Supporting businesses navigating a post-Brexit world

If you’re struggling to navigate the complexities of Brexit, you're not alone. 

Five months on from the UK’s departure from the EU single market, companies are still getting to grips with the changes. A new study by the London School of Economics’ Centre for Economic Performance revealed that 61 per cent of UK exporting firms reported Brexit-related difficulties in Q1 of this year. Specifically:

• 24 percent said that Brexit has caused sales to the EU to fall

• 37 percent reported delays

• 36 percent have faced additional customs and administration costs

• 22 percent said they experienced more regulatory checks

As a business owner, these challenges can have a profound impact on your ability to operate fully, pay wages, invest in new stock and compete with other businesses. 

There is some help. On 15 March, the Government’s £20 million SME Brexit Support Fund opened for applications. Small businesses can apply for grants of up to £2,000 to help them adapt to the new EU customs and task rules.

However, we understand that many business owners will be seeking out additional business finance to ease cash flow concerns or for growth – including those who have already received a grant. If this applies to you, have you considered the following options?

Trade finance

Trade finance is a type of working capital finance designed to provide your business with the funds it needs to purchase stock or inventory from a supplier. 

It usually works like this:

Once you’ve got a purchase order from a customer, you can use trade finance to buy the stock or inventory you need to fulfil the order. This means you can ship the goods faster, and you won’t be out of pocket while you wait for your customer to pay. As a purchase order is required, trade finance is sometimes called ”purchase order finance” or “import finance”.

Supply chain finance

Trade finance helps you finance the start of your supply chain. Supply chain finance, on the other hand, is similar to invoice finance, and it can help you lengthen your payment terms. As a supplier, it means that once the buyer has approved your invoice, you can get 100% of the value of your invoice from the lender minus a fee.

Here’s how it works:

• You issue an invoice to the buyer

• The buyer confirms to the lender that the invoice has been approved

• You get the value immediately (minus the lender’s fee)

• When the payment is due, the buyer pays the lender

Export finance

When you sell a product abroad – or even in the UK – it can take a long time to get paid. This, of course, can have a knock on effect on your business. The time it takes to ship and deliver a product can also take a long time, especially under the current circumstances. 

Export finance enables you to release working capital from interactional transactions so that your business receives the money quicker and maintains a healthy cash flow. 

Merchant cash advance

If you run a retail business and require funding for cash flow or growth, a merchant cash advance could be a viable option. The concept is actually quite simple: you borrow a sum from a lender and pay it back gradually through your customer card payments. 

It’s different from a more traditional type of loan where you’re required to pay the same amount back each month. It’s more flexible: you pay less back when you’re making less and more when your business is doing particularly well.

Because it adapts to how much money your business makes, it can give you that extra peace of mind when it comes to making repayments. 

Invoice finance

Invoice finance is similar to supply chain finance. You can use invoice finance to borrow money based on what your customers owe. It enables you to get paid most of the invoice’s value quickly instead of having to wait weeks or months for customers to pay up.

If approved, the lender will advance you a large percentage of the value of the invoice immediately – usually up to 90 per cent.  Once your customer finally pays the invoice, the lender releases the final amount (minus any fees or charges).

Additional business finance for growth

Of course, there are also many businesses out there with exciting post-Brexit growth plans in the pipeline. Some, for instance, are planning to leverage the opportunities that are available to them on the wider global stage in countries like the US and India.

Others businesses, including those operating in the hospitality and leisure industries, are anticipating a steep growth in trade after 17 May when the economy reopens further (as per the roadmap for coming out of lockdown). 

These businesses may be looking for finance to:

• Hire more staff

• Buy more stock/inventory

• Expand or refurbish premises

• Invest in equipment or machinery

There's a business finance type out there for almost every growth opportunity. For example, asset finance helps you purchase new equipment, vehicles or machinery, and there’s a range of short-term finance options to help you cover expansion costs (such as bridging loans). See what you could be eligible for today.