Financial and cash flow impact

September 2019: Preparing for Brexit.

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.
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).
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.
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.
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
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.