If you are under pressure, get help now

Thu, 11 Aug 2011 00:00:00 -1100

Message to farming businesses: if you’re feeling under pressure, don’t wait until it’s too late to get help. Contact the RFCS WA for help now, while it’s possible to make adjustments to your business.

RFCS financial counsellor Mandy McLean is keen for farmers and farm-related businesses to understand that there is help available if they are struggling with business finances.

She has been reflecting on the number of rural businesses that have been affected by poor cropping seasons and may need help, prompted by the fact that she and other counsellors have been very busy right through the seeding season.

It's usually a quieter time for rural financial counsellors. But this season has been different - the number of farm businesses seeking help remains high.

"Most of the clients I have seen during this time only received limited bank funds for smaller than usual seeding programs. As they were able to complete their programs more quickly, they have turned their attention to their business finances and longer term strategic planning," she says.

"Over the last decade, some people's business positions have declined as a result of poor seasons due to drought and frost, and other factors. People are feeling a bit insecure with falling property values and lending ratios."Some people feel in a jam. They need to make adjustments to their businesses, for example to sell part of the property, but property is really hard to sell at the moment.

"I've also worked with small businesses that provide services to agricultural businesses, who are finding their cash flow under pressure as farm work declines. With very tight cost control around reduced cropping programs, there's no extra money for farmers to spend on maintenance projects and this now has a flow-on effect for contractors and small businesses.

"For example, a contractor who provides minor construction services such as concreting, fencing, and so on, may find work has dried up because of farmers' very tight budgets. That extra work hasn't made it onto farmers' priority lists."

Those businesses are turning to the RFCS WA for business planning support.

How we can help

"We work with businesses to help them find options," Mandy says. "Solutions will be different for every business, depending on their goals and vision. We engage with the business using a business planning framework and we assist them to make adjustments to their operations in line with their aspirational goals.

"We help businesses to review their cash flow budgets, and to talk to banks about availability of finance. Some businesses have needed a temporary overdraft to support a job - they had to purchase a lot of materials in advance, but didn't have the cash flow to proceed.

"Where businesses are viable but experiencing a down turn, we can look at overall business practices, for example, tightening up terms of credit for clients. Contractors often know their customers and allow payment terms to blow out. People are paying their bills but a bit more slowly, and that can have a significant impact on cash flow. We look at what they can do to reduce the impact on the business.

"We encourage businesses to look at the bigger picture. A couple may, for example, seek work outside of their own business as a temporary measure, hoping to get back into it when things improve.

"With all of our clients, we work through the business planning framework to discover whether their short term decisions support their longer term vision and goals.

"Some of the people I'm working with have decided to exit the industry and sell their farms. This means embarking on a process that requires planning and support for families. We help them to make sure their exit strategies are being managed and that every decision they make supports their longer-term vision."

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If you are under pressure, get help now