Why a sheep cashflow is different
A sheep business earns its money in a few big lumps. The wool cheque arrives after shearing, and lamb or weaner sales bunch into a few months. Everything else comes out of the account every month, from drench and fly treatment to fuel, wages and interest.
That gap is why the overdraft matters so much in sheep. If shearing is in September and the lambs go in November, your account is usually at its lowest in late winter. A dry autumn that forces you to feed makes that low point deeper, and the bank will want to know you saw it coming.
The mix of income also changes from year to year. In the NSW DPIRD 2025 budgets, wool was about 28% of income for an 18 micron self-replacing Merino flock. At average wool values for the first half of 2026, the same flock earned 49% of its income from wool. A budget built on last year's mix can be well out by the time the cheque arrives.
What the bank looks at in a sheep business
The bank wants to see that the business makes money in an ordinary year and survives a bad one. The Australian Banking Association's 2025 report shows sheep farms carry little debt, with average equity of 95.4%. It also shows sheep and sheep-beef farms had higher 90-day arrears than beef farms in June 2024, at 1.23% against 0.62%.
To Nick, that says credit teams see sheep as well secured but uneven for cash. They will look at your weaning percentage, wool cut and micron over several years. They will also ask what you spent on feed in the last dry spell. They will also check how much of the debt your stock values are carrying, since sheep prices move fast.
Compliance costs are part of the picture too. Since 1 January 2025, NSW sheep born from that date need an eID tag before leaving the property they were born on. From 1 January 2027, every sheep needs one before it leaves any property. We put that cost in the budget rather than leaving the bank to ask about it.
What goes in a Bank Review Pack for sheep
A Bank Review Pack for a sheep business has a budget for each flock. We lay it out like the DPIRD gross margin budgets, which credit teams already know. It includes a month-by-month cashflow to the next shearing and the next lamb sale, with the low point marked. We show what happens if wool drops 20%, if weaning falls in a dry year, or if you have to feed for three months.
The pack also has a stock reconciliation showing opening numbers, lambs marked, sales, deaths and closing numbers. It finishes with a debt schedule and a statement of what you own and owe. On top sits a two-page note written the way a credit team reads.
How we work with your agent, vet and accountant
Nick worked as a farm hand for four years, so he knows what a crutching run or a feeding round involves. We still leave the sheep work to the people who do it best. Your agent and wool broker give us the sale and test results, your vet sets the health program and your accountant keeps the tax. We put dollars against all of it and keep the cashflow honest.
A year with Farm CFO
A typical year starts with the Farm Health Check for $850 plus GST, or a Bank Review Pack timed six weeks before your review. The Season Partner plan is $3,900 a year plus GST. On it, we check the budget against actual results after shearing, after lamb sales and before joining.
If you want the numbers every month, the Farm CFO retainer is $800 a month plus GST. If you want to see how we build the sheep budget, read How to budget a sheep enterprise: wool and lamb.
