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Ways to increase cash-flow on the farm

Farmers constrained by tight margins are examining aspects of their operations that influence profits.

Matt Lange, business consultant with Compeer Financial, says understanding how cashflows affect the checkbook is important.

“What bills tend to take up a greater portion of the checkbook balance, as well as the timing of when those bills are due.”

He tells Brownfield it’s common for farmers to receive cash discounts when paying bills early.

“But a lot of times, some farmers don’t recognize that or don’t take advantage of those opportunities.  So it’s a combination of using their checkbook as well as an operating loan to be able to take advantage of that opportunity to save on some expenses.”

Lange says seasonal cash flows should also be dissected.

“More often than not, a lot of producers can get by on a month-to-month basis.  But it’s things like land rent, seed, chemical, or fertilizer costs that are kind of once in a fiscal year, and sometimes they kind of sneak up on us.”

He encourages farmers to work with their bookkeeper to lay out seasonal cashflows that could be a detriment to the business.