Many farms are struggling with cash-flow and the expected delay to the Basic Payment Scheme will remove another line of revenue that plays a key role shoring it up.
For a farm trying to remain in business but struggling to find short-term cash, the future can easily look bleak.
That has prompted chartered accountants Campbell Dallas to urge Scotland's farming community to become more aware of the Debt Arrangement Scheme and the role it can play to help farms gain control of their cash-flow problems and protect the business, allowing vital time in which to undertake planning.
The Debt Arrangement Scheme was previously only available to Scottish individuals, but has now been made available to businesses and partnerships. Very few farmers are aware of the scheme, and whilst it is not a long-term solution if the problems are overwhelming, it does put a short-term break in cash-flow pressures.
Andy Ritchie, partner and farming specialist with Campbell Dallas explains: "The scheme allows a farm to repay its debts at an affordable rate while preventing creditors taking any further action, meaning the assets of the business are protected. It is particularly applicable to those farms struggling to maintain monthly contractual payments.
"The Debt Arrangement Scheme Scotland Act 2004, is not a form of insolvency, however, it is governed by the Accountant in Bankruptcy. It allows debtors to repay their debts, in full, over an extended period of time which is dependent on their disposable income. Once the scheme is approved, creditors must freeze their interest and charges and cannot take any further action as long as the monthly payments are maintained.
"If circumstances change for the worse, for example, a farmer suffers ill health and is struggling to maintain payments to the scheme, a payment break of up to 6 months can be requested. If and when the farming industry improves and there is an increase in disposable income the farm can increase payments to reduce the term of the scheme, and if it has a good year and the funds to pay debts off in full, then the scheme can be settled early."
Market round-up
C&D Auction Marts Ltd sold 3396 prime hoggs in Longtown on Thursday to a top of £102 per head and 258p per kg to average 175.2p (+0.4p on the week).
The firm also had 4745 cast sheep forward when heavy ewes sold to £145 for a Texel and averaged £69.74 (-£4.40), while light ewes peaked at £74 for Blackfaces and levelled at £47.23 (-£1.13). Rams sold to £115 for a Charollais and averaged £70.02.
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