Not every agricultural cashflow cycle revolves around grain harvest.
Around Cohuna, dairy farming is particularly important, alongside cropping, livestock and irrigated agriculture. That creates a different set of finance pressures from those faced by a purely broadacre cropping business.
Feed may need to be purchased.
Fuel and electricity costs continue.
Irrigation expenses need to be met.
Contractors and employees need to be paid.
Repairs cannot always wait.
Supplier accounts may fall due before the next major inflow of farm income.
For some agricultural businesses, the finance requirement is not another piece of equipment at all.
It is having enough working cash to keep the operation moving through a high-expense period.
A Strong Business Can Still Have a Cashflow Gap
Agricultural income and agricultural expenses rarely arrive in equal monthly amounts.
A dairy business may receive regular milk income, but large feed, irrigation, veterinary, maintenance or supplier costs can still create periods of pressure.
A cropping business can spend heavily before receiving the income from its crop.
A mixed farming operation may have several different production cycles happening at the same time.
The business can therefore be profitable over the year while experiencing individual months where more cash goes out than comes in.
That is where working-capital planning becomes important.
The question is not simply whether the business can pay the next bill.
It is whether paying it leaves enough liquidity for everything else that still has to happen.
Feed Costs Can Use Cash Quickly
For dairy and livestock businesses, feed can become a significant operating expense.
Purchased grain, hay, silage and other supplementary feeds may need to be paid for well before the income generated from production has fully covered those costs.
There may also be opportunities to buy feed in larger quantities or secure supply while pricing and availability suit the business.
That creates a commercial decision.
Does the business use its own cash?
Negotiate supplier terms?
Or consider working-capital finance so more cash remains available elsewhere?
The answer will depend on the cost of the funding, the value of the purchase and the expected cashflow of the farm.
Borrowing simply to hold more feed than the business needs does not make sense.
But where the purchase is part of normal production and the timing creates a genuine short-term gap, working capital may be worth considering.
Paying Suppliers Without Running the Account Too Low
Agricultural businesses can have several large supplier accounts competing for cash at once.
Feed.
Fuel.
Fertiliser.
Chemicals.
Freight.
Repairs.
Veterinary costs.
Contractors.
The business may technically have enough money to clear all of them.
But doing so might leave very little buffer for the next unexpected cost.
That is an important distinction.
A business does not necessarily need finance because it has no cash.
It may consider finance because it does not want to use every available dollar and leave the operation exposed.
For an eligible business, working capital can potentially help spread some of those costs over the period in which farm income is expected to replenish the cash position.
Irrigated Agriculture Has Its Own Cash Demands
Cohuna sits within an important irrigated agricultural area.
Irrigation supports dairy, cropping and other agricultural production across the district, but water-dependent farming can create operating expenses of its own.
Power, pumping, maintenance and water-related costs may need to be met alongside the rest of the farm’s commitments.
A business can therefore face several cash-intensive activities at once.
That makes it useful to look at the overall seasonal cash requirement instead of financing each expense as though it appeared in isolation.
A simple forecast of major payments and expected income can help identify whether the business genuinely needs additional funding and how long that requirement is likely to last.
When Paying Early Gets You a Better Supplier Deal
Some agricultural suppliers offer better pricing or early-payment discounts.
That can be worth looking at, but the calculation needs to be commercial.
Suppose a business can secure a meaningful discount by paying a supplier earlier than normal.
If finance is required to make that payment, compare the saving with the cost of the finance.
How much is actually being saved?
How long will the funding be needed?
When will the business repay it?
What other costs or fees apply?
A supplier discount is only useful if the business still benefits after finance costs are considered.
Where the numbers work, funding an earlier payment may be worthwhile.
Where they do not, taking on debt simply for the sake of receiving a discount may achieve very little.
Seasonal Funding Is Not Only for Cropping Businesses
Seasonal finance is sometimes discussed as though it only applies before or during harvest.
Agricultural businesses can experience seasonal cashflow pressure at many different points.
A dairy business may face a period of higher feed costs.
A livestock operation may have a large purchase or production expense before sale proceeds.
A cropping business may need money for inputs or harvest expenses.
A contractor may have significant mobilisation costs before a large program of work starts generating payments.
The finance requirement should follow the business’s actual cycle.
For some businesses, that means a once-off working-capital facility.
For others, the same pressure occurs regularly and it may be worth considering whether an appropriate revolving or seasonal facility could better match the way the business operates.
Growth Can Make the Cashflow Gap Bigger
A farm can also experience cashflow pressure because it is growing.
More production may require more feed.
More hectares can require more inputs.
Taking on additional contracting work can mean more fuel, labour and repairs.
A business can therefore increase revenue while simultaneously needing more working capital.
This can catch growing businesses by surprise.
The additional income may be very real, but the expenses needed to generate that income often come first.
Before expanding, it helps to estimate not just the expected revenue but also the extra cash required to support the larger operation.
Waiting on Invoices Can Be a Different Finance Problem
Agricultural contractors and transport businesses around Cohuna may experience another type of gap.
They may already have completed the work.
Invoices have been issued.
But customers are still within their normal payment terms.
Meanwhile, fuel, wages, subcontractors and repairs have already been paid.
Where eligible business invoices are creating the cashflow shortage, invoice or debtor finance may be worth considering.
This differs from general working capital because the funding is connected to qualifying invoices already owed to the business.
The right option depends on where the money is actually tied up.
A farming business waiting for agricultural income and a contractor waiting for commercial invoices may both be short of cash, but their finance requirements can be quite different.
ATO Debt Can Reduce the Cash Available for Current Operations
Older obligations can also make a seasonal cashflow problem feel much worse.
A business may already be paying an ATO arrangement.
There could be short-term business loans from an earlier difficult period.
Several equipment facilities may also be running.
Those commitments continue regardless of what is happening operationally.
If the business is now considering additional working capital, it is worth understanding how much cash is being used to service old debt compared with current operating expenses.
In some circumstances, the right answer may still be a straightforward seasonal facility.
In others, existing ATO or business debt may deserve a broader review.
Refinancing or restructuring should only be considered after comparing the proposed structure with the existing position. It does not automatically produce a cheaper or better result.
How Much Working Capital Does the Farm Actually Need?
Before arranging finance, work out the likely gap.
List the major expenses expected over the next few months.
Estimate when major income will be received.
Include existing loan and ATO repayments.
Then allow for the cash buffer the business wants to retain.
This can reveal whether the requirement is $30,000, $100,000 or substantially more.
It can also help determine how long the funding is likely to be needed.
A defined finance requirement is much easier to manage than simply borrowing as much as possible and deciding what to do with it later.
Finance the Cash Cycle, Not Just the Next Bill
Cohuna and the surrounding Gannawarra district have a diverse agricultural economy, with dairy particularly prominent around Cohuna and Leitchville, alongside cropping and irrigated farming. Gannawarra Shire Council identifies dairy, cropping and horticulture as key activities supported by the district’s irrigation system.
That diversity means agricultural finance requirements in the area will not all look the same.
Thrive Broking can assist eligible agricultural businesses considering working capital, seasonal funding, supplier finance, invoice finance and broader business debt requirements.
If you are around Cohuna and farm expenses are arriving faster than business income, speak with Thrive Broking before the cash position becomes urgent.
We can look at what needs to be funded, how the agricultural income cycle works and when the business expects cash to come back in before considering suitable finance options.