A recent survey has revealed that 80% of UK Business aren’t prepared for when Britain bids its final farewell to the European Union. Technically speaking, we said Bon Voyage to our European neighbours at 11pm on the 31st January of this year. However, our little island is currently undergoing an agreed transpiration period that is due to run till the end of 2020. But with how things have gone so far, who knows what the future holds. 

Over the past few months, negotiations have been taking place in the hope that Britain can establish a future partnership with the EU. However, with conflicting interests, there is a great deal of uncertainty as leaders at the European Parliament have threatened to refuse consent to a future deal. For both parties to be somewhat satisfied, it raises this question: shouldn’t compromise be made? 

So What’s Next For Businesses In The UK? 

Throughout the rest of this month, the EU hopes to end negotiations and come to an agreement. But for a process that has taken four years and counting, it’s looking increasingly unlikely that us Brits won’t be heading towards any sort of deal. 

With this in mind, Boris Johnson has told us to prepare for a ‘No Deal’ Brexit. So why is it that only two in ten companies are ready for the changing trading relationships? 

With the UK being a largely service based economy, (think finance, legal and real estate). It may come as a surprise that manufacturing’s importance for the UK economy is more crucial than we may realise. Manufacturing is officially responsible for 10% of the economy and 9% of employment. While these figures may seem low, it is also key to note that nearly half of the UK exports and imports of manufactured goods go to, and come from, the EU. With this in mind, there could be major disruptions to the manufacturing industry such as delays at the UK-EU border and even added costs. In some cases, manufacturers could be forced to produce products to different specifications for the UK and EU markets.

If this all sounds a little too threating, fear not. If you’re in manufacturing, we’ve created a checklist to help you prepare. Read below to get our top ten tips on battling Brexit for your business. 

Our Tips On Battling Brexit

1. Understand the tariffs that will apply to your business. How they will impact on raw materials costs and ultimately your finished product costs. If you are unsure of the tariffs, click here  for more information.
2. To be able to import and/or export goods you need to apply for an EORI number (Economic Operator Registration Identification).
3. Speak to customers about the impact of cost increases on your product and determine the ability of your customers to either accept higher prices, or understand the impact of lower margins on your business profitability.
4. Understand the Supply Chain flow of your key suppliers and ensure they have a plan in place that won’t detrimentally impact you.
5. Look at the origin of your goods. Currently if they are of 50% British origin they are classed as tariff free.
6. Delivery time of products coming through UK ports will be adversely impacted by customs checks. This time delay will impact products from inside and outside the EU. Look to increase carrying stock values to remove this risk.
7. Familiarise yourselves more with the Incoterms. Negotiating the right one with your customers, having a clear picture of when the change of ownership of the goods take place as well as insurance liabilities. Visit the Government website for more information. 
8. Make an integrated cashflow forecast. Take into account the impact of new tariffs and duties. 
9. If you have EU\EEA employees working in the UK before 31 December 2020, they have, until 30 June 2021, to apply under the EU Settlement Scheme. If the individual has 5 years continuous residence, they will be granted approved status. Otherwise, pre-approved status will be awarded. Once 5 years continuous residence has been achieved, the applicant can apply for approved status, visit the Gov website here. 
10. If you intend to employ EU\EEA individuals who are not in residence in the UK by 31 December 2020, after January 1 2021 they will have to apply under the new immigration points based system, you can do so here. 

Prepare For Brexit With Ampios

So there you have it, if you feel there are areas that you’ve not addressed, don’t worry. We can support you in putting an action plan together. If you need business support, Ampios are here to help. Contact us for your consultation. 

Becoming a director of a company, whether it’s as you start your own business or have worked your way up the career ladder, is an exciting time filled with opportunity. Being a director can be very rewarding, satisfying and profitable – but it doesn’t come without risk. To do the best for your business, it is worth reminding yourself of the roles and responsibilities of directors.

The Role of the Board 

The Institute of Directors defines the role of the board as ensuring the company’s prosperity by collectively directing the company’s affairs while meeting the appropriate interests of its shareholders and relevant stakeholders. 

As a director, you are expected to establish and deliver the business’ purpose,  visions and values; delegate responsibilities to senior managers and be accountable to shareholders and stakeholders. You decide which tasks can be delegated and which will be best managed yourself, you review your successes and areas for improvement and plan for your future. 

But as well as your role and the personal and professional benefits this has for you, you should also be aware of the challenges and responsibilities that becoming a director brings and how you can overcome these. 

Legal Responsibilities 

The Companies Act 2006 details the additional legal responsibilities you carry when becoming a director: 

1. To act within powers in accordance with the company’s constitution and to use those powers only for the purposes for which they were conferred.
   

   As a director, it is important to be familiar with the articles of association for your business as they are likely to restrict your individual decision-making powers.

