The overdraft runway

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By Dwain Duxson

The overdraft runway - In the start-up and investment community, they talk about runway. Which is another way of saying how much time do we have left before we run out of money.

Farm businesses are a little bit the same but different. Farmers have for a long time used an overdraft, a great tool that many would have. The overdraft runway is a little different in that Farmers use it to plug up periods of no income, so it's a shorter-term runway; as income comes in, the overdraft gets reduced.

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Just sticking it out there, but what would your business look like without an overdraft? What if you set a goal of not having an overdraft in, say, 3 years' time? 

To do so, your business would have to perform better, so that's a bonus. You would still be managing a runway, but a cash one instead of an overdraft one, which is no different, really. But it's the psychology of having cash, which is yours, rather than an overdraft, which is theirs, that would be a positive. Of course there are some Farmers that have never had an overdraft. So how do you manage your overdraft, and do you have ambitions of not having one? Reply to dwaind@farmtender.com.au

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