The continuing uncertainty over Brexit may have significant financial and cash flow implications, particularly in the event of a No Deal Brexit but also as markets react to political events.
As such, it is important to continue to monitor preparedness in the flowing areas:
| Brexit issue(s) |
Action required |
| UK Creditor and Debtor Management |
- Introduce strategies to ensure your continued ability to make and receive payments. Proactively follow up with UK based creditors and debtors and agree priorities.
- Consider location of bank accounts and forecast anticipated receipts and payments.
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| Inventory and Order Management |
- If you consider a No Deal Brexit likely, consider whether deliveries can be shipped prior to 31 October 2019 and whether key raw materials can be stored to avoid transport uncertainties.
- Consider additional administration requirements and resources that may be required to deal with new VAT and Customs arrangements (see VAT and Customs for further details).
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| Currency and FX Management |
- Consider Sterling exposure and mismatches between assets and liabilities.
- Are contracts being structured in Sterling? Can these be hedged? Are debt and liabilities appropriately hedged?
- Consider profitability of sterling based contracts and whether currency clauses need to be inserted.
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| Treasury, Financing and Forecasting |
- Capital markets may experience shocks, particularly in the event of a No Deal Brexit.
- If you consider a No Deal Brexit likely, ensure sufficient liquidity is in place including debt and revolving credit facilities in advance of 31 October 2019 to withstand potential shocks.
- Review covenant calculations and headroom to pre-empt breaches as a result of earnings and FX weakness and engage with lenders.
- Review cashflow forecasts and consider currency assumptions and whether updating is required.
- Consider preparing various scenario analyses to factor in possible weakening of sterling in coming months.
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| Customer Management |
- Consider key clients and their exposure to No Deal risks. Are credit terms and limits appropriate?
- Proactively engage with customers to discuss.
- Consider profitability and pricing of contracts in the UK and whether adjustments are required to avoid losses
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| Investments / Project Financial Close |
- Consider timing of key investments and projects. Where possible bring forward closing-dates for key financial and legal documents. Consider the most appropriate legal jurisdiction for all such documents.
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