In her first official statement on post-Brexit Britain last week, Theresa May confirmed that the UK will in fact leave the EU’s single market. This follows months of uncertainty about the UK’s role in the single market alongside a rejection of a ‘hard Brexit’.
The EU is the UK’s biggest investment and trade partner and indicative estimates from the government suggest that 8% of the UK’s SMBs export to the EU. That means nearly 10% of SMBs will be faced with potential extra taxes if they continue their same business model as new trade deals are negotiated. However, the road is far from bumpy for those who are trading within the UK. Aside from the initial fall in the pound, Brexit has not yet affected the majority of businesses, which is only continuing to prolong apprehension. So to help businesses remain confident and stable during uncertain times, here are some practical tips to help to weather the storm:
1. Use tech to keep your finances agile
With so much uncertainty on the horizon, getting your finances and cash flow in good shape is imperative to help your business to survive. Cloud accounting software enables you to invoice fast, handle payroll, reconcile with banks, record and manage expenses, all in one place. With your finances under control and a clear view of your financial picture, you will be in a much better position to stay afloat.
2. Manage your debtors in good time
For growing businesses in particular, late payments can pose a significant challenge. A recent Xero investigation into late payments revealed that small business owners are spending an average of 10% of their day – which equates to two days per month – chasing late payments. Know your customer and credit check them to make sure they are able to pay their bills. It’s also a good idea to agree payment terms before you supply to help keep cash flowing.
3. Invoice clearly and promptly
Incorrect invoicing can hold up payments. It’s important that any delays are not because of your own errors. Make sure you know where and who to send invoices to, and raise the invoice as soon as the job is complete. Cloud based software enables you to invoice from anywhere, meaning you can even invoice the job on the way home to help with cash flow.
4. Be pessimistic when forecasting
Most businesses have remained relatively unscathed by Brexit so far, but the process is only beginning. With this in mind, it’s important to consider the worst case scenario for your business and to plan accordingly. How will the change in trading taxes affect you once we leave the free market? How will your profits be affected by leaving the EU? Plan for the worst case, and anything less than this will be a bonus.
Once Article 50 is triggered we are in for a bumpy ride, so make sure you’re set up to survive a recession, should one develop. With the right safeguards in place, you will be able to grow your business, whatever the weather. There will be opportunities for you and your business, you need to be in a position to take advantage of these.
Paul Bulpitt, is head of accounting at Xero and co-founder of The Wow Company.