In the event of a no-deal Brexit, West Cork food businesses will need to protect themselves from bad debt, as consumers in the UK potentially face the consequence of paying hefty WTO tariffs and higher prices when shopping for groceries.
That’s according to Stephen McCarthy, head of sales for Munster, Bibby Financial Services Ireland who said: ‘West Cork is a haven for artisan food producers and home to a diverse range of businesses from start-up food stalls to multi-million euro internationally trading businesses. Many of these follow a route to market typical to food manufacturers, with goods beginning at the neighbourhood farmers’ market before moving on to the local grocery store and to other retailers in Ireland and the UK. But with Brexit on the horizon, West Cork SMEs face the prospect of significant disruption to this supply chain, and will need to find alternative markets and diversify their businesses to protect themselves as much as possible.’
He continued: ‘SMEs right across the south of Ireland face a number of challenges around the area of financing. Ensuring continued access to regular cashflow will be equally important – and even more so for those Cork SMEs facing a time lag between issuing invoices and receiving payment, as this can put a severe strain on their finances. When you consider that 36 days is the average length of time that Irish SMEs have to wait before receiving payment, it’s no wonder that issues arise with cashflow. The vast majority of businesses simply cannot afford to wait on money they are owed without a major impact on their bottom line. ‘
He pointed to things like Invoice finance to ease the cashflow worries for many businesses in this respect, releasing immediate cash worth up to 90% of the gross value of the invoices that is otherwise tied-up by these credit sales.
‘Brexit is creating a lot of uncertainty and unknowns for businesses, and as financiers we have an important role to play in helping them to understand the options available, and ensuring the Irish SME sector continues to thrive. In negotiating these hurdles, business owners in West Cork will require a financial partner that can consider their current and future needs and find a funding solution that is right for their business, and balance the sensitivity of dealing with your customers with the need to collect invoice payments quickly and efficiently.’