Hit enter to search or ESC to close
SBCI banner shape

Brexit and cash flow, what implications?

Navigating Brexit is a challenge, effective cash flow management allows businesses to survive and grow through uncertain times

Blogs & Videos
12 Jan 2021

The SBCI encourages businesses to consider its range of Finance options to assist them with potential cashflow issues arising out of Brexit.

An effective cash flow management allows businesses to survive and grow through challenging and uncertain times and now that Brexit has become reality, business owners are called to make decisions to protect their production processes, supply chains and trade.

Investing in the build-up of stock and identifying new suppliers and routes to market within the EU (or further afield) are some of the measures businesses have been undertaking to mitigate the impact of Brexit.

Normally, a new supplier will seek to operate on a cash basis until a trading track record is established. This involves additional costs for businesses, which inevitably impact on cash flow. Traditionally, businesses have financed this type of expenditure using short-term finance options, such as overdrafts or stocking loans. These options can put pressure on a business’ ability to access cash.

Several Government funded Brexit supports are available to businesses to mitigate this pressure, allowing companies to spread the cash impact over a longer period.

The Brexit Loan Scheme offers loan amounts of between €25,000 to €1.5m to businesses whose turnover of profitability has fallen (or is likely to fall) by 15% or more as a result of Brexit. It carries a maximum interest rate of 4%, with loan terms ranging from one year to three years and loans unsecured up to €500,000. More information is available here.

For microenterprise businesses (employing less than 10 people and with turnover of less than €2 million p.a.), the Brexit Business Loan from MicroFinance Ireland provides up to €25,000 to businesses whose turnover has fallen (or is likely to fall) by 15% or more, or where a business has a short-term cash flow need as a result of Brexit. Loans range from six months to three years. More information is available on the MicroFinance Ireland website here.

Businesses could also consider using a Trade Finance Product. This type of product guarantees to pay a business’ supplier once goods are dispatched and can also provide SMEs with much-needed funding to bridge the gap between paying suppliers and receiving payment from customers. This product may provide businesses with the ability to source new suppliers without negatively impacting their cash flow. The SBCI has supported Bibby Financial Services in the development of their Trade Finance Product, which main characteristics are highlighted here.

With trading relationships with the UK still unclear, this is a good time for businesses to review and understand how Brexit will impact their day-to-day operations. Key to this will be having a full understanding of the business’ cash flow projections and how these can be best managed and supported through the coming months.

by John Madigan