Chicken Farm Cash Flow Analysis Breakdown
There are many components that will determine the success of your business. Education, work experience, goodwill and cash flow are key factors that will ultimately lead to your farm’s growth and profit. How are these aspects measured? It varies from borrower to borrower; first, let’s define cash flow. Cash flow is the difference between revenues and expenses that a business incurs in any given period. If there’s more cash coming in than going out, the cash flow is positive. If expenses are higher than revenue, the cash flow is negative.
Our underwriters look at various aspects of cash flow when funding a loan, including revenues and expenses, to determine a borrower’s ability to repay the loan. If the borrower is being funded for new house construction, it is possible that their Integrator will offer him or her flock bonuses. Our underwriters will take flock bonuses into account for year 1-10 and year 11-20 projected gross revenues. Next, they will determine what a borrower’s cash flow will be over time.
The underwriter’s key responsibility is to tell a potential borrower’s story and how his or her work experience and history will enable him or her to be highly successful in owning their farm. Many of our borrowers either studied agriculture or are part of families with agriculture experience.
Once a borrower’s loan is funded, there will be ongoing factors that affect the business’s cash flow. How you manage your business expenses, which includes payroll, loan payments, and insurance is crucial to overall cash flow.
Our key focus is to make sure the pulse of the business is healthy and that the borrower is performing to his or her best ability. Having cash flow as a key component of managing your business allows you to preserve your money and possibly find new savings. Have you thought about your business’s cash flow lately? Understanding where you stand will allow you to be the most successful owner you can be.