Februarie/Maart

• at the end of the season, use the actual cash
flow statement to estimate the projected cash
flow statement for the next season.
• Compile a projected cash flow statement by making
use of references from your previous year’s
actual entries on farm records, tax forms and
cheque books.
• Use reliable crop and livestock budgets to provide
the necessary information for projecting future
cash flows.
• Consider farm business changes that are expected
to take place the coming year, such as crop
rotations, new livestock enterprises or sales and
purchases of capital assets.
even though your first cash flow projection may not
be as accurate, it will provide important planning
information and if the exercise is done regularly, projections
will become more accurate in the future.
hElPFul SuGGESTIonS To SolvE CASh
FloW PRoBlEMS
• Identifying the problems beforehand. analyse
the cash flow statements to identify problems
Figure 1: An illustration of liquidity.
Februarie/Maart 2011 • www.senwes.co.za
DEvElopiNG aGricUlTUrE •••
>> Four prinCiples For
Cash management
1 Cash is not given. It rather has to be
tracked, chased and captured.
2 Cash management is as much
an integral part of your farming
business as the entire technical
production process is.
3 good cash flow management
requires information. For example:
- Your suppliers’ payment terms;
- Short-term cash demands;
- Short-term surpluses;
- Investment options; and
- Current debt obligations.
4 You must be masterful. gather and
organise the data and formulate
cash flow statements.
“Do not use
production credit
for intermediate
or long-term
assets, because
proceeds from
one production
period can not
be expected to
cover even for
the costs of
assets.”
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