Cash flow pressures starting to build on many farm businesses

Omagh-based accountant, Seamus McCaffrey, further explained: “Dairy and beef prices have been reducing for the past number of months. But now we have the additional cost pressures coming on farm businesses. Fuel and fertiliser prices have already risen strongly in the wake of the war in the Persian Gulf.

“It is important that merchants and other farm input suppliers are paid on a timely basisin order to maintain good business relationships.

“And there is now every prospect that compound feed prices will start to strengthen over the coming weeks.”

He continued: “Up to now, relatively cheap feed costs had been cushioning the blow of reductions in dairy and beef prices. However, this may no longer be the case as farmers seek to manage their businesses through increasingly turbulent economic times.

“So, it all adds up to a scenario within which cash flow management will need to be prioritised within all farm businesses. And, in this context, cost management becomes extremely important.”

Adding to the cash flow issues facing local farms will be the tax payments made by these businesses over the coming months.

Seamus McCaffrey again: “And here again, we are looking at an almost perfect storm scenario. Tax bills accruing in July of this year and next January will reflect the strength of profits made by farming businesses in the 2025/26 tax year.

“All farm commodity prices remained exceptionally strong throughout 2025.

“So, we are looking at a scenario which sees farm businesses making payments to the HMRC at a time when cash flow is coming under severe pressure.”

One way of mitigating this scenario for sole traders and partnerships is to secure a profit averaging arrangement with Revenue and Customs.

Another option when it comes to decreasing the cash flow pressure caused by a large tax bill is to secure a ‘time-to-pay’ arrangement with Revenue and Customs. This is a formal agreement that allows individuals and small businesses to pay tax in monthly instalments over a period agreed with HMRC. In order to avail of the Time to Pay arrangement, all Tax Returns must be filed on time.

“Interest will be paid on all monies outstanding,” said Seamus McCaffrey.

Requesting assistance from HMRC when it comes to paying tax bill does not expose taxpayers to the enhanced possibility of a tax inspection.

“In fact, the polar opposite may well be the case,” Seamus McCaffrey commented.

“This is because the measures will only be agreed to in the case of taxpayers who regularly submit their accounts on time and have a strong track record of settling their tax affairs in an orderly fashion."

A third way of mitigating direct tax pressure is for a farm business to make a contribution to a private pension plan.

“Taking this approach will also have important benefits when it comes to the issue of transition within a farm business,” stressed the Omagh-based accountant.

Maintaining good working relationships with merchants and other input suppliers is at the heart of good farming practice.

Seamus McCaffrey concluded: “During those periods when pressure comes on business cash flows, there may be a need for farmers to seek an overdraft extension or some other form of working capital arrangement from the bank.

“But these requests will only be agreed to on the back of an accurate cash flow projection having been prepared for the business.

“So, yes, there are significant cash flow challenges confronting farm businesses across Northern Ireland at the present time.

“Responding to these issues in the most effective way possible will require farmers to sit down and work through a plan that identifies all of the costs impacting on their businesses over the coming months.

“Once this has been done, it’s a case of securing the advice needed to meet these commitments in the most economically efficient way possible.”