Women’s conference focuses on farm cash flow

Stacie Ballard, left, talks with Nicole Walker during a break in the Women in Agriculture Conference at Twin Falls, Idaho, on Oct. 27.

TWIN FALLS, Idaho — Keeping accurate and timely financial records is a key characteristic of successful farms, and using a cash flow spreadsheet is a helpful tool in farm financial management, according to speakers at this year’s Women in Agriculture conference sponsored by Washington State University Extension.

The conference took place Saturday in 35 locations across the Northwest and Alaska, combining simultaneous broadcasts and onsite sessions to pump up the financial success of women in agriculture.

“Farm financial management really doesn’t mean anything without keeping records,” Robin Reid, an extension farm economist with Kansas State University, said.

Some people just throw receipts in a shoebox to take to an accountant to file their taxes. Instead, they need to develop a habit of keeping up to date, she said.

That means routine record keeping, reconciling records with bank statements, having appropriate accounts for the farm business and personal activities and having sufficient details to understand and analyze their business.

“Record keeping takes time and effort. Once a year won’t get it done effectively,” she said.

While a balance sheet shows net worth and an income statement shows profitability, a cash flow spreadsheet evaluates feasibility. It’s the recording of actual dollars coming in and going out of the business, and it can be used to project inflows and outflows on a monthly basis, she said.

The importance is in being prepared for what’s coming throughout the year, and the projections are valuable in managing the business, she said.

“Cash flow gives you a picture of your yearly budgeted expenses and income. It evaluates feasibility and indicates if, when and how much you will need to borrow,” she said.

Having cash flow projections can help producers adapt as changes occur during the year. Farm managers can also use it to compare actual expenses and income with projections and monitor discrepancies, she said.

Good farm records are critical to build cash flow projections. For someone who has never done it, a good place to start is with the line items on the Internal Revenue Service’s Schedule F form. But it is important to add in family living expenses, she said.

A lot of times, struggling farms are just spending too much on family living expenses, she said.

LaVell Winsor, extension farm analyst at Kansas State University, agreed, saying living expenses often catch farm families off guard.

“This is a place we see folks getting into trouble with cash flow,” she said.

She recommends making a family budget and sticking to it.

Cash flow is a working document that can be used to anticipate shortages, and family living is one place to decrease expenses, she said.

Other ways to cover a shortfall could be savings, borrowing from another business the farm owns, microloans through the Farm Service Agency or a bank or selling unused or underutilized assets, she said.

Another method is using a credit card, although it’s not preferred and often comes with a high interest rate, she said.

In addition to keeping good records, she recommends meeting with an accountant regularly and keeping key people such as lenders in the loop for overall financial health.

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