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Top tips to ensure your business is prepared for Brexit

2nd September 2019

Top tips to ensure your business is prepared for Brexit

Prudent West Midlands’ companies need to start to prepare now for the October 31st revised Brexit deadline.

Adam Johnson, of Black Country law firm Higgs & Sons, said that if they don’t, they could be exposed to the risks associated with a sudden ejection from the single market and customs union.

“In particular, businesses with lengthy and complex supply chains are likely to face disruption,” said Adam. “While supply chains of any kind are risky (they’re outside your organisation and therefore beyond your control), companies with ‘just in time’ supply chains are particularly exposed to the potential adverse effects of a no-deal Brexit.”

Here Adam takes a look at five key risks that many businesses will be exposed to in the event of a no-deal Brexit and suggests five steps they can take in order to mitigate those risks.

 

FIVE KEY RISKS POSED TO SUPPLY CHAINS BY A NO DEAL BREXIT

  1. Supply chains involving the import of goods from the EU will be subject to increased costs at border crossings.
  2. Delays in bringing goods (and people) across EU border crossings are inevitable.  It is anticipated that delays immediately after the date of Brexit will be substantial.
  3. Not all suppliers will be able to adjust to the drastic change to the trading environment in which they find themselves.  Insolvencies of certain companies in your supply chain are a distinct possibility.
  4. Businesses will be subject to different import or export controls which they will need swiftly to familiarise themselves with.
  5. Exchange rate volatility is expected to be high in the run up to (and following Brexit). If (as is expected) sterling falls, this may be positive for exporters, but lead to increased costs for importers.

 

TOP 5 TIPS TO PREPARE YOUR BUSINESS FOR A NO DEAL BREXIT

  1. Ensure that you have signed copies of contracts with all suppliers in your supply chain. It may seem to be an obvious point but having a signed document to hand in the event that a dispute arises is essential. Make sure your contracts are up to date so there is no scope for argument as to which terms apply to your supplier relationships.
  2. Consider seeking to negotiate amendments to your supplier contracts to protect your business from some of the more extreme risks of Brexit. The ability to negotiate such amendments will depend upon the status of your relationship with that supplier. However, it may be possible to seek a right to terminate the agreement if, for example, currency fluctuations are sufficiently drastic to make the agreement uneconomical for either party.  Similarly, if it becomes logistically impossible for your supplier to deliver goods within the timescales required for your supply chain to be effective, it may be sensible to agree a termination trigger now.
  3. Check whether your supplier contracts stipulate who is to be responsible for delivery failures, defective goods and/or product recalls. It is far better to understand your business’s legal position prior to the likely supply chain disruption emerging.
  4. If your business exports to the EU, consider whether it is necessary to amend your customer-facing terms and conditions.  You may have an opportunity to insulate your business from the risks of delays and currency fluctuations by making such amendments now.
  5. Undertake an IP audit to ensure that your company’s intellectual property rights will be sufficiently protected post-Brexit. Certain EU-wide intellectual property rights (such as EU Trade Marks, Registered Community Designs and Unregistered Community Designs) may have a different effect post-Brexit. Moreover, IP Licences referring to the ‘EU’ may not cover the UK once Brexit has occurred.

Adam added: “Companies are well-advised to take steps now to be prepared for the effects of a no-deal Brexit.  Those businesses that take such steps will be better placed to capitalise upon any opportunities presented by the revised trading environment in which the UK will find itself from November onwards.”

For further information or advice, contact Sarah Webb or Adam Johnson on 0345 111 5050.

 

 

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