The Rural Financial Counselling Service (RFCS) NSW recommends that farmers review, update or create their cash flow budgets, because having an up-to-date cash flow budget is necessary if farmers wish to access new finance or tick off their annual bank review.
A cash flow budget is a way of monitoring all cash coming into and leaving a business, with the result being a net cash flow. A business net cash flow needs to break even or show a surplus to ensure financial obligations can be met.
RFCS NSW Chief Executive, Craig Hough says that the impacts of last year’s variable season conditions, fluctuating livestock markets, increased interest rates and input costs had made an impact on farm business incomes and expenses. He says that farmers should not lose sight of the ever-important role of budgeting.
“By implementing effective cash flow budgeting strategies, farmers are provided with knowledge that will equip them with the right tools to enhance their businesses and steer away from the risk of financial hardship,” he says.
“Some farmers believe that seasonal conditions are too variable to rely on cash flow budgeting, but this is exactly why cash flow budgets are so important. Understanding what your best, worst and average cash outcome might be, can put you in a powerful position, and creating one or several cash flow scenarios doesn’t have to be a difficult task.”
“Being uncertain about your financial future and how you are going to meet your financial obligations can be stressful and seriously impact your emotional, mental and physical health if left unchecked. A cash flow budget is a great way to better understand how far your money might take you in the short, medium and long term,” says Mr Hough.
RFCS NSW offers free and confidential financial counselling services to farmers and related rural enterprises experiencing, or at risk of financial hardship, as well a personal financial counselling service for people in financial difficulty living in the Illawarra Shoalhaven region.
“Our local Rural Financial Counsellors are skilled in cash flow budgeting and can assist with regular budget updates, as well as guiding you through the preparation work to develop new or scenario cash flows,” says Mr Hough.
“We’re a not-for-profit organisation with a mission to strengthen communities by helping farmers be prepared, responsive and sustainable. Call us on 1800 319 458 and we can help with this important aspect of business planning.”
