Blog

By Mark O'Rourke, Managing Director, Ireland

17 Jul 2019

With the Brexit saga ongoing, businesses across Ireland continue to face disruption and uncertainty. However, what is not being recognised is the specific challenges for SMEs produced by the UK’s exit from the EU – particularly for wholesale and retail businesses, given their reliance on imported goods.

Ireland has about 3,000 wholesale and retail businesses exporting goods to the UK each year, and the vast majority of these employ fewer than 50 people. With tighter margins, these businesses are already more exposed to currency volatility, particularly that recently seen in the case of Sterling. Fluctuation and volatility are facts of life no matter the currency, but the twists and turns of the UK’s Brexit negotiations with the EU have made it a particularly bumpy journey for businesses importing from or exporting to the UK.

 

The twists and turns of the UK’s Brexit negotiations with the EU have made it a particularly bumpy journey for businesses importing from or exporting to the UK.Mark O’Rourke, Managing Director, Bibby Financial Services

 

On top of the financial complexities, purchasing goods from overseas also creates the task of finding suitable suppliers and ensuring you can sell the goods at a profit, while any delays when buying, taking delivery and selling goods will have a negative impact on a business. SMEs often do not have sufficient in-house resources to deal with all aspects of what is a complicated procedure. And, if funds are not readily available at the point of purchase or even when placing orders, a business’s ability to meet its customers’ expectations, or take on lucrative new contracts, can be weakened.

One avenue open to businesses looking to ease any concerns around cashflow when importing and exporting is to avail of trade finance products. These provide access to all or part of the cash needed upfront, allowing businesses to build trust with new suppliers without leaving themselves exposed to the hazards of international trade. Typically, the financial provider delivering the product will also cover any duty, VAT and freight costs.

Aside from quick access to funding, our own trade finance product has the benefit of paying suppliers on the same day that goods are shipped, and in the currency of choice, helping to cement those all-important business relationships. A dedicated team of trade and currency specialists is also available to help SMEs deal with any unexpected issues that may arise. With the greater flexibility that trade finance offers, it can also be ideally suited to seasonal businesses, or those that receive large, one-off orders that must be quickly filled and paid for. While SMEs are often unaware of the range of financial supports available to them, trade finance can therefore offer much-needed breathing room for wholesalers and retailers – especially with Brexit on the horizon.

 Trade finance can offer much-needed breathing room for wholesalers and retailers.Mark O’Rourke, Managing Director, Bibby Financial Services

Once the UK completes its departure from the EU, Irish retail and wholesale businesses will be faced with a drastically changed business landscape and a higher degree of financial risk. In addition to putting in place suitable measures to protect cashflow, it will become increasingly important to be able to identify and communicate with the right suppliers in different markets. Trade finance products – and the right provider – will therefore be pivotal to ensuring Irish SMEs continue to grow and expand their international footprint.


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