Agriculture runs on one of the longest cash cycles of any business. Inputs are bought in late winter and spring, the crop or herd is managed for months, and revenue arrives after harvest or sale, at prices set by markets nobody controls. Planning a farm’s cash means planning time as much as money.
Start with an operating budget by enterprise
Build the season’s budget by crop, field, or livestock enterprise. For crops, work from cost per acre, including seed, fertilizer, chemicals, fuel, repairs, custom work, insurance, interest, and land. For livestock, work per head. Add overhead and family living or owner draws where they come from the business.
From that, calculate breakeven prices, meaning the price per bushel or per hundredweight at which revenue covers costs at expected yields. Breakevens anchor every marketing and financing conversation.
Turn the budget into a cash timeline
The budget says what the season costs. The cash plan says when. Lay out:
- Input purchases and when they are paid, including prepay discounts.
- Rent and loan payments on their due dates.
- Payroll and seasonal labor.
- Operating loan draws and repayments.
- Expected sale dates and volumes, including forward contracts and stored grain.
- Program payments and insurance indemnities, conservatively.
- Estimated tax payments.
The low point of this timeline determines how large an operating line you need. Sizing the line from a real projection is far better than guessing.
Use scenarios for price and yield
A single price assumption is a guess. Test at least three, such as a low, an expected, and a high price, against your breakeven, and combine them with yield scenarios. Look at what each does to the cash low point and to the ability to repay the operating loan. The goal is not to predict the market. It is to know which outcomes you can absorb and which call for protection through contracts or insurance.
Keep the budget and forecast separate
Once the budget is set and shared with your lender, keep it fixed. As the season unfolds, update a separate forecast with actual input costs, crop conditions, and prices. The difference between the two is the story of the season, and lenders appreciate seeing both.
Update through the season
Review the cash forecast monthly most of the year and weekly around tight periods, such as just before harvest. Compare actual costs to the budget and revise yield and price expectations as evidence arrives.
Report to your lender with confidence
A lender review goes better with a clear budget, a cash projection that shows the draw and repayment schedule, and an honest explanation of how this season compares with plan. Traceable reports, where every number ties to its assumptions, build credibility over time.
PursuitBid supports this cycle with adopted budgets, a rolling forecast, a thirteen-week cash outlook with explicit timing, and scenarios for price and sale-date changes, all built from your own records.
Written by the Syntonyl team. This article is general information, not legal, tax, or financial advice.