As the Irish Government move from contingency planning to implementation of plans for a no-deal Brexit all Irish SMEs need to implement their own Brexit plans. In ifac we’re very conscious that it’s a challenge for many SMEs to allocate time to an issue which, up to now, many believed would go away. Nobody can rely on this ‘hope’ anymore and it’s time for action according to David Leydon, our Head of Food and AgriBusiness.
There are a number of key actions which can still be taken to mitigate against the worst elements of Brexit but with only 71 days to go time is running out.
Today, make sure you have a Brexit team leader in place. This could be the CEO in a small organisation or the financial controller in a bigger organisation. It’s not this person’s job to do the work, but they are responsible for bringing together the cross-functional team to work out the Brexit to-do list. This list of actions that the team come up with must be monitored weekly from now on.
Some of the items that should be top of the to-do
Conducting a supply-chain audit and working out where you are vulnerable to transport delays, tariffs, or VAT at point of entry. This is critical – look at your inbound and outbound supply chain – where are there dependencies on the UK, either for supplies, sales or as a land bridge for transport of goods to Europe.
Bridging skill set challenges in your organisation, around tariffs in particular. Tariffs are complex and you need to understand how your products are affected and how tariff changes will impact on your competitiveness – see Tariff Checked on intertradeireland.com.
The Irish Exporters expect customs declarations, safety and security declarations, transit declarations to increase from the current 1.7 million declarations to around 50 million in a hard Brexit scenario. How are you positioned in this scenario? Engaging a good customs agent who is well connected internationally is critical.
Start work on obtaining Authorised Economic Operator (AEO) status. This will help Irish food businesses streamline their export processes in a post-Brexit environment. Companies that obtain AEO status or Trusted Trader status are regarded worldwide as reputable traders due to their high levels of safety, security and compliance. There are many benefits to this, among them: lower inspection costs, fewer delayed shipments and priority treatment if selected for checks. The first step is to register with Revenue and its Economic Operators’ Registration and Identification (EORI) system
Communicate intensely with your UK business partners to develop your plan for the end of March.
Review your currency exposure – if you deal in significant amounts of sterling, now is the time to review your hedging policy and hedging know-how
Review upcoming contracts in the UK and ask whether you should enter them and take on extra headcount, for example, given the risks that Brexit brings
Spend time with your financial controller or professional services partner modelling a range of financial scenarios – particularly the increased costs the business will incur from Brexit (eg. weakened sterling, transport costs, product development costs to lengthen shelf-life etc.).
In addition, make sure you are well capitalised going into 2019 and review the range of loans available from the Strategic Banking Corporation of Ireland (SBCI). Speak to your bank now if you are interested in the future growth scheme where loans up to 10 years will be available from March.
Applying for the Be Prepared grant if you are an Enterprise Ireland client to cover the cost of bringing in a consultant who can help deal with the implications of Brexit for your business
There will be some opportunities in certain sectors to displace some imports from the UK. For Irish food businesses there may be opportunities to displace some of the €3.7 billion worth of food we import annually while we import €3.2 billion worth of machinery and transport equipment.
Finally, it’s late in the day to start diversifying but, nonetheless, it is better to start this process now. As we all know, market diversification takes time and significant effort.
In summary, ensure someone is responsible for making sure the organisation is focused on Brexit mitigation actions; strengthen skill sets where you acknowledge gaps; and, finally, make sure you are well capitalised going into 2019 so you can react to changing circumstances.