Farm finance through the seasons

Key points

• Farm costs and farm income rarely land in the same months.
• Mapping your year month by month shows where the gaps are.
• Input costs, harvest timing and stock purchases are the big swings for many farms.
• Some finance can be set up to match the seasons. Ask lenders what they offer.

Why farm cash flow is different

A shop or a café sees money come in most days. A farm often does not. You might spend heavily for months on seed, fertiliser, fuel and wages, then get paid in one or two big lumps after harvest or stock sales.

That pattern is normal. The challenge is making sure you can cover the lean months, and that loan repayments do not fall at the worst time.

Map your year

Start with a simple month-by-month picture. For each month, write down what you expect to spend and what you expect to earn. Use last year's records as a guide, then adjust for what you know about this year.

The cash flow planner does this for you and shows the running balance. Look for the months where the balance dips lowest. Those are your gaps.

Inputs: the big spend before the season

For cropping, the biggest costs often come before and during planting: seed, fertiliser, chemicals, fuel and contract work. These can be a large share of the year's spending, all at once.

The crop input planner helps you add up input costs by paddock or crop, so you know what you will need and when.

Ways farms often cover inputs

• cash saved from the last harvest
• a seasonal or working capital facility from a lender
• supplier terms, where the supplier is paid later

Each one has its own costs and conditions. Compare them using your own quotes.

Harvest timing

Harvest is when much of the money comes in, but not always straight away. Grain might be stored and sold later. Buyers might pay on terms. Weather can push harvest back.

When you plan, think about when the cash actually lands in your account, not when the crop comes off. If harvest runs late, how long can you cover costs?

Stock purchases

Buying stock is another big outlay. Prices can move a lot, and the return may not come for months, after the animals are grown out or sold.

The livestock purchase planner helps you think through the purchase cost, the holding costs and the expected sale, using your own figures.

Matching finance to the seasons

Some lenders understand farm cash flow and offer options such as:

• seasonal or harvest-timed repayments
• interest-only periods at certain times of year
• revolving facilities you draw on and repay through the year

Not every lender offers these, and terms differ. The seasonal repayments tool helps you see how a seasonal pattern might fit your income.

Build in a buffer

Seasons do not always go to plan. Prices can fall, rain can fail, and machines can break down at the worst time. A cash buffer, or an unused part of a facility, can give you breathing room.

If a season does go badly, read When a season goes badly. Talking to lenders early is usually better than waiting.

Questions to ask a lender

• Can repayments be timed to when our income comes in?
• Is there a facility we can draw on for inputs and repay after harvest?
• What happens if harvest or sales are later than planned?
• What fees apply to the facility, even when it is not used?