Having financial gas to spare always comes in handy

In 2022 not all, but many arable farmers and dairy farmers had a financially favorable result. This is different for 2023. For dairy cattle, the lower milk price plays a role in this and for arable farming the key question is how the current price level of the various crops will develop further. I regularly get the question, "what's the best thing to do with all that money that comes in and just sits on the current account?"

What is Wisdom? The main thing is that the entrepreneur is in the driver's seat and must steer. It just depends on what your plans are. If you are going to invest soon, you will have to use that money in part. Borrowing money has become about three times as expensive in the last year and a half; from 2% to 6% interest. Highly overstated, that costs an average arable or dairy farm half a ton per year. That comes close to the amount that a family spends such a private bit. All in all, this is really about something.

Additional repayments are also an option, of course. Just the idea of ​​less debt can give you a good feeling and positive energy. At least it is for me and I suspect it is for most of you as well. Especially when the interest on existing loans has to be taken out again soon, the higher interest rate will also be strongly felt here. In addition, the possible advantage is that the usual repayment can be lower, which in turn creates extra room on the current account.

Do not put all your money into extra repayments or investments
Yet in my opinion it is not advisable to put all your money into extra repayments or investments. Temporarily setting aside, so saving, at currently still very low interest rates seems a bit old-fashioned and economically not immediately the best result. Still, money has its advantages when you are doing business. You have money available immediately when you come for an attractive case that you cannot pass up. If it is exciting and you can pay immediately, you are always one step ahead of the competition. I call that, "you can really steer with the wallet".

I don't want to spoil the party of extra money here, but I have to and so I do. Great prices and enthusiasm can also turn around, as experience shows. Even then you have to do it. Who better, faster and cheaper to temporarily ask for extra money to cover this than yourself? I believe that you should keep part of your money readily available under the motto 'Having spare gas always comes in handy'. After all, you are an entrepreneur and that does not get stuck.

Jasper Carpenter

Jasper Timmerman is a senior advisor at Farmers Funding & Advice. He specializes in tax optimisations, restructuring, business transfer, family business and financial guidance.

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