Log in

Brexit, late payments and the importance of doing nothing

6th July, 2016

Sometimes when you’re running events, you can be hit by circumstances – weather, tube strike, all your speakers catching the flu - but events of globally significant importance are thankfully quite rare…

But that’s just what happened for Taulia’s first European “Connect” event which took place under the shadow of Brexit in the Amba Hotel, Charring Cross last week. Would the attendees and speakers suddenly have more pressing issues on their minds? Thankfully for Taulia – that wasn’t the case.

And there are a few reasons for that, as Cedric Bru, Taulia CEO pointed out as he opened the day’s session. When faced with danger, we react in one of three ways – attack, run away, or freeze. Your quality as a leader, Bru suggested, is determined by which decision you make. Business leaders need to take stock and not rush to decisions they may regret later, and part of that process is gathering information. So, rather than an empty venue devoid of attendees and speakers – the event was filled with those looking for answers and looking to share information.

Bru pointed out that Taulia themselves are committed to maintaining their European HQ in London and, as was one of his remits when he joined the company just over a year ago, continued expansion into Europe. The company already has around 75 people working across London, Germany, Bulgaria and the Netherlands and counts some very large organisations such as Vodafone, RBS and Northgate as customers.

What the technology offers is certainty in an increasingly uncertain world. As such Bru sees the current challenges as being positive for company growth. One of the certainties technology has the power to deliver, is when and how much companies will be paid. If an organisation can control their spend and manage the risk along their supply chain, they’re better placed to withstand external economic pressures and uncertainty.

And there's nothing more undermining to the certainty of business, particularly for SMEs, than late payment. So it was a little disheartening to hear Philip King’s, CEO CICM news on the progress of the European Directive on late payments and the upcoming Duty to Report legislation. As it turns out, it's more of a case of “progress – what progress?” as he pointed out that the legislation has been delayed yet again. So has the government lost interest? Well, King pointed out that Minister for Small Business, Anna Soubry had first the floods, then the steel crisis, then the EU referendum to deal with. All very understandable – but the problem has not gone away – and continues to put companies, and their supply chains at risk. And it’s not just a UK problem. For example, a well-known German retailer pushed out payments to 120 days – and across Europe the effectiveness of the late payment directive has been patchy. In France, although it initially made a big impact, this has since trailed off. The move towards mandating B2G einvoicing in Jan 2018 may have the effect of pushing the Directive into focus again.

But as far as the UK is concerned, it remains to be seen what will happen to any number of EU based regulations in the wake of Brexit. In fact, simply knowing what to do about something as standard as VAT in the immediate aftermath of Brexit is going to prove troublesome. As Lex Greensill (Senior Adviser and Crown Representative of Her Majesty the Queen) pointed out – the outcome of Brexit was a surprise, and what businesses need is clarity – and that’s not going to happen for some time. In his opinion, the impact may give rise to more pain than in 2008, despite the fact that the banks now are better capitalised. In fact, in his view, the odds of recession for the 2nd half of this year are even, possibly more than that.

Without disagreeing with that view, Cedric Bru struck a more positive note, saying that however difficult and however long the negotiations take, deals will have to be made and in the medium to long term, things will pick up. No question that there will be a chilling effect, but with long lasting and deep connections between UK and European trade and relationships, it will recover. The onus will be on business leaders to lead by example - listen, observe and move forward from a position of clarity.

 

bottom footer image2