As Prime Minister Boris Johnson vows to leave the EU with or without a deal on 31 October, Brexit is fast becoming an ever-closer reality. But what will this mean for our commercial contracts?
Whether or not your business trades with other EU members, as a business owner you will have a general idea of whether Brexit will have a positive or negative impact on your business.
Whilst you may feel the repercussions of Brexit are out of your hands, there are ways in which you can protect yourself. Here we focus on the importance of reviewing your key commercial contracts in order to ensure that they remain suitable and provide sufficient protection against any risks associated with Brexit. Of course, thought should also be given to any future opportunities that may arise. Our 10 top tips are as follows:
1. You should re-assess pricing when entering into any new contracts with businesses in EU member states, particularly in light of new levies, taxes or charges. You should also consider which party is liable to pay any increased costs and how these might be apportioned.
2. With regards to fluctuating exchange rates, you could include clauses that trigger a price-alteration or change in currency in the event that an exchange rate reaches a certain level. You could also tie in this clause with a right to terminate, in order to protect yourself from financial hardship.
3. Ensure you have appropriate cash flow for VAT purposes as well as additional inventory.
Customers / clients
4. Check your international contracts and make sure they are robust enough in the territories you want to operate in.
5. Review your supply chains to ensure that your suppliers can meet their contracts with you or alternatively consider other new suppliers.
6. Re-examine your existing client base. You do not necessarily need to say ‘adios’ to your European clients, but do use Brexit as an opportunity to explore new client opportunities from different continents.
7. Customs declarations are likely to be more onerous post-Brexit, especially if the UK leaves the single market. You should look to review and update your business operation software to prepare for this extra burden.
8. Make a ‘plan B’ (in all senses!), but consider warehousing or alternative transport methods to deal with and minimalise any border delays.
9. Keep a close eye on and review your current intellectual property protections. Patents, trademarks, registered design rights and copyright could all change after Brexit, so an audit is recommended.
10. Consider obtaining ‘Authorised Economic Operator’ status. Although this can be time-consuming, it can speed up customs clearance.