In agribusiness, efficient cash flow is essential to sustain the operation throughout the seasonal cycles and cover expenses with inputs, planting, harvesting, livestock and marketing. When available financial resources are not sufficient to cover operating expenses, it is essential to reevaluate capital inflows and outflows. Good cash flow management in agribusiness provides predictability and contributes to the sustainable growth of companies and rural properties, ensuring that all operations go as planned.
To organize cash flow in agribusiness in a strategic way, reducing expenses and facilitating investments in new projects, it is recommended to consider, at a minimum, the following aspects:
Complete Record of Entries and Outputs The use of an ERP, specialized software, or even spreadsheets allows the detailed recording of all financial transactions. In agribusiness, it is important to include specific items, such as: time recording, input costs, equipment maintenance, transportation, and small operating expenses. Monitoring fixed accounts and investment installments, such as leasing and machine purchases, allows for more accurate cash projections for periods of high and low production.
Definition of the Cash Flow Analysis Period As agribusiness has periods of high and low movement, the definition of an analysis interval appropriate to the production cycle is essential. Monthly reviews are ideal for critical periods, while weekly reviews can be advantageous in preparation phases. This monitoring helps to predict financial needs and avoid surprises, especially in businesses that depend on financing or have large financial movements.
Categorization of Inputs and Outputs Dividing cash flow into categories allows for a clearer view of key costs and revenues. For agribusiness, categories such as inputs, labor, transportation, and storage are indispensable for accurate analysis. In the entries, it is important to distinguish the different types of revenue, such as sales of grain, livestock, and wood. This detailed categorization makes it easy to identify areas where it is possible to reduce costs or increase investments.
Establishment of Reserve Capital and Exchange Protection Maintaining a capital reserve is essential, as agribusiness is susceptible to weather conditions and market fluctuations. Companies exposed to exchange rate changes should also consider protecting their assets against these fluctuations. Well-structured reserve capital and exchange rate protection are fundamental measures to face periods of decline without compromising the operation or relying on emergency loans.
Adoption of Other Practical Measures In addition to the practices above, other strategies can improve cash flow in agribusiness:
Encourage cash payments to simplify cash flow and ensure greater predictability of revenues.
Forecast future payments and receipts to plan operations more effectively.
Maintain backups of financial records, especially for companies that operate in remote areas, ensuring the preservation of data in secure locations.
The organization of cash flow allows agribusiness managers to identify financial bottlenecks and direct resources to priority areas, optimizing costs and strengthening the operation's financial structure.
Count on TATICCA — ALLINIAL GLOBAL:
At TATICCA — ALLINIAL GLOBAL, we offer specialized services in auditing, accounting, taxes, corporate finance, advisory and business consulting focused on agribusiness needs. With certified methodologies, our team is ready to help your company structure a robust cash flow that supports both sustainable growth and financial stability during periods of high and low market growth.
