FOR many local businesses and farms, success hinges not only on productivity but on one vital ingredient, cashflow.
At its core, cashflow is the rhythm of your business: the money coming in and the money going out.
Misjudging this flow, even briefly, can lead to financial stress that could easily derail your operations.
That’s why planning your cashflow isn’t just a good idea, it’s essential.
Whether you’re running a business, selling cattle or managing a dairy herd, getting a handle on your cashflow allows you to make informed, confident decisions.
It lets you anticipate hiccups like rising input costs, market price dips, or unexpected expenses, and deal with them before they become crises.
Start by building a budget that includes all expected income - grants, payments, sales - and compare that against your monthly outgoings, from loan repayments and tax to living costs.
Reviewing past bank statements, invoices, and financial accounts is key to grounding your budget in reality, not just hopes.
For farmers especially, consider best, actual, and stressed-case scenarios to test how resilient your business is when income fluctuates.
Equally important is looking ahead.
A good cashflow plan isn’t just about covering next month, it should help set clear financial targets for the next five years.
This means projecting future income, accounting for tax obligations, and ensuring you understand your minimum viable profit, what you need to meet your repayments, tax, and personal drawings.
Don’t forget tax planning.
In a bumper year, big profits can lead to steep tax bills.
Spreading payments or setting aside a percentage of profits throughout the year can ease the burden.
Consider whether income averaging still suits you, and if not, speak to your accountant about options like opting out for a year.
Finally, keep reviewing your plan monthly.
This lets you spot problems early and adjust your strategy as needed.
Treat it like a living document, one that evolves as your business grows and adapts.
Managing cashflow may seem daunting, but with the right approach, it becomes a powerful tool to grow your business confidently and sustainably.
If you need help getting started, or would like to review your current plan, speak to your accountant.
We’re here to support you every step of the way.
Talk to Peter and our team in Bandon on 023 884 1785 or visit www.ifac.ie
