How to Create Your Farm Cash Flow Projection
Summary
Whether farmers come up with incorrect numbers (because of a lack of visibility into their cost and profit centers), don’t know what numbers the lender wants to see, or don’t have the right kind of accounting records needed to smoothly translate their farm business plan into a banker-oriented cash flow plan, the end result is that they struggle to get the farming business loan they need to cover their immediate costs and carry through to the day when they get paid for all of the work they’ve done. Because, they can have an impact on your farming business’ valuation and your future operational plans (including capital improvements, repair costs, and productivity adjustments). Begin by collecting information about production centers such as acres available (or permitted) for each enterprise, acreage already planted or fertilized, livestock facility capacities, breeding records and yield and performance histories. As part of your unit budget, you should incorporate: The crop production plan should have summarized the total quantity of each type of fertilizer, seed and chemical needed. Ownership records can help you keep track of your accounts payable and receivable—which is vital for improving cash flow by collecting on debts so you can avoid penalties for late payments to your creditors.
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