New Strategies For A Smarter Financial Flow.

As plans to leave the EU are being set in motion, agricultural businesses are facing changes to the financial support available to them. With the Basic Payment Scheme reducing to zero by 2028, our landed estate client was facing an income drop of up to £150k.

They knew they needed to prepare for the future, so they got in touch for an assessment of their business. Their loan repayment costs stood at more than £500k per year, and we could see a difficult road ahead if no action was taken.

How We Approached It

Looking over the last three years of accounts, we were able to get a clear idea of how their business was currently doing. We identified where money was being made by the estate as a whole, and made a note of their financial needs for drawings, reinvestment and other servicing loan commitments.

Once we knew all the ins and outs, we were able to see what the impact of a reduced income would be. We then looked at ways to cut overhead costs and improve profit margins.

The main area that needed some work was the structure of their annual loan repayments. There are going to be a lot of changes once we leave the EU, and businesses will need to adapt. This means financial structures will need to change as well, making sure they match any new business strategies.

How We Achieved It

We drew up a full business plan along with a performance analysis. We highlighted any areas where we could make valuable changes, and created both short and medium-term action plans.

Working with a consultant, we also wrote out a full proposal for the Estate’s bankers. We suggested how existing loan borrowing, together with additional finance needed for reinvestment, could be given in a revised way over a longer-term. This would make sure that the business had enough money available to cover repayments.

Adding an initial capital repayment holiday into the terms of the new loan will create a cash outflow of more than £400k per year. This will reduce in 2022 when capital repayments begin, but the impact on cash outflow from the estate will still be over £250k per year.