In many cases, it may not be possible to resolve the difficulties in 2013, and a planned approach extending into 2014 may be the most prudent.
Simply by discussing the problem with another person, you are starting the process of coming up with a solution.
In many cases, the underlying business is essentially sound, and the cash flow position will recover when conditions improve.
Such farmers need short term access to additional cash to tide the business over, and the farmer’s track record will support a high level of confidence in paying off this short-term debt when conditions improve.
The recommended steps are as follows.
Act early, even the best farm plans and schedules need adjustments.
Delay will only magnify the problem. It will not solve it.
If you believe that you will not be able to meet repayment schedules, it is far better to have this discussion in advance of the repayment date than after missing a repayment.
Know your debt, put together a list of all your debts, including who you owe, how much you owe and the interest rate and term.
Put this down on a sheet and include all bank repayments, all merchants, other farmers, contractor and vet. Knowing this, you will not over-promise when it comes to speed of repayment.
Consult your Teagasc adviser or accountant and draw up a cash flow plan including a forecast for remainder of 2013 and possibly longer.
They have the expertise and experience to help you present tailor-made proposals to your bank and/or your merchant/farm input supplier. It is important to be realistic when it comes to calculating your financing requirement and your potential to meet existing repayment schedules on time.
Arrange a meeting with your bank manager. Take time to prepare the appropriate information for this meeting including: a recent set of farm accounts or profit monitor; a statement quantifying the impact of the 2012 and 2013 weather related issues on your farm business; and a cash flow forecast for the remainder of 2013.
Maintain contact throughout the remainder of 2013.
For those with short-term cash flow problems, an extension to an existing overdraft facility or a new overdraft facility may be all that is required.
Some may require a restructuring of merchant credit to a short-term loan.
Arrange a meeting with your main input suppliers and those to whom you owe money.
Explain your situation and offer a repayment schedule to them which you can realistically meet. Do not offer to pay more than you can afford against arrears.
Look for staged repayments of the outstanding amount without interest.
Delay non-essential investment or expenditure on your farm.
Review the main efficiency factors on your farm, identify where can you get the best return for your efforts.
In more severely affected farms, the farm household income will be insufficient for living expenses, check out your entitlement to income supplements e.g. Farm Assist, Carers Allowance etc.
If you are under severe financial pressure then Farm Assist may be an option – many farmers availed of this in 2009 with the downturn in milk prices. This should be looked on as a safety net and may have a part to play in getting you over this extreme period. If you or your spouse are employed off-farm for 19 hours per week and you have children then you may be entitled to the family income supplement. You can get application forms for either of these schemes by calling the Department of Social Protection automated application form request phone number at 1890 202325, and following the instructions.
After you submit the application form, an inspector will visit your home. If approved, the payments can be made directly to your bank account.