With inflation at record levels, interest rates showing no sign of decreasing and tax bills to be paid by the end of January, managing cashflow remains a serious challenge.
The short-term focus of any farm business in the current climate must be on working capital requirements. Consideration needs to be given to reviewing existing facilities, forecasting future requirements, and reviewing long-term debt obligations.
Bank funding
Stress testing obligations will give an insight into how performance will be impacted in the event of further interest rates rises.
If additional finance is needed, early discussions with lenders is advisable. Lenders do not respond well to last-minute calls for increased credit facilities, so keep them informed and try to plan as far ahead as possible for any additional funding requirements.
Debtors and creditors
Keep a careful eye on debtors and the length of time they take to pay. Implement a robust procedure to review debtors and to identify overdue accounts, or those where there is cause for concern, and follow these up promptly.
Whilst many suppliers will grant a 30-day credit period, try to stick to it and avoid a build-up of liabilities. It is much more difficult to play catch up than it is to pay in line with credit terms.
Tax
Where personal tax bills are due for payment by the end of January, HMRC are offering Time To Pay arrangements where the liability cannot be met in full by then.
Do not allow tax bills to go unpaid if avoidable – HMRC have been ramping up enforcement in recent times.
If anyone finds themselves facing what may seem insurmountable cashflow challenges – seek advice and seek it early.
Gareth McGonigle is a Director at ASM Chartered Accountants. He is a Licensed Insolvency Practitioner with a wealth of experience in both restructuring and formal insolvency assignments. Should you wish to have a free, confidential discussion to discuss your options, Gareth can be contacted at gareth.mcgonigle@asmbelfast.com or at 028 9024 9222.
