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How small business sectors can use virtual banking to navigate Brexit

The ongoing uncertainty surrounding the UK’s future relationship with the European Union is causing problems for the government and businesses.

With the outcome far from clear, businesses are having to plan for a range of scenarios that may or may not come to pass. And different industry sectors will be impacted in different ways.

Small businesses are making preparations for the range of potential outcomes, but virtual banking can play a role in supporting specific industries as they deal with the specific challenges they are likely to face. Read on for some examples:
 

Manufacturing

One of the likely implications of Brexit is that export and import tariffs will increase, as frictionless trade between the UK and the EU is ended, at least in the short term. This means manufacturers, both large and small, will be paying more for the material and components used in their production lines.

For those operating as part of complex supply chains, the impact on larger manufacturers, such as Honda, will have a knock-on effect. And costs will multiply for businesses with manufacturing operations in the EU, or that produce complex items that need go between the UK and EU more than once, as part of the manufacturing process.

It has been reported that many UK manufacturers plan to move their supplier base out of the EU and back to the UK and to invest cash reserves in stockpiling raw materials. This would avoid the escalating costs that leaving the EU is likely to bring.

How virtual banking can help:

The flexibility that virtual banking provides can help manufacturers as they adjust their operations in response to the changing economic situation.

If they decide to shift operations back to the UK, or to other countries with more favourable trade arrangements, there won’t be any need to run changes past their virtual bank, and payments between new countries – including across multiple borders – can continue to be rapid and low cost.

The fact that virtual bank accounts can be managed and accessed at any time via any connected device, means businesses can keep track of their finances during the period of transition, while 24/7 customer service means issues can be quickly resolved.
 

Retail

Like manufacturers, retailers often rely on supply chains that extend across international borders. The impact of tariffs on the goods they import and export could therefore be significant.

Retail businesses may therefore look at suppliers from outside the EU, or come up with more cost-effective methods of acquiring goods – such as purchasing items from companies within the Single Market, exporting them to a third country with free trade agreements with both the EU and the UK, then import them from there.

It’s also likely that many UK retailers, particularly those with international e-commerce operations, will have customers in the EU. New tariffs will force the price of products up while changes to payments regulations could impact the way customers pay for their goods and services.

How virtual banking can help:

Like manufacturers, retailers will benefit from the low-cost international payments that virtual banks support, particularly if they switch to non-EU suppliers, or put together a more cost-effective supply chain involving several countries.

For e-commerce, businesses can keep control of costs by using payment functionality provided by the virtual banks. The ePayments Merchant Service, for example, enables customers to install a payment button easily and at no cost, with low fees for transactions using a range of payment methods.
 

Logistics and transport

Businesses offering transport for material and goods across the EU, as well as those transporting people, such as travel operators, will be impacted by Brexit.

Border controls will probably become more strict, meaning the process of travelling between the UK and EU will become more laborious. For travellers, there are likely to be additional costs and paperwork, while logistics providers will have to ensure the correct tariffs and permissions have been obtained to move between the UK and the EU.

How virtual banking can help:

With the main issue being around costs and ensuring the right payments have been made, the cost effective elements of virtual banking will come to the fore. Low international payment fees for transactions between businesses and third parties in the EU will be an advantage, as will the low e-commerce fees.

In addition, the prepaid payment cards offered by many virtual banks will be useful for people wanting to spend money in the EU. With flat ATM fees, users can withdraw Euros without having to pay the higher fees to withdraw directly from their bank account.

Finally, the fact that virtual banking supports rapid payments means that if any payments are outstanding (either duty on goods, or for travel documents), they can be quickly paid, with any connected devices.

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How small business sectors can use virtual banking to navigate Brexit
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