Sunday, July 3, 2022

Keep track of the finances

Banks want farmers to communicate with them more on the changes to their budgets and upcoming costs according to BNZ Agribusiness partner Sue Rowlandson.

Sue Rowlandson.

 

 

 

 

 

 

 

 

 

 

 

 

She told a Dairy Women’s Network (DWN) Dairy Day titled ‘A Challenging Season’ that keeping in regular contact was absolutely critical, as was identifying any issues or overdraft requirements.

It was frustrating when clients went into credit at the 20th of the month and then into overdraft again with two weeks left before the next milk cheque without informing the bank, she said.

Farmers should be doing regular cash flow updates, even if they were bimonthly in conjunction with GST, comparing their actuals with their budget and seeing where the major differences were.

“There is nothing that impresses me more than someone coming to me and giving me DairyNZ budgets.”
Rowlandson encouraged farm owners to request financial reports before employing sharemilkers or contract milkers as well, because “if they’re stressed financially they’re not going to be able to give the best to your business”.

Once a budget was in place monitoring was essential but financial responsibility should not be put on one partner. Couples needed to set two hours aside every month shortly after the 20th where they reviewed exactly where they were, were going and what the changes and variances were.

Clients needed to tell their bank when they needed funding and how it would be repaid.

“And we need to know how much! Tell us the amount so we can then look at the impact of that.

“We all know that changes happen, but when a major change happens, head back and change your budget and look at what the ongoing impact is.”

BNZ is working on a total payout of $5.80/kg milksolids (MS).

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