To decide on the split between 'Cash sales' and 'Cash from debtors' think about who you will be selling to.
In recent years, input costs in most agriculture sectors have risen significantly and organic producer prices have been squeezed and this has put pressure on margins. As a result, many farmers (especially small-scale ones) are increasingly looking at new ways of selling their produce in order to improve profitability. For example, some organic farmers sell direct to members of the public as a way of maximising value. The way in which your produce is sold may influence whether you receive payment at the time of sale or some time later.
Customers that will always expect to pay you some time after you have provided them with the produce that they have ordered may include:
- wholesalers and processors
- national supermarket chains
Sales to these types of customer come under the category of Cash from debtors.
Your Cash sales customers may include:
- members of the public. You may decide to sell some of your produce direct to the public, for example through your own farm shop, a box scheme, a website or at a farmers' market
- local retailers or catering establishments that you supply infrequently or retailers whose orders are generally of relatively low value