Brexporting: From price points to pallet delivery 

How might a Brexit affect your logistical operations and international trade? Here, we look at some considerations for SMEs.

How will a 'leave' vote affect international traders?

How will a 'leave' vote affect international traders?

Just when you think you have importing and exporting all figured out, along comes Brexit. Perhaps the greatest problem for small and medium-sized enterprises (SMEs) in trading relations with the EU is the sheer uncertainty over how a ‘leave’ vote will affect them. Questions abound over the consequences for VAT, import, and export duty payments, and experts at the highest levels have said bluntly that there is no way to know the consequences at this stage, but there are some aspects you might need to plan for. Would your days of paperwork-free pallet delivery from the UK to the EU be over? Quite possibly, but that isn’t to say all will be trouble and expense. As we read between the lines of various scenarios, we see a few considerations relevant to SMEs.

Sourcing and cost of your product

First and foremost, could your product continue to sell well at a higher price point? While there are many scenarios and precedents for structuring trade with EU countries (think Norway or Turkey, Switzerland or Canada), it is likely that some businesses will see new costs, whether in import tax for raw materials, VAT, or customs.

For example, if you import a finished product from the EU for resale in the UK, and Britain remains part of the European Economic Area (like Norway), not much would change except you would be responsible for paying the 20 per cent VAT at the UK entry point for the goods because the UK would no longer be part of the EU’s group VAT collection. Could your business absorb the rise in cost or could you pass that expense on to your customers and not suffer for it?

Mike Cherry, national chairman of the Federation of Small Businesses (FSB) and a Guardian expert panelist on Brexit and SMEs, while frustrated with the lack of information, also sees ‘a clear appetite to export further afield’ among the FSB’s constituents. The United States is the second-largest destination for British exports after the EU, so exporters might want to explore the potential for increase there or in other countries outside the EU.

Paying for legal or accounting advice

The upside here is that transitioning out of the EU is a process that would take years, so you’ll have time to seek the advice you need. The caution is that you shouldn’t wait until the last minute. If the vote is to leave, make sure you will eventually have funds to hire counsel or chartered accountants to help you sort out how to proceed. Depending on your business, the result will not necessarily make things more expensive or difficult; it may just be a matter of different paperwork or paying different fees, but you don’t want to be missing important facts when the time comes to make customs declarations or pay VAT.

Seeking financing

Again, there is an upside and a downside. UK SMEs have not received a lot of external financing under the programmes administered by the European Investment Bank, so they wouldn’t see a sudden drop in their financing options in the event of a ‘leave’ vote. The trouble is the uncertainty that could ensue in the financial markets, which commonly results in nervousness when it comes to lending, especially to households and small businesses. This could lead to a greater awareness of alternative finance options for them, so this is a potential upside for both borrowers and lenders in that growing sector.

Further reading on international trade

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