Buying from abroad: Will Brexit affect relationships with international suppliers?

Written by Claire Poskitt

Ah, the ‘B’ word. Whether you voted for it or against it, there’s no denying that Brexit has become a bit of a pain in the B-side for businesses across the country. But its impact isn’t limited to the UK alone. In fact, it’s inevitable that the departure from the EU will affect your business’s relationship with international suppliers.

The question is: will this impact be good or bad?

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International suppliers and you: Expect the best, prepare for the worst

It’s fair to say that Brexit isn’t going to be a clean break. With talks still up in the air, and many businesses like yours still searching for answers that aren’t available, it’s likely that your plans will have to be adaptable.

That said, there are some things we do know that’ll help you embrace the changing landscape with your international suppliers. Here are four areas you should be reviewing now:

1.     Calculating customs and VAT

No matter where you’re buying from, chances are, you’ll be facing the implications of a new, Brexit-induced customs border tax.

In fact, in the event of a no-deal Brexit, if any of your products pass through the European Union en-route to the UK, they may incur customs charges. Don’t automatically assume your international suppliers are exempt. These costs are, of course, in addition to the declaration charges, administrative cash flow costs, as well as new import and export VAT charges if a no-deal Brexit is pushed through.

As a result, it’s vital you take time to review your supply chain and anticipate the effects of these costs – particularly VAT charges – on your products and their costs.

If you’d rather not face heightened custom prices and the added administrative pressures, it might be time to look into sourcing domestic suppliers.

2.     Assessing product-to-shelf times

With the potential for added customs bottlenecks, it’s fair to assume that your outsourced products may take longer to arrive than you might like.

For businesses who deal with perishable items, such as fresh produce, now is the time to plan. After all, leaving shelves under-stocked (or over-purchasing to compensate) aren’t scenarios you’d like to tackle last-minute.

If you feel like your company can’t cope with the longer lead time, it may be best to find a more local supplier, or to see if there’s any way you can resolve the issue with your supplier.

3.     Turbulent tariffs

Many global suppliers with profitable UK markets will surely be willing to scale to accommodate higher tariff costs. However, post-Brexit relationships with your suppliers is objective at best. Therefore, you should be prepared for the off-chance your suppliers might not be willing to bear the burden of higher expenditures.

In the event your partners cut the cord, you should seek out local suppliers or businesses that are willing to pay the extra to supplier the UK market.

That said, any large supplier that provides you with long product cycles, such as vehicle manufacturers, finding another specialist supplier may be impossible. In this case, it’s down to your negotiation skills and determination to keep the relationship alive and thriving.

4.     Reviewing contracts

With prices and costs expected to fluctuate, your existing contracts with your suppliers may become defunct. Don’t wait until Brexit has been and gone to review your contracts.

Take a look at your contracts now to see how flexible they are. Do they protect your from post-Brexit supply chain risks? If they don’t, it could be time to question whether your relationships with your international partners need renegotiating or, in the worst-case scenario, cutting loose.

Brexit’s what you make of it

So, will Brexit destroy your relationship with international suppliers? Yes, no, and maybe. (Sorry!)

At the end of the day, the situation boils down to your industry type, the products you’re outsourcing, where you’re outsourcing from, and the strength of your relationships.

Regardless of what happens, it’s essential you research the changing landscape as thoroughly as you can and plan where you’re able to. Don’t wait until tomorrow – get reviewing and negotiating now.

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Purchasing , Supply Chain