Weathering Your Cash Flow
The weather and other factors have had a huge impact on arable and livestock farmers up and down the country. A poor harvest in 2012 resulting in low yields and poor quality grain, Schmallenburg and then a difficult spring means that the outlook for 2013 unfortunately doesn’t look much easier. This could have a serious impact on your cash flow, so how do you plan ahead?
You need to look at a whole range of issues that could occur – late payment of the Single Farm Payment due next January, for example. Would this mean you wouldn’t be able to buy fertilizer until Spring next year, and would that make it more expensive?
It is far better to have a clear understanding where your business is now compared to last year and look forward to where it is likely to be this time next year through accurate budgets and cash flows.
This will then enable you to have a discussion with the bank manager making him aware that you may need to increase the overdraft before harvest or before the SFP comes.
Bear in mind that market conditions will be different to last year as global grain stocks look like they will be up on last year, pushing down the price from arable farmers and for livestock farmers increasing the price of feed, forage and bedding costs, particularly as farmers will think twice about baling their straw.
All this undoubtedly causes stress and worry for everyone. Our role is to help you manage the planning process and reduce the uncertainty. The earlier the issues are addressed and resolved the better. We can help you through accurate reporting and giving you a clear idea of what you can afford to do. If you need to borrow we can also help negotiate preferential rates with the banks and give you a better chance of accessing finance with a proper business plan.
If you want assistance or advice on cash flows, your current borrowing and making it work better, please call Tom Mason.