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Managing rural cash flow

Actively managing the cash flow of your rural business enables you to be prepared for seasonal ups and downs and may even help reduce the cost of lending.

01

Why cash flow counts

Cash in your rural business is like fuel in your ute or car. You depend on it to keep things moving forward. You might be humming along just fine, but a change in circumstances might mean you run out, putting a halt on any growth plan you may have had.

How you manage cash flow is also important to your suppliers and lenders. If they believe you’re running on empty, they could consider you a risky prospect – no matter how good the rest of your business might be. On the other hand, if you’re the type of owner who can demonstrate that your cash flow is well managed, this will help convince them that your business is stable.

That’s why, even if you’ve got a good accountant looking after things, it’s essential you personally know what’s happening with your cash flow at all times.

02

Greater confidence can reduce lending costs

Because of the sector’s seasonal nature and the scale of operations, most rural businesses require a significant line of credit and other lending to succeed.

To secure this type of lending, we’ll conduct a credit risk assessment across your business which reviews factors that could affect your ability to repay your loan now and in the future.

Some of these factors, like the economy, will be beyond your control but you can readily influence others - like demonstrating your ability to understand and manage your cash flow.

A healthy, well-managed cash flow reduces risk for a lender and often leads to better lending terms which flows on to savings for you.

03

Tips for managing cash flow

Stay close to your numbers

The number one thing you should do is actively track your financials and understand every month’s income and expenditure. FastNet Classic internet banking, the ASB Mobile app and online accounting platforms like Xero, Cash Manager and MYOB can help you to easily keep track of what’s happening with your money.

Update your seasonal budget

You’re probably used to creating a budget and financial forecast at the start of each season but do you update it through the year and record variances?

This is particularly important when commodity prices are volatile, as regular revision or re-forecasting can help minimise the negative aspects of a downturn, and help you identify opportunities as they arise. Online tools like Figured make this easier.

Plan for the next season

Planning for the next season helps you to stay one step ahead. This is important because your business' working capital and lending requirements and macro industry factors may change. Try not to get too caught up in the numbers but focus on the impact they could have on your business and the corresponding decisions you’ll need to make.

Access sector-specific cash flow resources

Industry and grower associations and your professional advisers often provide cash flow resources specific to your sector on their website.

Next steps

Talk to your local rural banking specialist

Find your nearest ASB Rural Manager.

Find an expert

Call us

Contact your local ASB rural team, we’re here to help.

0800 787 252

Any questions?

Email us and we’ll help with your rural banking query.

ASBRural@asb.co.nz

Other helpful guides

ASB's lending criteria and terms apply.

Rural banking Managing rural cash flow