To most people, farming and business probably seem like two completely different activities with very little in common. The truth, however, is that farming is first and foremost a commercial enterprise. So, while farmers may not have stores or sell directly to retail customers, they need to run their farms in much the same way as any other business owner would. And that includes making the most of the cash that flows in and out of their operations.
That’s according to Dawie Maree, Head of Information and Marketing at FNB Agribusiness, who says that, while farmers are unlikely to generate a significant second source of income from a cash investment, that doesn’t mean that they should overlook the many benefits that good cash management can deliver.
“As with any business, farmers typically have cash flow that fluctuates from month to month,” Maree explains, “and while the cash inflows may be less frequent for a farmer than a retail store, the importance of optimising that cash while you have it is as important for a farmer as it is for a shop owner or any other commercial enterprise.”
Maree says that one of the biggest mistakes that many FNB agri clients make is to simply leave these cash amounts in their transactional accounts until they need to access them later. “Many farmers end up sitting on massive amounts of cash in their cheque accounts,” he says, “and because of the cyclical nature of farming, there are times when that money stays largely untouched in that account for months.” He argues that a far better approach is to make sure that money works as hard for you as a farmer, as you did to earn it – and the best way to do that is by making sure you have a sound cash management strategy in place.
Stephanus Buys, Head of Agric Banking at FNB Cash Investments agrees with Maree and says the less than optimal cash management strategies of many farmers often stems from a misunderstanding that they have about what is involved in optimising their cash flows. “In our experience, farming clients often shy away from investing their cash because they believe that doing so will create additional, time-consuming administrative headaches for them, or could lead to more complexity in their tax management,” Buys explains, “however, the innovative way in which FNB has structured its various cash optimisation and investment vehicles means these fears are unfounded.”
Buys says that these cash investment offerings from FNB are specifically designed to make it easy for farmers, or any business owner, to seamlessly manage their operational cash flow and investment capital. “At FNB, we know that good money management requires a holistic and integrated approach,” he explains, “which is why we understand that our clients won’t benefit from a silo banking mentality that uses separate, isolated accounts. Rather, we work from a holistic view of what our clients need their cash to achieve, and then offer a highly integrated solution made up of various accounts that work together seamlessly to deliver the outcomes the client wants.”
Buys and Maree agree that while it’s unlikely that any of these cash management solutions are likely to make farmers independently wealthy, they do make it quick and easy for them to manage their cash well, with a minimum of time or cost expenditure, and ensure that their money works as hard for them as they do to earn it.
“While banking products have traditionally been priced individually, FNB is moving away from this way of thinking and focusing more on delivering cost efficiencies to its clients through an outcomes-based approach,” Maree says, “which, for farmers, means that they can benefit from a well-structured cash management solution, built around an understanding of what they need their money to achieve, and structured to ensure they need to invest minimal time to achieve maximum cash optimisation and growth results.”
