Cash Flow And Brexit – Are You Ready?

Oh no, not another Brexit blog. We know. By now a lot of business owners are sick of the whole Brexit mess. No matter which side you come down on, one thing we can all agree on is that this has gone on long enough now. The constant wavering has caused a huge amount of uncertainty across the country, and business owners are really starting to feel the effects. And now with the delays stacking up and the EU starting to put on the pressure, businesses are finding themselves in turmoil, holding back from hiring or investing, and instead hoarding cash just in case the worst should happen. All in all, not a great situation for the UK right now, but one we find ourselves in none the less. As business owners, it’s our job to try and understand what the impact of Brexit could be to our business, and to prepare for it as best we can. And while we don’t know a whole lot about what Brexit will look like, even now, we do have enough of an idea of the impact to start making some predictions, and taking some preventative action.

Some Predictions

Over the 3 years since the referendum was first held there have been a lot of people making predictions, particularly when it comes to the economy. At first, think tanks were optimistic, predicting some instability and a significant drop in growth forecast, but no recession and, in general, no major repercussions. However, as time has worn on and the situation has become worse, economists’ predictions are becoming even grimmer than ever. Now, the growth slow-down is all but guaranteed, with predictions of 1% or 0%, even if we avoid a no-deal Brexit, and GDPR will decline quickly over the course of 2020 – more so if we crash out of the EU. Consumer price inflation would skyrocket over 4%, the pound would crash, and the unemployment rate would be higher than ever. All in all, no good predictions there!

So What Does This Mean?

If we look at these predictions, it’s easy to get a little bit confused about what they would mean for your business. In our experience some industries are likely to be hit worse than others by problems, but that all businesses will feel the pressure to a certain extent. One of the first signs of this pressure will be the cash flow problems, which will start to appear for all sorts of reasons, including:

• Slower payment of invoices from clients
• Creditor pressure to pay invoices quicker
• Difficulties in raising finance to invest or otherwise fund the financial wellbeing of the business
• Cash flow and profit forecasts that are made irrelevant by quick changes in the market

So What Can We Do?

Unfortunately, there is very little certainty around the whole issue, so the answer to that one is a very firm ‘no idea’. No one has the power to predict the future, so any suggestions of what will happen to the market and to business in general over the next few weeks and months are mostly guesswork. This means any plans we as business owners make need to have flexibility built into their core, so that we are ready for any eventuality.

And let’s not forget that while Brexit has filled thousands of column inches for many years, it isn’t the only thing to do so. If you were to go back over the last 100+ years you would find similar fear-inducing events dominating the news, with uncertainty plaguing the headlines. So for now, the best we can suggest our customers do is this. Put the newspaper down, turn off the TV and carry on as usual.

At Debtcol, we work with business owners who are struggling with cash flow issues and help them get back on an even keel. We predict a lot of unrest around Brexit, and some of this may put a serious dent in your cash flow. So while you can do everything possible to get ready, you also need to be prepared to deal with any fall out, should it happen. If you would like some support or just advice on what you could be doing, just get in touch with the team today.