Top-10 Tips to Improve Cash Flow for Rural Businesses


With the ability to access bank finance and equity becoming increasingly difficult, the owners of small and medium sized rural businesses need to make the best possible use of cash flow, says Mike Harrison, a partner of Saffery Champness Landed Estates & Rural Business Group.

This is particularly true where landed estates have developed diversified enterprises, effectively as subsidiaries of the main estate business. For example, there needs to be a very clear separation in terms of accounting and financial management between traditional estate income by way of rents, etc., and a diversified business such as a farm shop, says Mike Harrison, who adds that: cash management and the reduction of costs have never been more important.

Saffery Champness has produced a checklist of 10 tasks to ensure that managers of rural businesses make best use of cash:-

1         Bank Finance discuss fixing interest rates with your bank or an interest rate cap. Remember that banks dont like surprise calls for increased credit facilities, so regularly keep them informed and always plan ahead for any additional funding requirements;

2         Customers keep a keen eye on your debtors and, in particular, the length of time that debts have been outstanding. Have a robust procedure to identify potential overdue accounts and make sure that your business is not adversely affected by bad debt;

3         Suppliers they will almost certainly have are their own financial pressures, so talk to them regularly. Assuming you have a good payment history as a regular customer, you may be able to secure preferential payment terms. Also, think what would happen if your main supplier went bust have a Plan B;

4         Financial Management ensure you are aware of what is happening with every penny of your business. Do you have a financial system that allows you to do so? Good accounting software pays for itself time and time again;

5         Costs what areas in the business can be cut back and where can savings be made? These may not always be apparent. An annual audit of the business can pay for itself by identifying opportunities to make cuts that will have an impact on financial performance;

6         Plant & Machinery are your vehicles and machinery up to date? Make use of existing higher rates of relief on new purchases, while these are available. Although expenditure on new equipment may not be possible, anything that can be done to improve performance will save time and money, and can pay dividends;

7         VAT with the increase in the rate to 20 per cent, as of the 4th January 2011, businesses need to prepare for this now. Some businesses overpay VAT and fail to claim possible rebates. Take advice if you are not clear on how to do this;

8         Currency this should not be overlooked, especially as single farm payments are based on a fixed exchange rate from euros to sterling;

9         Insurance this is increasingly important both as a customer and supplier. Ensure you have a good relationship with your insurer, having shopped  around for the best terms;

10     Reduce risk now is a good the time to carry out a risk assessment of your business.

Implementing our Top-10 tips should ensure that cash flow, the life blood of any business, is in good shape. When access to liquidity is restricted, cash management becomes critical. Cash flow management has a double benefit: it can help avoid the downside of any cash calls; and it can give you a commercial edge when making transactions. Businesses that are able to aggressively manage their cash usually require less working capital and are able to extend more competitive credit terms than their rivals, Mike Harrison concludes.

Saffery Champness has 58 UK partners and more than 400 staff, with nine offices in the UK (including Scottish offices in Edinburgh and Inverness) and one each in Guernsey and Geneva. The firm celebrated its 150th anniversary in 2005, after the firm was founded in 1855 by Joseph John Saffery. For further information about the Company, please visit

Saffery Champness has worldwide associations in over 100 countries through its membership of the global association Nexia International. The Landed Estates Group is headed by a team of 15 partners who advise

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