Understand your cash flow better with AgConnexion | Lactascan

Cash flow on a dairy farm is affected by a number of factors. Grain and milk prices come to mind as having a direct impact, but there are other, often overlooked factors that can give you a different view of your business. Here are three factors that positively and negatively influence cash flow and are documented in Lactascan.
 

Factor 1: Variations in production margin

AgConnexion | Lactascan can generate a production report for your farm. At the end of page 3 of this report, you will see how an increase or decrease in your production margin would impact your working capital (imp. $/quota allowed).

Essentially, if your margin increases, your cash flow improves. If it decreases, your cash flow worsens. The same applies to losses: if you’re over quota, your working capital will suffer because you have expenses with no income to back them up.

At the bottom of the page is the total figure for the year. It’s worth looking at your monthly totals to see if your farm is in a better position than the previous year.
 

Factor 2: Additional days

Additional days also have an impact on cash flow, which you can see in the three right-hand columns of the report under “Additional days.”

Isolating this factor makes it easier to see the effect, as the figure is the net result (once the feed has been paid for this production).
 

Factor 3: The number of days in the month

The third factor is the number of days in a month. It’s important to compare different months, but because they don’t have the same number of days, it’s not always easy.

That’s why, in Lactascan, we have adjusted the margin generated per month to 30 days, which makes it easier to understand.

Lactascan’s reports give you a better understanding of your dairy business’ finances to help you make the right decisions.

Source: This article was originally published in French in the November 2022 issue of Coopérateur magazine.