Paul Bradshaw from AC Mole & Sons discusses managing risk.

At a time of continued uncertainty for farmers (what is new you may ask!) it is useful to reflect on areas of the business where risks can actually be managed.

One of these is the borrowing / funding requirements where much has changed over the years.

Gone are the days of “do I simply borrow on an overdraft or a long term loan”. Lenders still offer these two basic products but increasingly loans can be agreed on fixed or variable interest rates with differing commitment terms / fixed terms and repayment programmes.

The conventional overdraft may still have its place but the Banks will often also offer alternatives such as Invoice Finance (borrowing against your debtor book) or Asset Finance (to fund specific asset purchases appropriate to the lifespan of the equipment / asset).

Whilst these various choices may offer potential benefits in managing the risks associated with borrowing, they also mean that decisions have to be made.

When considering what is right for your business it is important to fully understand all options to ensure you achieve the right balance between cost and risk management.

The good Lenders out in the market will set out the options that are available clearly together with the varying costs associated with them.

Your choice will be based on how much certainty you need, how much flexibility is required and of course the proposed pricing.

To add to the complication, there may be tax implications too!

We at A C Mole and Sons work with our clients to understand the current and future needs and ambitions of their businesses.

We are therefore well placed to help them in assessing the options available, the implications for each from a cost, flexibility, risk and tax perspective and work closely with the client and their lenders to achieve the best outcome.

Paul Bradshaw is working as a consultant with AC Mole & Sons following a 39 year banking career, the last 17 years of which were spent working in the Somerset area as a Senior Agricultural Relationship Manager. Contact 01823 624450.