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Australian Cattle Council : Yearbook 2010
70 YEARBOOK 2010 CATTLE COUNCIL OF AUSTRALIA Cashflow -- a key challenge for agribusinesses Cashflow is often the biggest management challenge for agribusinesses, with many farmers relying on seasonal income payments to accommodate frequent expenses. Talking with farmers, cashflow is probably the single biggest challenge for them, therefore it's important to seek advice on how to balance the cash flowing in and out of your business. I encourage business owners to review cashflow forecasts with a best and worst case scenario and work out whether you have reserve funds to operate surplus funds for investing or need to borrow. If you need extra cash, ensure you discuss the timing of repayments as well as the amount, to best match expected cashflow. Alternatively, you may want to use high interest deposit accounts to invest surplus cash Below areas five tips to help businesses manage their cashflow: 1. Cash in the bank v cashflow. Cash in the bank is only a 'point in time' measurement, before paying creditors, overheads and fixed costs. Cashflow takes into account income being received and expenses being paid out over a period of time. 2. Control and reduce operating expenses. Understand the true cost and profitability of everything you do and how it aligns to your business plan. 3. Release cash invested in fixed assets. Capital investment in production technology may help to boost business efficiency over the long-term. However, prioritise purchases and look at how these assets are funded, as there may be alternatives such as leasing. 4. Manage risk to protect profits and create certainty. Protect your future cashflow from the effects of external influences. Risk management solutions can include fixing interest, hedging exchange rates and taking a forward position on prices. The right insurance -- for people as well as buildings and equipment -- is also important. 5. Use your networks. See what the neighbours are doing, attend courses, and keep learning. It's also a good time to be talking to your team of experts -- your accountant, financial adviser and your local NAB Agribusiness Banker -- about your business, where you want to take it and what the economic environment means for you. NAB has been helping farmers and other businesses manage cashflow for more than 150 years. NAB Agribusiness bankers are specialists who understand the cyclical nature of the industry and the challenges being faced The beef industry is one of our core areas and approximately one in three cattle farmers bank with NAB. We know that some graziers are still recovering from poor seasons over recent years and need significant amounts of capital to complete their restocking, so keep your agribusiness banker informed of where your business stands. Your local NAB Agribusiness Manager will understand your issues and has the authority to make most lending decisions on the spot, so can move quickly to assist you or suggest alternatives as the need arises. NAB Agribusiness can provide assistance and insights to help review the current situation of your agribusiness and plan for the future. For more information, contact your local NAB agribusiness banker, call 13 10 12 or visit nab.com.au/agribusiness. Important Notice: NAB has not taken into account your objectives, financial situation or needs and recommends that you consider whether any advice in this article is appropriate for your circumstances. ABOUT NAB AGRIBUSINESS National Australia Bank (NAB) Agribusiness employs more than 580 agribusiness banking specialists in 110 metropolitan and regional locations Australia-wide. The Agribusiness team use their local and industry knowledge to better understand the unique environmental and economic needs of farmers and businesses beyond the farm gate -- whether they provide inputs into agriculture or process, distribute or market primary produce. NAB's flexible range of agribusiness products and services is delivered by listening to and working with customers, to tailor the best packages and advice for their businesses. For further information please visit www.nab.com.au/agribusiness. Khan Horne General Manager NAB Agribusiness