Stockpiling for Brexit
Will stockpiling for Brexit have an impact on your cashflow and profits?
In a no-deal or “hard Brexit” scenario, there is widespread concern of queues at borders leading to the delayed delivery of goods to and from the continent. Companies are being encouraged to take steps now to ensure that inventories do not run out.
In an era of “just in time” stock management to minimise working capital and maximise profits, this change is going to be a shock.
Importers who are planning to increase stock levels need to consider the following risks and costs associated with holding stock:
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By placing an extra order, will you exceed credit limits with suppliers?
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Will your suppliers be able to service your increased orders and if so, will a short term spike in demand result in an increase in prices?
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This additional stock will be carried forward and will not be converted into additional sales. Are your cash reserves sufficient to pay for it?
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There will be an increased risk of wastage on stock with short shelf life.
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Warehousing costs will increase. Do you have sufficient space?
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Insurance costs may increase if your limits need to be reviewed.
Many importers will be unable to pass these additional costs onto their customers and a long term increase in working capital will stretch cashflows.
Any business which is already having cashflow difficulties will find them exacerbated.
The UK economy needs the continued flow of trade and cannot afford your business to fail. Please take early advice to minimise the impact and ensure your company survives.
If you would like more information on cashflow management, please book a free initial meeting with Lynn Gibson of Gibson Hewitt today on 01932 336149 or email lynn@gibsonhewitt.co.uk
