Following recent news around the potential economic impact of Brexit, businesses of all sizes should be making plans to adapt and thrive.
KPMG is helping businesses of all sizes respond to unprecedented economic uncertainty generated by Brexit. While clients face numerous complex issues, we are recommending they address a shortlist of critical issues first to reduce the impact on day-to-day liquidity, access to capital and bottom line profitability.
What are the big risks?
KPMG’s working capital diagnostic tool uses proprietary data visualisation to show clients how they can offset the financial impact of building an inventory buffer. Typically our optimisation programmes can save you by identifying opportunities, using our innovative diagnostic approach, between 10 and 15%.
We are working with clients on short-term cash forecasting to understand whether they can fund greater investment in stock within current facilities.And our cash optimisation methodology helps clients identify priority initiatives that can improve immediate and long-term liquidity, help enforce controls over cash procedures (in order to conserve cash) and introduce KPIs that demonstrate the effectiveness of management initiatives.
We’ve been spending a lot of time helping our clients assess and respond to the potential risk of supply chain interruptions as a result of Brexit. We are modelling the impact of import cost rises for some clients and helping others reposition their supply chain to avoid or minimise product outages.
Using client data, we have designed, developed and delivered supply chain risk management processes and controls for firms in a variety of situations, and across multiple sectors. That gives clients a clear overview of risks and supplier performance, enabling them to develop robust contingency plans and, ultimately, ensures their operations keep rolling with the minimum financial impact.
Reassuring lenders, suppliers and customers that your business is resilient and ready for whatever comes next is vital.
Lenders in particular will want to know that businesses have modelled all the main Brexit scenarios. We have been supporting businesses in this challenge – helping clients understand how different outcomes would impact liquidity, the business’s funding requirements and what solutions might be available if they face a squeeze.
To date Brexit has not materially impacted debt availability but as we near 29 March 2019, lender behaviour and risk appetite may become more inconsistent and unpredictable.
We’re advising a number of clients to accelerate planned 2019 re-financings to avoid having to approach lenders during a period of significant uncertainty. In any event, we anticipate that the volume of preparatory work required for any capital raising next year – as well as ongoing lender management – will be much greater than before.
How can we help?
We have experienced professionals working across the UK that are able to support our clients in dealing with some of the issues being faced.
To contact us on any of the links below:
Scotland: Alan Flower
North: Kenny McKay
Mids & South: Andrew Burn
London: Will Wright
International: Mark Raddan