Now is a good moment to take stock of the financial position of the farm.

With effectively two-thirds of the year now behind us, we have a good idea of likely revenue and costs for the remainder of the year.

I sometimes see farmers glaze over when they hear of cashflow budgeting, as they think of massive spreadsheets with endless rows of data. It doesn’t have to be like this.

Completing a very basic cashflow forecast to year end in terms of milk receipts and livestock sales and the main costs can really help to plan the rest of the year on the farm.

Step 1

Begin with the current account balance on 1 September as the starting point.

The starting point for a cashflow is relatively simple. Start with what cash you have on hand on 1 September and what monies are likely to come in for the rest of this year in milk and livestock sales.

Then add all the money that currently owed in terms of merchant credit, bank payments and outstanding bills now and for the rest of the year.

Step 2

Next, work how much money is expected to come in through milk and stock sales between now and year-end. Be realistic on milk yield and milk price by comparing the August milk statement with August 2025.

While dairy markets are improving, milk prices are in or around €5.60/kg MS for August, which is still below 2025. While prices usually increase during autumn (+10c/kg MS/month), we are unlikely to match 2025 on milk price from August to November sales.

With most herds down 10kg to 20kg of milk solids on 2025, that should give you a good indication of milk receipts to the end of the year.

Step 3

Go through all invoices and work out how much money is owed for goods or services already incurred.

I would generally focus on the five main cost areas (wages and drawings, feed, fertiliser, contractor and youngstock costs) as these normally represent 80% of the cash costs for the year and most are now well-known.

For most items such as meal, fertiliser and contractor, it may be easier to work out quantities first and then convert that to price per unit if there is a big departure from last year.

Step 4

Bank repayments and land rental will mainly be similar to 2025 unless something has changed. If tax bills for sole traders or preliminary taxes for companies have to be paid this autumn, these need to be included here as well.

Step 5

When all these areas are filled, the net year-end cash position and predicted bank balance at year-end can be worked out by difference.

If this final bank balance position is less than or even close to zero, then planned costs will have to be looked at again or extra finance introduced in order to pay all bills and maintain drawings.

An example of the steps is provided below for a 110-cow dairy farm.

If cashflow is tight like our example, what options do you have?

If surplus stock are being carried (such as extra youngstock or cull cows), these can be sold sooner rather than later.

Equally, farms can decide to delay capital work around the yard for the remainder of this year until normal margins are restored.

As every farm has different cash requirements, farms in this situation should seek financial assistance early via their adviser and bank financial specialist, as there are a range of financial options available to meet any short-term requirements.