Although we cannot help with Brexit, we can help you to ensure that your farming business is as prepared as possible for the uncertain times ahead.
It’s important to understand how your business is performing
In order to understand how your business is performing, it is important to regularly monitor your cash flow. The year end accounts not only show historic data but they also contain accounting adjustments – a cash flow for the same period can show a very different story. Many cloud accounting packages have the facility to produce a cash flow or alternatively, a spreadsheet can be set up to generate the figures. Once you have a template in place, you can flex the numbers to show the impact of changes in price, or yields. This can be extremely powerful in providing insightful financial
information and allows you to take timely action.
Withdrawal of the Basic Payment Scheme is prompting diversification projects
Once we leave the EU, the Basic Payment Scheme (BPS) is to be withdrawn. How will your cash flow look if you factor in the loss of this income? The withdrawal has prompted many businesses to look for diversification opportunities to supplement their turnover and ensure they are fully utilising the assets they own. However, before ploughing straight into a diversification project, it is important to assess the costs involved whilst also ensuring there is room in the market for your project. We highly recommend speaking with a local business consultant before investing heavily. There are also wider taxation implications to consider such as Inheritance Tax (IHT) reliefs, which can be dramatically different if the use of an asset changes away from trading.
Ways to reduce your costs
Cost control is another way to improve your cash flow. Simple measures can be taken such as purchasing through a buying group, to more bespoke arrangements such as machinery sharing or even the sharing of labour. In some cases, it may be possible, and very tax efficient, to swap land in order to own land closer to base, thereby reducing fuel costs. Our specialist team can advise you on the best ways to reduce costs.
We can help you prepare for uncertain times
In the coming months, we are sure to face a considerable amount of uncertainty. Knowing how to deal with this is no mean feat but one thing is for sure, burying your head in the sand is not an option. If you would like any advice, please contact Kerry O’Reilley on 01295 250401 or koreilley@ellacotts.co.uk. Alternatively please have a look at our market-leading farming and agricultural accounting service.
