TRADE TALK New World Thinking Mitigating risk, conforming with regulations and ensuring compliance will be priorities for all business through <strong>2020</strong> and the new decade. AUTHOR – Marco Forgione Marco Forgione THE UK’s withdrawal from the EU at the end of January heralds the start of a new role for the UK on the global stage. For the first time in 47 years, UK negotiators are working to frame new trading and economic relationships. In future our global trade will be governed by new, mostly bilateral agreements. The implication for all aspects of businesses, including credit management and customs compliance, is that the rules may be set on a nation-by-nation basis. This fluid environment will offer unprecedented opportunities but will also demand greater structure and internal process. Last month’s CM Editor’s Column highlighted how new processes, technologies and training lifted Laing O’Rourke’s Prompt Payment Code achievement from 59 percent to 93 percent in just seven months. It is this fleet-footed, dedication, and commitment to continuous improvement which will be essential in future. Changes to existing regulatory systems, such as customs arrangements and anti-money laundering regulations, are already having an impact. The global economy is having to adapt to a new reality where sanctions are used as strategic elements of wider trade negotiations. There are several macroeconomic issues which will influence future international trade, including Russia and others’ attempts to establish an alternative reserve currency, the effect of crypto currencies, and the role of blockchain. Businesses will need robust internal processes if they are to respond to this rapidly changing landscape. KNOWN KNOWNS To paraphrase Donald Rumsfeld, businesses need to be able to adapt to known knowns, known unknowns and unknown unknowns. The full impact of the coronavirus, the Australian bushfires and the trade agreement with the EU will not be known for many months. What is certain is that supply chains will be disrupted, capital flows will change, and customs regulations will alter. Technology will be another significant change agent. A recent study by Dun & Bradstreet and CICM found that 87 percent of respondents believe automation will drive increased efficiency. As detailed in last month’s CM, artificial intelligence is transforming collection negotiations with the development of AVA. In response to the ongoing lag in the UK’s productivity, the Bank of England and the UK Government will have to establish new approaches to encourage investment. Philip King FCICM, the Interim Small Business Commissioner, has an important role to play in sending a clear message to Government that MSMEs need access to finance and the increased liquidity created by greater compliance with the Prompt Payment Code. Businesses will also be called on to respond to the growing demands of the sustainability agenda. The requirement to transform will become even more relevant as we move towards COP26 climate change conference in Glasgow this November. In summary, UK businesses have a unique opportunity to benefit from a globally focused, free-trade approach to international goods and services markets. However, to reap the rewards, companies must ensure they have a highly skilled, informed and adaptable workforce supported by robust processes. Investment in training, technological development and operational procedures will be key to making sure trading is done free from delays, seizing of goods, and fines or possible imprisonment. With all of this in mind, it is fair to say that mitigating risk, conforming with regulations and ensuring compliance will be priorities for all businesses this year and throughout the new decade. Marco Forgione is Director General of the Institute of Export and International Trade Businesses will need robust internal processes if they are to respond to this rapidly changing landscape. The Recognised Standard / www.cicm.com / September 2019 / PAGE 60
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