1. Get paid as quickly as possibleFor Gipsy Hill’s Sam McMeekin, it can be worth sacrificing a little cash in return for getting it sooner. “We had one large customer to whom we gave a small discount in return for shorter payment times,” he says. “If you can negotiate, let’s say, a one percent discount to move from 90- to 30-day terms, you should do it. And actively review your customer base to see who’s up for that.”Other debtors, though, might not be so able to pay. A little understanding goes a long way for Lost & Grounded’s Alex Troncoso. “We try to be supportive,” he says. “We might put together a payment plan and split the payment over 12 weeks or whatever. Most customers really appreciate that. Handling it the wrong way is a really good way to destroy that relationship.”According to Sara Barton, see what other brewers have to say if all else fails. “You might hear that you need to watch out for so-and-so, stuff like that,” she says. “Brewers do tend to keep each other warned.”
2. Ensure you have enough cash in reserveFor Troncoso, the financial buffer needed depends on what stage the brewery is at. “In a perfect world, I’d want to have a month’s sales in the bank,” he says. “When it’s unpredictable, it’s really easy to get caught out if you don’t have enough in there – and when you’re a young business, it’s that much more unpredictable, so you need a bigger buffer. As you mature, you can operate with a smaller amount.”McCardle says cash liquidity is just as important when things are going well as when you’re struggling. “You need to have enough cash to cover those periods when sales are increasing – because it’s then that you need to buy materials in and then wait for your customers to pay you,” he says.
3. Seek direct access to marketThere’s one very good reason why taprooms have become such a crucial part of modern British beer: they provide access to immediate payment. Some breweries, particularly well-established ones, benefit from an estate of pubs.It’s a huge advantage to have this sort of direct access to market, says McCardle, but – as Barton adds – it’s no guarantee. “Businesses like Batham’s brewery in the West Midlands, who have ten pubs, they can sell all their beer into those,” he says. “We have to be a bit more on our toes because we’re mostly in the free trade.”They do own one pub, though – but it’s rarely been a guaranteed money-spinner. “We’ve supported our pub, The Marquis of Granby, a lot of times through the brewery,” adds Barton. “We allowed it to build up a load of debt with us to keep it going. It’s a rural pub, so not huge in terms of turnover, but now it’s doing alright.”
4. Be prepared for slower times of the yearAccording to McMeekin, there are typically two key moments of the year for breweries like his. “April until June is by far the biggest period of the year, and then there’s four weeks at the end of November and the start of December that is a sort of purple patch,” he says. “Then it’s pretty hectic.” This is when breweries need to cash in to tide them over during less busy times, such as January. Planning is essential.However, things haven’t been so predictable in recent years, according to Barton. “It normally picks up in September, but this year it hasn’t really because everyone’s feeling the pinch,” she says. “You just have to hope that economic factors will improve.”
5. Stopping Cap-Ex is a mistakeWhen cash flow in the brewery is a worry, it can seem sensible to cut back on investment in brewing equipment – but that’s short-term thinking. “You should always have a CapEx program going on; that’s part of being in this business,” McMeekin says. “Even if it’s just about repairs and renewals. Not maintaining your equipment is just the start of a steady decline.”
