Whether it’s operating a business or prioritizing your personal finances, liquidity and cash play a big role. In fact, there is an old saying that “cash is king.” But with the farm economic reset going into its fifth year, cash and working capital are increasingly difficult to maintain. Nevertheless, the efforts to preserve these additional lines of defense are critical. Why? Let’s examine some of the benefits of cash and strong working capital positions.
First, cash – or working capital – acts as a safety net if adversity strikes, creating issues with profit and cash flow. If current assets can be turned to cash without disrupting overall operations, you are more flexible – especially in marketing. More specifically, the bushels of stored grain or side pen of cattle can be marketed at a profitable point instead of at a time when cash is most needed to pay expenses, service debt, or payback operating loans. [Read more…]