Free Cash Flow Template for Farmers
Cash-flow management is a key element of enhancing the success of any business, and farming is no exception.
In this era of farm development, expansion and diversification, cash flow management is even more crucial.
Below are some of the key questions that might be lingering in the minds of any agripreneur reading this article;
- What is a cash flow?
A cash flow is a financial statement that measures the balance between income and expenses of an organization, including an agribusiness, over a specific period (e.g. monthly, quarterly or annually).
It is often called the king of financial management.
2. How will a cash flow benefit my agribusiness?
Here are some of the benefits of a cash flow statement;
- A cash flow statement helps you plan the movement of your cash for the next financial business period, as the statement outlines all expected cash incomes and expenses (including operating, financing and investing activities) and projects the likelihood of your business having adequate cash to run for the next period.
- It gives you the information to take on new marketing opportunities and make informed purchases.
- A cash flow statement will come in handy when making an application for a bank loan or any other credit facility. A cash flow statement makes credit application process as seamless as possible since credit managers can be able to predict your ability to repay the loan in the future. One way to ensure adequate cash flow for your business is to set up a line of credit with your bank or financial institution, which will give you cash to cover expenses when your income is delayed and bills have to be paid.
- Poor cash flow management could mean late or missed loan payments, overdue bills and increased operating debt, therefore cash flow tracks your inflows and outflows. With this information, you can ensure that you have available cash to cater for your future expenses.
- Effective cash-flow management also helps considerably when setting targets for future growth. It helps you focus on business expansion and track your progress towards future goals.
3. How does a cash flow work?
A cash flow notes the beginning cash balance at the start of a financial period, it adds all income from operating, sales, loans and personal contributions, then subtracts all operating expenses, capital asset buys, loan and interest payments and personal withdrawals to get the ending cash balance.
4. So what’s the best way to start?
A simple Excel workbook is one of the most effective cash-flow management tools.
With this in mind, Kilimo Insight has designed a simple to use, and effective cash flow template.
Note that this template was particularly designed for a poultry business, but can easily be altered by simply changing the cash receipts and payments to suit any other business.
Here is a free download of a Simple Cash Flow Template for Farmers.