‘Deal or No Deal’ – the need for certainty in uncertain times – by Nick Smith

Whatever your views on Brexit, I think we can all agree it’s a total mess.

As business people, we know the best way to negotiate a favourable deal is the ability to walk away without one. However, the ‘no deal’ option has been taken away following a vote in Parliament making the move illegal.

Despite this, Boris continues to use it as his ‘bargaining chip’ as he meets with Juncker, Barnier and other EU leaders.

Then just when you thought things couldn’t get any worse, the Supreme Court ruled on Tuesday that Boris Johnson’s decision to suspend Parliament was unlawful. He had to fly back immediately from the States using the RAF, as he had originally booked with Thomas Cook. And then it was into the ‘bear pit’ of the Commons where Boris became so animated I thought he may actually turn into the Incredible Hulk, as promised.

Unless the Government can pull off a new deal before 31 October on which the whole of the Commons agrees – and with such animosity between the parties, how likely is that – it looks like we will be ‘kicking the can’ down the road until the end of January and beyond. Of course, that is subject to EU agreement, even though Boris, if he is still in power, has said he would rather ‘be found dead in a ditch’ than ask for an extension.

In the meantime, businesses are left in limbo as they prepare for the worst-case scenario predicted in the leaked Project Yellowhammer document, which sounds as though it has been co-written by the Four Horsemen of the Apocalypse.

The results of a client survey reveal diametrically opposed views about a ‘no deal’.

On the one hand, some believe it may lead to:

  • Significantly increased working capital requirements
  • Delays in payments from customers
  • Increased levels of inventory
  • Suppliers needing support in the form of earlier payment

On the other hand, some predict it may result in:

  • A reduction in inventory as customers stockpile
  • More supportive suppliers, supplying ahead of schedule
  • Increased payment terms from understanding clients

All this uncertainty could also lead to further complications, for those dealing with overseas partners, due to movements in the exchange rate.

A likely scenario in the event of no-deal exit is a slight devaluation of sterling against the dollar and euro and, conversely, a slight strengthening of the pound against the two currencies, should an agreement be reached. It therefore may be appropriate to consider currency hedging to avoid short term shocks.

Another knock-on effect is that all this turmoil won’t do anything to help persuade the banks to move away from their reluctance to lend.

That’s why, in these uncertain times, Reward Finance Group remains ready, willing and able to help companies with their funding needs, whether it is to help overcome a working capital shortage or to take advantage of a deal.

Having started the company at around the time austerity became Government policy, we have helped companies through some tough times by being flexible, making quick decisions and having plenty of money to lend.

With much to concern businesses as negotiations about Brexit continue, Reward Finance Group aims to provide funding certainty in these very uncertain times.