Brexit… Speaking with your customers is key during these uncertain times
Wednesday 29th June 2016
We now know that Brexit is a reality. We know that the majority voted to leave the EU. But we don’t know much beyond that. Nobody actually knows what will happen over the next few years, or how a post EU United Kingdom will look or operate. We are living in uncertain times.
Uncertainty brings strain on both businesses and households. As the negotiations progress, I expect the public to be drip fed information on key issues and what is at stake. Every day a new topic will be in the news. Some key elements of the negotiation will affect us all, but other issues may only have an impact on a specific sector. A decision/key agreement on one point may also impact customers within the same sector differently. We just don’t know. Customers will also react differently. Some will try and keep cash reserves higher than usual for a rainy day, stretching suppliers. Others will continue to use credit lines when they should be pulling back.
Given the uncertainty, business customers will find it increasingly difficult to forecast budgets and income streams accurately.
I have always advised business owners, credit controllers, sales staff and directors to get to know their customers. Firstly, knowing your customer and their business can put you ahead of the curve. If you are aware of an issue before, at the same time, or shortly after the customer finds out, you can control their credit, stop supplying or start the recovery process earlier than normal. Secondly, knowing your customer increases the chance of getting paid if they default. Information is key. Information is your insurance policy. Thirdly, understanding the reasons behind short term cash flow problems may help you to maintain that relationship for the long term, and support your customer through a difficult time.
Brexit is a timely and important reminder to all those businesses who supply on credit terms, and those that are involved in the credit control and recoveries process: Speak to your customers, understand their sector and their business. Do this now, before there is a problem. By understanding potential issues now, you are best placed to protect your own business going forward.
Graeme Davy is a Partner in our Commercial Litigation Department, and Head of Debt Recovery. If you would like to discuss this article in further detail please contact Graeme on 01274 703 918 or at email@example.com