Managing cash flow on your farm

Why do I need to manage cash flow?

Managing cash flow means you have access to cash when you need it. On Canadian farms, knowing when your bills are due and making sure you have the cash on hand to pay them is a key pillar of good financial management.

Cash flow is an estimate of all cash receipts and expenses expected to occur during a certain time period. Estimates can be made monthly, bi-monthly, or quarterly and can include farm items as well as non-farm income and expenses.

Cash flow on the farm impacts everything from how you market your inventory to your relationship with your lending institution. For many producers, forecasting cash needs can still be challenging.

Knowing your cash flow on your farm can help you

• Decide when to make purchases, generate sales or cut overhead

• Focus on investing in new products, recruiting staff or expansion

• Create a loan repayment blueprint, maximizing your lender relationship

What’s the difference between short- and long-term cash flow planning?

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