2. To promote the success of the company for the benefits of its members.
   

   You should act in good faith to promote success for the company and its shareholders. You need to consider the outcomes of your decisions for everybody involved in the business – employees, suppliers, customers and communities. It is also important to consider the impact your decisions will have on the environment, the reputation of your company and your business’ success in the longer term.
   
   All decisions should be made within the best interests of the company, not to benefit any individuals. However, be broad-minded when evaluating those interests, keeping in mind other stakeholders – the financial aspect is not the only perspective to consider.

3. To exercise independent judgment.
   

   As a director, you are legally obliged to exercise judgment independently and be prepared to question the decisions of others. If the existing board make decisions, it is important to question why that’s the best thing for the company. If you have a different approach in mind, you should voice it.
   
   

4. To exercise reasonable care, skill and diligence.
   

   As a director, you are expected to make decisions based on diligence, knowledge, skill and experience and are accountable for those decisions.If you have specific professional training (for example legal or accountancy training), you will be held to a higher level of accountability than less-qualified members of the board when decisions are made relating to your expertise.

    

5. To avoid conflicts of interest.
   

   A conflict of interest could arise if you have a close, personal interest in the business of competitors or other third parties such as suppliers. Alternatively, if you are responsible for a decision regarding an employee or potential employee with whom you have a close relationship (e.g. a family member or close friend), this would also constitute a conflict of interest.If you find that you have a conflict of interest, you must declare this to the board so that it can be resolved.

   It is important to ensure that your non-financial interests (personal beliefs and values, welfare and political views) do not take precedence over your lawful and ethical duties as a director.

6. Not to accept benefits from third parties.
   

   You must not accept benefits with the expectation of you doing, or not doing, something within your power to influence a decision.

7. To declare an interest in a proposed transaction or arrangement.
   

   If you have an interest in a deal or transaction, you must make it known. If a close friend or family member will benefit from you doing business with a specific supplier, you must declare this to your fellow board members.

You’re ready

Becoming a director should not be a daunting prospect nor anything to be frightened of. The risks are minimised as long as you comply with your legal responsibilities as a director. Following these rules will protect your business from malpractice and help to ensure your continued success. 

If you are worried about becoming a director and how to act in the best interests of your company, get in touch to discuss how we can help you. 

Martyn Jones, Specialist in Corporate Governance 

Discovering a cash flow problem within your business can create a daunting time of uncertainty and worry. Not only are you concerned with ensuring you meet your business demands, but you know that the bank, with money tied up in your business, is wanting to know how you’re dealing with it. 

Here is a guide to the ways that your bank may react. Use this to help you understand the potential changes to your lending agreement, anticipate these and consider how it could affect your business in the future. 

How will the bank react?

So far, they have supported you – backing your business plan, lending you money while ensuring that they monitor your progress. But now, they will see you as a greater risk to them and may make some changes to protect themselves. 

Your bank may have a variety of reactions to your funding problems, all changes made to your agreement with them to protect their lending. They may implement one or a combination of the following changes. 

• The offer of further support.
  Great news! Be aware though, this support will come at a price: additional fees or an increase to your current interest margin.
• An increase in price for their borrowing facilities.
  They could choose to do this in reaction to the increased risk to them. It may come in the form of a rise in interest margins or arrangement and monitoring fees.
• Heightened security requirements.
  The bank’s priority is to protect themselves so they may request a higher level of security – collateral against their money. They could request personal guarantees from the directors of your business, which may need to be supported by personal assets, rather than company assets. 

• The inclusion of additional financial terms and conditions.
  The bank could wish to monitor your business more closely to assess your recovery from your funding issue. They can request information of accounts every month, rather than quarterly, for example, or ask for weekly cash flow forecasts.
• The addition and/or tightening of bank loan covenants – such as increased debtor cover.
• Pressure on you to enter into costly bank products.
  Your bank may try to persuade you to consider some of their products to assist your business through your financial difficulty.
  This could be interest rate hedging (to provide protection from or minimise the impact of increasing interest rates); fixed interest rates or a switch from Overdraft to Invoice Financing – whereby its service fee would be based on your sales turnover.
• There is a risk that you be moved into “intensive care” by the bank.
  This could result in monitoring fees being levied.
• An independent assessment of the business.
  A bank could appoint independent accountants to assess your business on their behalf and report their findings back to them. The cost of this would be expected to be covered by you. 

How will these changes affect my business?

The overall impact of any of these changes would be a higher financial cost, management time being used differently and a period of worry and confusion. Thankfully, some people have experienced and overcome similar issues and are willing to advise, mentor or guide you through your funding problems. 

At Ampios, we have years of experience over a range of business sectors and have the expertise that you need. If you’re looking for help, support or advice, don’t hesitate to get in touch. 

Alan Wilson – Specialist in Banking Relationships & Borrowing Arrangements