so do thousands of businesses across the country. Forward-thinking CEOs and senior management teams will be taking steps to formulate contingency plans for their cash flow cycle, preparing for the worst-case scenarios ahead of any potential bumps in the road – and if you haven’t done this yet, now is the time to start.

SMEs, in particular, especially those that are more susceptible to change, should be considering alternative finance options and safety nets so that they can continue operating as usual in the initial stages of the breakaway. In a no-deal scenario, for example, the processes of importing and exporting could be delayed, at least in the short-term, and the time it takes for payments to be processed and received will most likely increase, leaving many businesses short of funds.

Another important factor for SMEs to consider is the potential for a dip in business activity, which could be significant during the initial adjustment period. There’s also uncertainty as to whether we’ll see the same levels of business in our current economy – what if import prices are higher, delivery times longer or overhead costs to your business are permanently increased?

In addition to this, there’s no doubt the foreign exchange markets could fluctuate in the run-up to and following negotiations, therefore, companies that deal with different currencies should ensure they have a sufficient amount of liquid cash in the currencies they trade in, in order to avoid being affected by any volatile foreign exchange.

It’s not necessarily a time to panic, but the reality is that there are only five months to get ready. Take a realistic look at the impact to your business, such as what would happen if you were unable to import new materials for six months – and work out a contingency. But, most importantly, now is the time to ensure your business has the working capital and cash flow funding to see it through this period of change, whatever that change may look like.

Alternative finance facilities are relatively quick ways to improve cash flow and increase liquidity in a business and should be considered. It’s a case of taking a realistic look at the potential impact on your business and protecting against it. It’s vital to ensure that a business has the working capital and cash flow to continue operating during the period of change, however drastic the change may be.

While the outcome of the negotiations is unknown and out of business owners’ control, make sure you’re in a position to ensure the best possible outcome for yourself and the future of your company. Regardless of a business’s direct or indirect exposure to EU trade, it is guaranteed that everyone will be affected in one way or another.