Six steps to getting your business ready for Brexit
Ireland is facing a severe economic shock at the end of the month. Gavin McLoughlin highlights ways you can prepare for the fallout
Barring an extension, the most disruptive economic event to hit this country in decades will take place at the end of this month. No matter what form of Brexit we end up with, it looks certain to be negative for the Irish economy. That means it will be negative for Ireland's businesses, and it's essential that they try and mitigate the risks. Here's our practical guide outlining the steps you can take.
Where do you get your inputs from? Do they come from Britain or travel through Britain on the way to Ireland?
If so, you may need to change your arrangements so you can keep making your products after Brexit. That could involve sourcing new inputs from elsewhere, stockpiling them in advance of Brexit, or altering the way you order your inputs so that more of them arrive at the one time in order to guard against future delays.
"Even though answers to many Brexit questions are still unknown, it is important that companies do not wait for concrete answers or policies, but begin to work through potential scenarios and plan their responses now," says Mark McKeever, PwC supply chain advisory consulting director. "Then, when required, they will be prepared to change business practices, review their core operating models, switch suppliers, renegotiate contracts or move parts of their supply chain activities into new territories."
Sterling is likely to be weaker post-Brexit, especially if there's no deal. That could have a major impact on your business if you sell goods to Britain. One of the most important things you can do is have a currency-hedging strategy in place. That's designed to protect you against a fall in the value of the pound.
Imagine that you sell a good to a UK business at a certain price in sterling. The agreed payment arrives 30 days later but in that time the pound has depreciated substantially, and when the payment is converted into euro it turns out you have made a loss. The way to tackle this is by putting in place an agreement with your bank, by which the bank agrees to lock in a certain exchange rate.
"Many businesses adopt forward contracts; these are an agreement with a bank to exchange a specified amount of foreign currency at a specified date in the future, with the exchange rate fixed at the time the contract is entered into. It is, in effect, 'today's rate, in the future'," says Philip Hartley, head of foreign exchange and emerging markets at Bank of Ireland Global Markets
"As we approach the March 29th deadline, there still remains a large amount of uncertainty around Brexit. Currency risk however can be hedged and we believe, with this uncertain backdrop, Irish businesses should take this risk out of their business."
After Brexit the rules for trading with non-EU countries will apply to Britain.
That will introduce more 'friction' - to use the politicians' favourite euphemism for trade disruption.
There are a couple of ways to make things easier however.
One is to apply for 'authorised economic operator' status - which essentially means you're a trusted trader. You'll get priority treatment if there are border checks, and be seen as lower risk in any risk profiling carried out by customs, as well as other benefits.
It's important to engage with Revenue, who will be able to provide guidance on the specific circumstances you face.
"We work on the basis of a presumption of honesty and that businesses want to be voluntarily compliant and minimise the level of interaction with us," a Revenue spokeswoman told the Irish Independent.
"Key to ensuring the majority of goods continue to move freely through our ports and airports post-Brexit, is the provision of customs declarations and any necessary supporting documentation in advance of the arrival of goods and this message is central to our trader engagement programme."
Brexit is likely to have a negative impact on the British economy. If a large proportion of your sales are made there, you should probably consider reducing your dependence on that market.
That's easier said than done of course as new markets aren't cracked overnight, but at the very least it's worth researching whether a new market is a runner. With a network of offices around the globe, Enterprise Ireland is a good place to start if you're looking for pointers.
See if Brexit presents opportunities
Imagine you have a British rival that exports goods or services to the EU market. Its operations could be seriously disrupted by the UK departure. If so, that might present an opportunity for you to swoop in. One area where this might apply is agri-food. Bord Bia CEO Tara McCarthy has encouraged Irish farmers to consider whether they could make up a shortfall if, for example, UK dairy producers were hit.
If you have a UK operation your staff there could be significantly affected.
The common travel area will protect Irish citizens, but citizens of other EU countries may have to apply to keep their British residency under the so-called EU Settlement Scheme. Non-EU citizens will have a stricter regime still. Enterprise Ireland recommends employers are proactive, and work with their staff to make sure they have all their papers in order.
Grants to mentoring: supports available to help your business cope with Brexit effects
Enterprise Ireland 'Be Prepared Grant'
€5,000 grant available to help prepare a Brexit action plan, can be used to cover consultancy, travel costs, etc.
Intertrade Ireland 'start to plan' voucher
A grant of up to €2,000 to help companies get professional advice on Brexit in areas such as customs and currency management.
Brexit loan scheme
Loans of up to €15m available with maximum interest rate of 4pc. Run by the Strategic Banking Corporation of Ireland with loans through AIB, Bank of Ireland and Ulster Bank.
Ireland Strategic Investment Fund
Ireland's massive sovereign wealth fund will consider making equity investments in companies to help them cope with Brexit. Individual investments could be larger than €10m. It will only make the investment if there is a commercial rationale, however.
Businesses can be set up with an experienced mentor to assess their company's exposure to Brexit. The scheme is run by the local enterprise office network.