Cash Flow Planning
From John Dymond, Rural Financial Counsellor
Cash flow management of expenses and income is the principal key to long term success. No matter how much profit is in an enterprise over the course of a trading period, unless there is cash in the bank, or facilities such as overdraft to meet any expenses that precede the income, bills cannot be paid as they arise. This causes stress to the business and stress to the individuals in it.
A large number of rural and farm businesses are already preparing sophisticated cash flows, often utilising computer software. Whilst this provides some forewarning of possible crunch points, continuous review is needed over the course of a season. Such things as interruptions to harvest due to rain, or damage to crops from frost or flood or other external factors (such as rising fertiliser prices), are likely to lead to cash flow pressure.
It is very likely that in some years actual revenue will fall dismally short of the cash flow budget and if this is creating difficulties it can often be useful to call in the services of a Rural Financial Counsellor.
By involving a Rural Financial Counsellor as early as possible in the process, time can be taken to review a range of options before the situation becomes urgent.
A Rural Financial Counsellors involvement may include assessment of the business’s current position and cash flow budgeting, negotiation with the business’s lenders, provision of information on government assistance schemes and information to help the business owners make decisions about financial management.
The service is free, effective, responsive, flexible and confidential and can be accessed on 1800 612 004.
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