It is just over four weeks away until the end of the transition period. As yet, there is no extension to the period or a trade agreement in place, which means that from the 1 January 2021, there is a real risk of disruption at ports and border crossing points, increased red tape to enable border crossings, potential tariffs on imports and possible import and export controls, which may delay or prevent the movement of goods. This in turn could mean increased supply costs and delayed delivery times for UK businesses when the EU introduces full border formalities.
There are a number of ways in which businesses can mitigate these risks, for example:
- map your supply chain to identify where you are most exposed. This is really a question of supply chain management and trying to ensure that your business is not left ‘carrying the can’ for any delays and/or increased costs while the UK and the EU get used to the new rules;
- speak to key customers and suppliers to identify potential issues and find solutions;
- make sure that you are on top of import/export requirements e.g. customs declarations and EORI number (if you are a UK business make sure you have an EORI number that starts with GB);
- consider hedging currency risk; and
- review your contracts with customers and suppliers (more on this below). Key areas to focus on include terms relating to price, delivery and when risk passes from one party to another.
Beth Miel, an associate in B P Collins’ corporate and commercial and Brexit teams, urges suppliers to check whether their customers’ terms and conditions include, what has come to be known as, the ‘Brexit’ clause, which enables suppliers to increase their prices and delay delivery times in these circumstances.
Conversely, businesses should also check whether their supply contracts contain similar provisions, so that they’re not caught off guard with delays to their supplies and additional costs that could be costly to their business – if their suppliers try to implement them.
For both suppliers and their customers, it is essential to review their terms and conditions ahead of 1st January. This may also be a good opportunity for businesses to review their terms and conditions more generally, to make sure that key provisions such as pricing, delivery and risk, reflect their up to date business practices and have enough flexibility to adapt to the changing economic climate.
As this is a very challenging time for UK businesses, particularly with Brexit and their ongoing battle to mitigate the damaging effects of Covid-19, B P Collins’ corporate and commercial team can help as they are fully experienced in this area and can rapidly assess the risks and provide solutions on how to move forward.