Things to consider doing now if cash flow is slow

By Brian Ravencraft

I am sure you have heard the saying “cash is king” when it comes to business. There is some truth to this statement for sure because when cash flow is tight, stress certainly sets in for any business owner. Ideally the cash is always flowing, but that isn’t always the case. Let’s look at some moves you can make when cash is slowly making its way in:

  • When money is tight, purchasing expensive new equipment falls to the bottom of the to-do list. However, if you still need certain equipment to keep operations afloat, investigate repairing what you already have on the farm. Or you can shop for refurbished equipment. Purchasing new equipment does present tax savings in most cases, but that won’t help with the cashflow when things are tighter than normal.
  • Perhaps you have equipment collecting dust on the farm. If you have machinery you no longer use, now would be the time to investigate selling it. The funds you receive could provide a little boost to your cash flow.
  • While you are in liquidation mode, decide what stored crops and livestock with which you could part. You will want to rebuild this inventory as soon as possible once cash flow picks up speed, but in the meantime, liquidating could help your situation.
  • You can keep liquidating in a way but canceling leases that are high cash rents. If canceling is too drastic, at least see if you can renegotiate the terms.
  • Tapping into your savings can be painful, but hopefully you have cash in reserves for this very situation. If things get stressful enough, make some withdrawals from your accounts.
  • Evaluate your options when it comes to lines of credit and credit reserves. If you need to borrow to get by until cash starts coming in at a quicker rate, know your best options and the limits to how much you can borrow.
  • Take a look at everything you owe payments on. What can you refinance? Can you renegotiate any loan terms to stretch out the time you have in which to pay everything back? Longer terms could mean lower payments. Is loan payment deferment altogether an option?
  • Speaking of loans, check with the Farm Service Agency (FSA) to see what types of loan options are available to you through their programs to reduce your credit risk and improve repayment terms and interest rates. FSA also offers low-interest marketing loans on stored grain for up to nine months.
  • This may be the time to consider increasing prices for items you sell from your farm operation. You won’t want the price hikes to be so high that you scare off long-time customers, but a small increase could add up over time and slowly increase your cash flow.

I have only touched on some of the strategies you can use to increase cash flow. Each farming situation is unique. Reach out to me or your accountant for tips on what might work best for you in the short term and the long term. Of course, budgeting and forecasting can help with cash flow as well as tax planning. As always, I am here to help you if needed.

Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs. Brian has been with Holbrook & Manter since 1995, primarily focusing on the areas of Tax Consulting and Management Advisory Services within several firm service areas, focusing on agri-business and closely held businesses and their owners. Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we offer the resources of a large firm without compromising the focused and responsive personal attention that each client deserves. You can reach Brian through or

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