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SMEs should identify Brexit-related risks and put mitigating strategies in place

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The nation’s small to medium firms could soon be doomed with a heightened risk of supply chain disruption, Hitachi Capital Invoice Finance has claimed. It warned that pressure will soon be added on cash flow and that access to funding could become restricted.

“For smaller companies, if key customers pull back from orders and credit lines suddenly get pulled, the pressure on cash flow could force a foreclose,” it said.

John Atkinson, managing director of Hitachi Capital Invoice Finance, further prompted that after the credit crunch in 2008, SMEs found it much harder to raise finance to fund business strategies and many were forced to put investment plans on hold.

“While lending bosses are currently reassuring businesses that they are still ‘open for business’, this position could change if orders begin to stall and supply chain disruption spreads,” he explained. 

“The explosion of alternative funding solutions in recent years means businesses have more options and should seek advice about how best to use these to bridge any funding gaps and keep investment plans on track.”

But before taking action to protect cash flow, SMEs need to look at what financial risks come about based on a variety of Brexit scenarios. Such risks are not always readily apparent but can have devastating consequences if left unchecked.

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“Most SMEs have established good relationships with key suppliers, but may not be aware of potential problems lower down the chain if tier two or three suppliers are heavily reliant on trading links in the EU,” said Atkinson. “By identifying such issues early, it should be possible to put mitigating strategies in place.

“SMEs learned a lot during the last economic downturn. Employers know the importance of careful cash management and ensuring the business has access to the funding it will need to take advantage of any improvement in trading conditions in the future.”

Image: Shutterstock

Elsewhere, entrepreneur and influencer Barry James makes a visceral and calculated case for Britain now being at it’s most exciting point in history – rather than languishing in post-Brexit doom and being dogged by never before seen political upheaval.

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