Uncertainty. That’s the word dominating the business world as the British government continues to negotiate with the European Union about the UK’s proposed exit from the EU.
With it still unclear whether the UK will leave with a good deal, bad deal or no deal – or even leave at all – and decisions about membership of the single market and customs union to be finalised, it’s incredibly difficult for businesses to make strategic decisions and plan ahead.
Some major companies have already announced plans to move operations elsewhere, or at least scale them down in the UK. Others are waiting to see what Brexit brings, with BMW planning to pause production at its Mini plant in Oxford for the month following the UK’s proposed exit.
Any decisions based on the current situation, or assumptions about what will happen, are fraught with risk. What businesses need to deal with this is flexibility, meaning they can quickly adapt their approach as the economic implications of Brexit become clearer.
For instance, companies that currently do most of their business domestically, or with EU countries, may need to start looking elsewhere for business opportunities, meaning they will be conducting financial transactions with entities based in countries they haven’t dealt with previously.
Traditional approaches to banking require companies to set up new and costly wires to transfer money to new international markets. But the ‘payments without borders’ model supported by e-payments reduces the fees charged for making financial transactions between different countries, sometimes to nothing at all.
By using e-payments accounts – which are also able to deal with multiple currencies – businesses can deal with their revenue and costs in a more global and cost-effective way. This means their operations and the talent they have access to aren’t limited by geography – or indeed by political and economic unions.
In doing business with new markets as a result of Brexit, employees may be required to travel abroad, meaning prepaid payment cards issued by virtual banks come into their own. These can be used without a charge anywhere in the world, have flat ATM fees, and give users the option to withdraw local currency.
A potential complication of the UK leaving the EU is how transactions for goods and services are carried out. For example, businesses working with a company located in an EU member state may suddenly be subject to higher tariffs to export and or import goods or services.
To get around this, companies may conduct transactions through countries that have free trade agreements with the UK and the EU, avoiding the tariffs. This will obviously require transactions to take place across multiple borders, which companies using virtual banks and e-payments can do more cost-effectively and flexibly than those using traditional banking.
As well as lowering costs, e-payments accounts have the benefit of speed. They can be set up quickly and simply, while international payments can be made within a day thanks to the provision of an IBAN (an international bank account number).
The attributes of e-payments accounts mean companies won’t be risking too much if the economic relationship between the UK and Europe shifts. If needed, they can easily change their payments approach in response to changing business requirements.
While there will be other business challenges presented by Brexit, whatever form its takes, the use of e-payments and virtual banking can provide a level of flexibility that means businesses won’t have to waste too much time or money on adjusting their financial transactions.