Reviewing your supply chain

Assess your supply chain to limit disruption and to give yourself the best possible cash position.

According to a survey from Aldermore Bank (25 November 2020), 47% of businesses that import goods and services from the EU and 43% that export to the EU had made no preparations for Brexit.

Admittedly, the sample size was small (1,003 senior decision-makers in small and medium-sized businesses). But as Tim Boag, Group Managing Director, Business Finance at Aldermore, notes: “Our research revealed that many SMEs were generally unprepared for Brexit or were delaying plans to address the impact until after the end of the transition period.

“While the delay in preparing for Brexit is understandable given the ongoing impact of the pandemic, the potential wide-ranging effects of Brexit on many businesses means it’s crucial that SMEs take steps to prepare.”

Boag advises: “Businesses should consult the Government’s guidance for SMEs post-Brexit and work out how VAT, tax and duty, and other regulatory changes will impact them and their supply chain.”

You can use the transition checker tool at gov.uk/transitionLink opens in a new window to identify the specific steps you need to take now the Brexit transition period has ended.

Below, we look at how you can review your supply chain to make your company more resilient after Brexit.

Improve your cash position +

You can review your supply chain to try and improve your cashflow.

It’s important to make sure that you time your payments to suppliers in a way that helps your business’s cash position. For this, you might consider the following:

  • Taking full advantage of creditors' payment terms
  • Using electronic funds transfers to make payments on the last day they are due
  • Communicating with suppliers clearly if you ever need to delay a payment
  • With major suppliers, renegotiating the headline payment terms if you're a key customer
  • Considering carefully whether suppliers' discounts for early payment make sense
  • When choosing your suppliers, considering which has the most flexible payment terms

You could also consider using supply chain financeLink opens in a new window or other forms of asset-based lending to free up additional working capital from your supply chain.

Reduce your risk of disruption +

You should review your supply chain periodically to limit the risk of disruption to your business. This is particularly important at the current time, when most businesses are facing major uncertainty.

You could consider the five steps below:

  1. On-shoring or developing local suppliers might make supply more reliable. Learn more about finding new suppliers
  2. Make your manufacturing and logistics operations as efficient and effective as possible. This may involve reallocating production facilities. Digital technologies and advanced analytics tools can assist in this.
  3. Build up safety stock levels in the short to medium term.
  4. Prepare for changes in demand.
  5. Spend money on research and development (R&D) strategies to manage changes in your product specifications, for example as a result of Brexit-related regulatory changes or shifting consumer demands.

Additional support +

Supply chain resilience Link opens in a new window

PWC outlines the importance of a resilient supply chain to make sure your business can continue to operate during challenging times.

How to ready your supply chain for EU importing Link opens in a new window

Read more on building a supply chain strategy in light of the UK's transition out of the EU.

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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.