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Pharma, shipping, logistics and other companies shouldn’t wait for government guidance
Many businesses trading abroad ‘are in the dark’ about what they should be doing to prepare financially for the Brexit January 1, 2021 deadline, according to feedback received by Hamilton Court FX, a UK-based consulting firm that provides foreign exchange (FX) transactional advice and delivery.
Importers and exporters, including those in pharmaceuticals, shipping, logistics, insurance and other businesses are worried about the government's failure to provide clear detail sooner to guide them through UK and European Union bureaucracy.
With eight out of 10 businesses still ‘sitting-on-the-fence’ and waiting for detailed government advice on the changes to the way they import/export goods and pay for them, the consulting group warns that it is imperative that they act now with proactive methods of hedging their currency needs so market fluctuations don't eat into their profits.
"We have been receiving feedback from our clients for a year or more on their frustration with government over Brexit advice,” Mark Palmer, chief operating officer of Hamilton Court FX, said. “There is little available and no one to speak to. There is no one-size-fits-all answer here, which is why businesses need to speak to someone. All their issues are different and there are less than 80 days to go."
Last week the British government sent an email to businesses with links to its website that purport to offer advice on dealing with the changes brought on by operating outside of the UK post-Brexit, the consultancy noted.
"The portal offers us no tangible advice that hasn't already been covered externally and by comparison misses a lot of key elements of consideration,” Palmer said, adding that the firm is countering ‘Brexit fatigue’ by offering the following advice to help companies implement active strategies to ensure that they'll know where they stand with foreign exchange, including:
The firm also offered some alternative FX strategies instead of waiting:
Hamilton Court FX added suggestions that businesses should consider with their FX product mix: A lower potential obligation; structures that allow for upside flexibility or that can deliver a level of outperformance vs. vanilla products if their risk tolerance allows for it; trades with low or zero chance of margin call, and working with an expert to tailor a trade that aligns with the company’s market view, while still delivering the level of protection required.