3 ways to gear up your farm for the next financial year

Published on November 19th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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It’s time to go back to the drawing board

Planning your finance is a step in the right direction. It is beneficial to do a monthly assessment to see where you are spending your money and the holes that are causing you to lose money. According to Farm Online, ANZ experienced a drop of impaired farm loans to $500 million last year. Although the numbers of defaults have decreased, there are still farms that owe thousands in outstanding loans.

This could be due to a variety of reasons such as the recent drought that has affected production on some farms, the performance of the export market, and a lack of cash flow to act as a buffer against unexpected costs. Cash flow is an issue for both large and small farms, even if they are able to generate a profit.

Having a financial forecast on when and where financial difficulties may arise can help you prepare your finances. You can also consider taking out a cash flow lending loan or working capital loan to help your farm business during those periods in which you have a tight cash flow.

Know when and when not to make cuts

Another reason why it is useful to evaluate your finances every month is that it can show you where you need to cut back. This is where you can make use of a qualified financial advisor or an accountant who will be able to help you spot areas that are draining your budget. However, be careful about not cutting back too much back in the name of saving on costs. This also means checking if the cuts you are making for maintenance and repairs of equipment is necessary. You can also consider ways to cut back on operational costs by improving the efficiency of your labour force. Keep in mind that what may work for one business may not work for yours.

Does your loan still cut it for you?

Commercial loans are just some of the finance options that farmers make use of to keep their farms afloat or working capital to keep things running. However, your loan can also be something that can either make or break the operation of your business. Check to see if your loan still offers you a rate that is suitable for your needs.

Some farmers may have taken out a bad credit loan that offers fewer options and not so flexible features. However, if your credit score has improved from the last time you applied you can look for another loan that comes with flexible features that will work for your farm. Always remember to compare the interest rate, ongoing fees, and charges that come with the loan.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for commercial loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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