As we head toward the end of 2024, many farmers are facing the seasonal financial pressures that can come with tight cash flow. With costs rising across the board and the looming pressures of year-end financial obligations, it's crucial to take a proactive approach to manage cash flow and ensure the farm stays on solid ground.
Here are some key strategies that farmers can use to ease cash flow challenges in the months ahead:
1. Sort Out Your 2024 Accounts Early
For farms with a March year-end, getting your 2024 accounts in order as soon as possible is essential. Preparing your accounts early gives you a clear financial picture, helping you to budget effectively and plan for any upcoming financial commitments. This can also make it easier to identify areas for cost-saving and improve your overall cash flow management as you head into the new year.
2. Consider Borrowing Earlier Rather Than Later
If you foresee the need for extra funding to bridge the gap between expenses and revenue, securing borrowing sooner rather than later is a smart move. The longer you wait, the fewer options you may have, and urgent loans often come with higher interest rates or less favourable terms. By planning ahead, you can work with your lender to find a solution that suits your farm’s needs and helps you manage seasonal cash flow swings more effectively.
3. Take Advantage of Free Business Advice for BPS Claimants
For those claiming the Basic Payment Scheme (BPS), there’s an opportunity to receive free business advice funded by DEFRA. This is a valuable resource that can help you assess your farm's financial health, explore cost-saving measures, and identify opportunities to improve cash flow. Don’t miss out on this service—using professional advice could make a significant difference as you navigate the months ahead.
4. Sell Unused or Little-Used Equipment
Many farms have old or underutilized equipment that takes up space, drains resources, and is insured unnecessarily. Selling unused kit is a quick way to release cash, reduce clutter, and lower your insurance premiums. It’s worth doing an audit of your equipment to see what could be sold—this could be an easy win for your cash flow situation.
5. Leverage Unencumbered Assets
If your farm has unencumbered assets (those not tied to any loans or other obligations), you may have a hidden opportunity to release cash. Unencumbered land, buildings, or machinery can be used as collateral to secure financing, giving you access to much-needed capital. Speaking with a financial advisor about leveraging these assets could provide a practical solution to ease your cash flow issues.
6. Shop Around for Utilities and Make Use of Night Rates
Another quick win for improving cash flow is reducing overhead costs. Now is a great time to shop around for better deals on your utilities and insurance policies. Many farmers stick with the same providers year after year, but the savings you could achieve by switching can add up significantly. Additionally, if your farm operations can be adjusted to take advantage of lower night rates for electricity, you can further reduce your utility costs. Certain farm activities, such as irrigation or machinery charging, can be timed to run during off-peak hours, creating another layer of savings to help combat the seasonal cash flow squeeze.
Preparing for the Coming Months
The next few months can be challenging for farms facing tight cash flow, but taking action now can significantly ease the burden. By organizing your accounts early, securing funding ahead of time, and exploring opportunities to release cash, you’ll be in a stronger position to weather financial pressures. Additionally, small changes like selling unused equipment, shopping around for utilities and insurance, and taking advantage of night rates can all add up to meaningful savings.
At Excel-A-Rate we specialize in helping businesses manage their cash flow and financing needs. If you need advice or support, whether it’s securing a loan, refinancing equipment, or planning for the future, our team is here to help you navigate these financial challenges with confidence.
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