For farmers, “cash flow management is more important in the early years,” maintained certified public accountant Shawwn Storms Feb. 27. He was speaking about "Addressing Financial Challenges" at Batesville’s “Time to Grow: Your Food, Your Profits, Your Opportunities” seminar.

“Cash is still king,” the Batesville resident announced. Cash deficiencies cause higher costs, due to interest or missed discounts. Lower revenues lead to missed opportunities, less advertising and fewer employees.

Drew Cleveland, Farmland, said, “We're thinking about doing a CSA (Community Supported Agriculture, where farmers get paid after providing a certain amount of crops for a number of subscribers during a long time period). One reason is for cash flow.”

Storms pointed out, “Sometimes growth eats up your cash in the form of receivables ... Making money ... doesn't always result in cash in your back pocket.”

He urged attendees to keep good records, even if it means doing it on nights or weekends after working other jobs. “Eighty to 90 percent of our clients use QuickBooks.” Although the software program costs about $400, he said it’s worth the expense.

The accountant also reported that businesses that get paid by automatic bank drafts “are miles ahead of the game .... That's an easier process" than billing customers. “Do you have to have a credit card machine?” an attendee asked. No, but the bank might charge a fee.

The speaker observed, “The past 18-24 months have been incredibly challenging for our banking friends.” He said bankers look at six C's before loaning money: character, credit limits, collateral, capitalization, cash flow and communications.

“If you do get into a loan, read the documents,” he advised. “What I'm finding in today's environment, they haven't paid attention (to the loan language) and now it comes back to haunt them," whether as a prepayment penalty or salary restriction.

Glen Suttman, Batesville, reported he had a good experience with a banker after taking out a series of small loans. "For a big investment, they're willing to back you up easier." When looking for a certain loan amount, “shop it around” for the best terms, the farmer suggested.

“Don't take the first one that wants to loan you money.”

When choosing a banker, look for one with experience, the CPA said.

If a banker thinks a borrower has a collateral shortfall, the farmer can turn to the Small Business Administration, which may guarantee part of the loan. “That is a very good program,” Storms noted. “If you go to a bank, don't forget to ask about it. If a bank doesn't use SBA, you may want to search for one that does.” SBA loans have fixed interest rates, advantageous over some banks’ loans with fluctuating ones.

“Farmers have been afforded good benefits from our government as far as tax laws.” Producers should talk to their financial advisers to capitalize on those laws, Storms said.