Agriculture - How to deal with cash shortages
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We work with authorised partners of the British Business Bank for the Coronavirus Interruption Loan Scheme
We work with authorised partners of the British Business Bank for the Coronavirus Interruption Loan Scheme

Most business owners will tell you that the industry in which they work and their company is unique – nothing like any other business. And it is true – one thing all businesses have in common is that they are all different!

What solutions are available?

Agriculture is no exception. Firstly it is so diverse that many farmers become experts in their own field (- excuse the pun) but may have limited knowledge of other areas. Why should a poultry farmer know much about horticulture, or a hill sheep farmer in the highlands of Scotland know anything about growing cider apples?

Of course mixed farming has existed for centuries but as in most industries and occupations, as life becomes more complex, we all tend to specialise more. And agriculture is certainly technically complex.

In an industry which deals closely with nature – living entities whether it’s livestock or crops – and the weather, it has more than its share of challenges. And that’s ignoring dealing with supermarkets, red tape and worrying about the outcome of the BREXIT referendum.

But there is common ground amongst all businesses. If things start to go wrong, whatever the reason, eventually it hits cash flow. So whether you are tearing your hair out with worry over the prices you are being paid for your produce or indeed if you were say a manufacturer and the lack of a key component had stopped production, the pain is the same – it results in a cash flow shortage. If it is more regular than a one-off event then it is time to do something.

Any business which is experiencing a cash shortage needs to address the problem sooner rather than later. Cash is the lifeblood of any business and without it the business will ultimately fail.

There are quite a number of solutions such as asset finance and hire purchase. It may be that there is need for a financial injection into the business in order to revitalise it. Raising finance even as recently as a couple of years ago was difficult but far more lenders have emerged recently who will lend even if your credit history has taken a few knocks.

But borrowing money isn’t always the right answer if the underlying problem has not been identified and addressed.

If borrowing isn’t a realistic option there are other ways of salvaging a business. It may involve some form of restructuring or perhaps a formal arrangement with creditors to enable the business to continue trading and allow some breathing space to recover. Of paramount importance is to take professional advice as soon as the problem arises.

If you run a business in agriculture and have cash flow issues WF offers free confidential advice. We can help you identify the underlying problem and can explain what options are available to put your business back on its feet.