How can finance directors prepare for Brexit?
Nic Redfern examines how finance leaders can steel their organisations against the changing business backdrop created by the UK’s exit from the EU.
As Brexit looms ever closer, the political climate is still rife with uncertainty. With so many unanswered questions still lingering in the air, businesses and consumers alike watch on as Prime Minister Boris Johnson attempts to make progress.
Perhaps one of the most pressing concerns for businesses is how the forthcoming upheaval will impact the UK, EU and world economies. Indeed, the answer to that question will determine whether Brexit is deemed to be a success or failure.
As ever, in the face of uncertain times, finance directors need to be armed with the right information to steel their organisations against the changing business landscape, and there are several areas that will require particularly intimate management.
Understand the risks
Firstly, an in-depth understanding of the risks posed by Brexit is vital. Changes to customs are, of course, inevitable – as are new legal and administrative barriers. But how will these adjustments affect your financing? Will new duties disrupt your supply chains or sales?
It’s likely, so make sure you have all the details fully ironed out. Research the different commodity codes on your imports and exports and see how their respective rates will change in each scenario.
Invest in new technologies
It may seem counterintuitive to invest in times of uncertainty but this may be the time to focus on efficiency and small investments can deliver potentially massive time savings. Supporting your workforce by investing in new technology will be an invaluable addition to your business.
Brexit will inevitably slow processes down due to new rules and regulations, but you can speed it up again with changes to IT. For example, scrapping Excel and switching to a specialist online platform that removes the need to complete laborious data management tasks – as many FTSE100 companies have over the past few years – can massively shorten the time taken on administration.
Such technological investment will pay for itself when it comes to consolidating and updating your workforce data.
By using automated processes, for example, your analytics will be dynamic and can reflect the immediate financial impact of Brexit on your business. Getting ahead by implementing new processes quickly, even if Brexit is delayed or even cancelled, means you’ll have made valuable changes regardless.
Undertake detailed forecasts
Next on the agenda should be the creation of detailed forecasts, each with alternative operational and financial schedules.
Consider how workforces are assigned, the possibility of redeployment and whether you’ll need to make some new hires. All moving parts need to be fully accounted for. Understanding the impact of the various scenarios is key to being able to respond to the changes as the impacts become clearer.
If things don’t go to plan, it’s important to have some cash saved to help you ride out the choppy waters. Cash is the lifeblood of day-to-day operations and having enough in the bank could provide a crucial buffer in difficult circumstances.
Indeed, with the seemingly infinite complexities presented by Brexit, this financial cushion will help you sleep a little easier at night.
Be open and transparent to your employees
It’s not all about money and data. Finance directors will also need to consider the qualitative, human side of Brexit. Clear, concise financial communication is crucial for keeping things moving in uncertain times.
Internal and external audiences need reassurance, and swift communication of strategies, prospects and results will calm the nerves of employees and clients alike.
For some businesses, people management also needs to be front and centre. Determining which employees will be affected by citizenship changes will need delicate, considered management. Naturally, this will be achieved through effectively utilising the expertise of your HR team, if you have one. A strategic partnership will help you rapidly realise which roles, departments and functions need additional resource.
Brexit will throw up a host of challenges for businesses, but that doesn’t mean it can’t also proffer significant opportunities for growth. By preparing your team, cash flow, data and tech strategy, the shock of Brexit can be mitigated. If the wider economy goes against predictions and fairs well, preparations of this sort may even set you up for greater success.