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Reviewing finances with a 5 minute cashflow

Reviewing finances with a 5 minute cashflow

On most beef farms the majority of income 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 no long term damage is done to the business due to a cash shortage, says Catherine Egan, Teagasc Beef Specialist

It is important that cash flow is also managed so as to build a cash reserve and to undertake necessary on-farm improvements. Therefore 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.

Bridging the gap between income and 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.

  1. 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).
  2. 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.
  3. Engage with your merchants/farm input suppliers and keep them informed – examine potential for structured repayments to avoid paying excessive penalty interest on overdue accounts.

3. While fertiliser prices are high 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 further increasing costs.

4. Involve all family members in analysis & solutions where possible.

5. Sale of trading stock. Target beef cattle /stores for sale/ 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 advisory office to review 2021 by completing a Profit Monitor and discuss the option of using the Teagasc cost control planner for 2022.

Click here to complete a 5 minute Cash flow for your farm

The Teagasc Beef Specialists issue an article on a topic of interest to Suckler and Beef farmers every Wednesday here on Teagasc Daily.  Find more on Teagasc Beef here  Teagasc provides a Local Advisory and Education service to farmers. Find your local Teagasc office here