In developing your workforce plan, you want to make sure that you have adequate cash on hand to cover your payroll expenses. A cash flow projection (or cash flow budget) is an estimate of the amount of money you expect to flow in and out of your business. It includes all your projected income and expenses.
Monthly cash flow projections can help identify when you can expect to experience cash shortfalls in your production year. If you anticipate a temporary cash shortage, you might explore opening a line of credit or a short-term operating loan to help bridge the gap. Planning ahead is a key management strategy.
Here are some resources to help you develop cash flow projections:
- Understanding Cash Flow Analysis, is an Iowa State University Extension and Outreach web page that provides a written description of how to construct and use cash flow projections to help manage farm finances. Iowa State's Extension Farm Management team has also created templates (in Microsoft Excel) for creating cash flow budgets. You can choose between the short form Cash Flow Budget, or their more in-depth Farm Cash Flow decision tool.
- Farm Planning with Cash Flow Statements, are cash flow templates (in Microsoft Excel) developed by the Vermont Farm Viability Program. You can download the Farm Viability Financial Workbook for Vegetable or Diversified Farms and the Financial Workbook for Dairy or Livestock Farms.