Tips to help manage cash flow

Current cattle markets have severely reduced the cash flow of many beef operations. Here are some steps you can take to help you manage cash and credit flow:
•assess your current situation regarding cattle, feed, and housing;
•examine the ability of your farm business to meet its cash obligations over the next few months;
•communicate with your creditors as soon as possible to discuss the details of your current situation; and
•provide lenders with an assessment of your cash flow and credit needs.
These professionals can supply you with the financial analysis tools you need to prepare this information or, alternatively, use OMAF’s Farm Financial Analysis and Planning Workbook (Publication 37)—a step by step system for producing a cash flow statement in either the hard copy workbook or in an electronic Excel spreadsheet format.
Access this document at http://www.gov.on.ca/OMAF/english/busdev/downtown.htm and download Publication37ver1.xls
Additional considerations include looking at the farm accounts payable. Feed, fuel, and crop input purchases carried for more than 30 days on account with suppliers may be subject to interest charges of two percent or more per month.
Discuss your current situation with these creditor, as well.
One option for interest cost reduction and cash flow assistance is ACC Farmers Financial—Agricultural Commodity Corp. at 1-888-278-8807. They have an Advance Payments Program which can provide advance payment on crops grown and placed in storage by the applicant.
Crop insurance is not required for this program, and there is a provision for on-farm feeding of some crops.
Another option is in regards to operating loans. Negotiate with your lender to increase your operating loan, or to term out a portion of your operating loan, to cover any projected cash flow deficiencies.
Prepare for your meeting by summarizing changes to your marketing strategy for both the short- and long-term, current costs of production, and cash and financing needs for now and in the future.
OMAF Factsheet “Troubleshooting Your Farm Business—Identifying and Managing Financial Pressure” (Order #00-107) includes a detailed list of questions that can prepare you for meeting with your lender.
A final option is your Net Income Stabilization Account. Call NISA at 1-800-665-6472 to determine your eligibility for a 2002 withdrawal, if you have not already received your 2002 Deposit Withdrawal Options Notice.
Contact NISA for information on your options regarding early access for the 2003 program year.
The bottom line is keep creditors informed, assess your cash flow, and assess your options.
Dates to remember
•Aug. 14-17—Rainy River District Fall Fair, Emo

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