Any dairy farmer at the moment will tell you that cash is tight. The sharp fall in milk prices has seen many heading for troubled waters, with some producers struggling to make any margin over recent months.
In an effort to save their business and livelihood, disgruntled farmers have waged war on the supermarket’s squeeze on prices by holding in-store protests and boycotts. Some have even gone as far as urging consumers not to buy any milk.
It isn’t the first time that the battle over milk prices has spilled onto the high street, which is why now more than ever, it is crucial to consider the importance of healthy cashflow.
Every company needs a sufficient supply of cash to meet the basic costs of running a business. More money going out than coming in simply isn’t sustainable and can cause them to cease trading.
Budgeting cashflow enables firms to forecast the amount of money they expect to receive and spend over a certain period, usually in three month increments. Having realistic estimates of performance, prices and timescales will help to build a timeline of activity for the year and plan for the future.
Dairy farmers tend to receive regular monthly income from milk cheques, whereas Suckler Cow Units make most of their income during the autumn. Both operations, however, need cash throughout the year, with a detailed budget showing the difference in money coming in and out each month and the knock-on effect that this will have on the business.
It also highlights times in the year when borrowing may be necessary to keep the company afloat. Asset finance, for example, can be utilised for a multitude of financial reasons. Unlike a traditional bank loan, asset finance solutions are tailored to your business through an in-depth understanding of your sector and cashflow issues, meaning it helps to overcome the challenges faced so you can focus on doing your job.
With such asset-rich businesses, solutions like refinancing can release hidden equity in equipment to provide farmers with an instant cash boost, with repayments then tailored to suit seasonal cycles.
Asset finance can also assist the funding of new equipment and facilities such as robotic milking machines and milking parlours.
When a shortfall in cashflow is expected, it is vital that you discuss your options rather than ignoring the problem.
Farmers and growers are also set to face significant tax bills this year, which many may find difficult to pay. In addition to assisting with cash flow, asset finance is another great tool to help tackle HMRC debt and reduce your tax burden.
For more information, contact Praetura Asset Finance today on 0333 323 7800.