08 February 2023
Avoiding future issues with cash flow planning
On most beef farms which include different systems from suckler to finishing or dairy calf to beef, the majority of income on farms is at the end of the year.
It is important that cash flow is managed to ensure that all essential bills are paid (including living expenses) and that no long-term damage is done to the business due to a cash shortage. It is important that cash flow is also managed so as to build a cash reserve and to undertake necessary on-farm improvements, Catherine Egan, Teagasc Beef Specialist, discusses further.
With rising input costs it is important that a plan is put in place now to avoid cash flow issues in the months ahead. The main priority is to minimise non-essential spending. The following are the main areas to examine to try and bridge the gap between income and spending.
1. Prioritise essential living expenses.
2. Review financial repayments / commitments.
- Examine the option of reducing bank repayments through either availing of a temporary interest-only period or extending the term on existing loans (where feasible).
- Where machinery leasing or hire purchase agreements are in place, consult with your finance provider to examine ways of reducing monthly repayments on a temporary basis where possible.
- Engage with your merchants / farm input suppliers and keep them informed – examine the potential for structured repayments to avoid paying excessive penalty interest on overdue accounts.
3. While fertiliser prices are high again this year, it is important not to limit fertiliser resulting in reduced grass yield and a fodder shortage, hence concentrates will have to be purchased to make up this deficit and lead to further increasing costs.
4. Involve all family members in analysis and solutions where possible.
5. Sale of trading stock.
Target beef cattle / stores for sale or the early sale of cull stock, especially where you may be tight for fodder.
6. Review the main efficiency factors on your farm, where can you get the best return for your efforts?
Contact your local Teagasc advisor to review 2022 by completing a eProfit Monitor and discuss the option of using the Teagasc Cost Control planner for 2023.
Click here to complete a 5 minute Cash flow for your farm
Teagasc Beef Specialists issue an article on a topic of interest to suckler & cattle farmers every Wednesday here on Teagasc Daily