Dakota Farmer

You need to use your prepared cash flow statement regularly, not file it away.

Lon Tonneson, Editor, Dakota Farmer

January 27, 2020

2 Min Read
calculator, pen and budget sheets
GO WITH THE CASH FLOW: Blaine Carey, South Dakota Center for Farm/Ranch Management instructor, says you should frequently be updating your cash flow statement and placing it in a spot that will be visible to you every day.Getty Images

It’s important to have an accurate cash flow statement, but it is even more important to use it during the year, says Blaine Carey, an instructor with the South Dakota Center for Farm/Ranch Management at Mitchell Tech.

His tips to get more from your cash flow statement include:

Everyday visibility. After you complete a cash flow statement, post it someplace where you can see it every day. A cash flow statement doesn’t help much with making capital purchases and marketing decisions if you file it in some obscure place and don’t open it until next December, Carey says.

Update it frequently. Pencil in your actual numbers as the year goes along. "I think the best time to re-visit your numbers is sometime around mid-June," Carey says. "By then, planted acres have been finalized and most of the costs have been incurred. This timeline will also provide an opportunity to re-figure break-evens ahead of the USDA Quarterly Stocks and Planted Acreage report, both of which have a tendency to provide some big swings in commodity prices.

"Having a good knowledge on production expenses is an important part of controlling costs in an environment of tight margins. Overhead costs are a little more difficult to trim but it is relatively easy to track year-to-date expenditures and compare them to projections."

Don’t forget to update family living expenses. "It may not be practical to check this every month, but it would be a good idea to take a good look at it on a quarterly basis," Carey says. "This will allow you to adjust spending money in one area if there are unforeseen problems appearing in another."

If you haven’t devoted much time to understanding your financial condition, consider enrolling in a farm management program.

In South Dakota, contact Carey at 605-350-4132 or [email protected] about enrolling in the South Dakota Center for Farm/Ranch Management.

In North Dakota, contact Aaron Anderson, state supervisor, at 701-328-3179 or ndfarmmanagement.com about enrolling in the North Dakota Farm Management education program.

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