So, the votes are in and counted and we are heading for the EU exit door, and while it may take as much as two years after Article 50 is triggered for the final divorce to take place, there is going to be a lot of uncertainty in between.
For companies that import from overseas – whether that is buying products or raw materials overseas to sell in the UK – the pound sinking to a 31-year low against the US dollar will make these products more expensive. Passing this cost onto customers is one option, but it may not be as easy to do if your competitors are still keeping their costs lower.
For exporters, it is likely to be good news as the cost of their goods will be comparatively cheaper for overseas customers. Yet for many businesses, they are doing both importing and exporting, and plenty more are doing neither, but still working hard to build their companies in what are currently less than perfect conditions.However, no matter what your current situation, the chances are there are ways that you can improve your bottom line, and help to position your business ideally for the future:
1. Look at your costs
there are many ways to cut costs, and most businesses could do with reducing the fees on things they need to buy. For example, staying with the same company that has always done your business insurance may not be a good idea, as your loyalty is often rewarded with higher premiums than you might get elsewhere as a new customer. Always search the market for your insurance each year, even if all you manage to achieve is getting a better price so you can bargain more effectively with your existing insurer.
2. Sort your currency in advance
Dealing with overseas transactions, especially with the pound’s value going up and down like a yo-yo, can be complicated and leave your business with a bigger shortfall than you might have expected. But you can work with currency firms to fix the rates you get for a period of time – as much as two years – which means you can be sure about your costs for the foreseeable future.
Finding the right currency provider for your international money transfers in the first place is key, as you want to be sure you are working with a company that has your best interests at heart. You can research how to get the best rates using a comparison service, but generally using your bank to transfer any currency abroad will cost as much as 4% more than a currency provider. There are some exceptions, but that would mean on a £100,000 transfer, you are losing £4,000. If you are transferring that much each month that is enough being wasted to employ an extra middle manager for your firm.
3. Use the cash you have more effectively
In uncertain times, many businesses will hold more cash in their reserves to help smooth any bumps in the road, and if you are doing the same for your business, then make that cash work better for you.
Savings Champion, an independent savings adviser which offers specialist information for businesses as well as consumers, had one client that was holding almost £2 million on deposit in a standard ‘big’ bank business saver account earning 0.05% interest.
However, after it took control of that money for the client through its Business Concierge service , even after fees, the client had earned an extra £22,818 in interest on that money. In addition, £1.15m more of it was protected under the Financial Services Compensation Scheme than had been previously.
These measures merely scratch the surface when it comes to improving your business’s financial position, but as we head towards a life outside of the EU, the more you can do now to prepare yourself, the less the impact of the future – no matter what it brings – will be.
By Ali Steed, The Business Powerhouse