Farmers advised to have a budget plan in place now
FARMERS have been strongly advised this autumn to set time aside in order to have a close look at their finances and especially their cashflow situation over the coming months.
Farm and agribusiness accountancy specialists, Ifac, said that farming had been particularly challenging over the past year with once again the weather leading to grass shortages and a reduction in milk yields.
With farmers having to spend more money in buying in feed, this has put additional strains on already tight farm budgets, Ifac point out.
Ifac say that in light of these challenges, the importance of effective cashflow and budgeting has never ‘been more apparent’.
Philip O’Connor, Head of Farm Support at Ifac said that cashflow was the lifeblood of any business and even if profits happened to be up in 2024, some cash should be set aside for next year.
“If your cashflow is under pressure, review your loans and interest rates and look for opportunities to secure better value.
“Where available, consider using savings to support working capital if necessary. Other options to consider include delaying non-essential capital expenditure or seeking funding by way of a loan,” said Philip O’Connor.
He said that a ‘well-prepared budget’ can help farmers to anticipate and prepare for future challenges such as the weather related difficulties of the past year.
“Even at this stage if you don’t have a budget in place for 2024, it is not too late to plan one for the remainder of the year and into 2025. Working out your fertiliser, concentrates, and feed requirements will help you estimate what you need to budget for the remainder of the year,” he said.
The Ifac specialist also advised farmers to look closely at income sources and other costs that they might incur – once that information is gathered it would enable farmers to prepare a financial budget, he said.
“If after completing your budget, you expect to be cash-negative after drawings, loan repayments and tax, you need to examine funding options.
“Now is the time to review cashflow and potentially look at funding options, not next spring if the farm runs into cashflow issues,” said Philip O’Connor.
Pictured: Farmers advised to look closely at income sources and other costs that they might incur to prepare a financial budget.