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Beyond the Bottom Line: 8 Ways to Strengthen Your Cash Flow
By Grace Debbeler, Associate Business Consultant
Cash flow is the lifeblood of any farm operation. Whether you’re running a small organic vegetable farm or a large-scale livestock business, maintaining a healthy cash position ensures you can cover expenses, invest in growth, and weather tough seasons.
At the same time, it’s possible for a farm to look profitable on paper but still struggle to pay the bills. That’s because profitability and cash flow aren’t the same thing — and understanding the difference is key to running a resilient farm or food business.
Profitability tells you whether your business is earning more than it spends over time. It’s based on revenue minus expenses, and often uses accrual accounting — meaning income and costs are recorded when they’re earned or incurred, not when the money actually changes hands.
Cash flow, on the other hand, tracks the real-time movement of money into and out of your business. It answers the question: Do you have enough cash on hand to cover your needs today, next week, or next month?
That difference isn’t just technical—it’s practical. A farm can show a profit on paper but still fall behind on bills if cash isn’t flowing at the right time.
In this post, we’re sharing eight proven ways to improve cash flow — practical, farm-tested strategies you can use to strengthen your business and build long-term sustainability.
1. Increase Cash Sales
One of the fastest ways to improve cash flow is by boosting direct sales. Farmers' markets, CSA subscriptions, on-farm stores, and online platforms can all generate more immediate revenue while strengthening customer relationships. Encouraging customers to pay in cash or up front — such as through prepaid CSA shares or discounts for cash purchases — puts money in your pocket right away and helps avoid credit card fees. You can also bundle products or introduce value-added items like jams, dried herbs, or cheeses to increase each sale and diversify your income streams.
2. Increase Gross Margins
Evaluate your pricing strategy and production costs with an eye toward improving margins. Focus on the difference between what it costs to produce a product and what you sell it for. This might mean raising prices if the market supports it, reducing input costs, or refining your production methods to be more efficient. Even small improvements in your margins can add up quickly over time. Implementing basic budgeting and cost-tracking practices can also reveal areas where you’re overspending and help you make informed decisions to boost overall profitability.
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3. Decrease Cash Expenses
Cutting operating costs is one of the fastest ways to free up cash. Take a hard look at where your money is going—seed, feed, fertilizer, equipment, labor, utilities. Can you negotiate better pricing with suppliers? Buy in bulk? Switch to more cost-effective inputs without sacrificing quality? Don’t overlook the small stuff either: unused subscriptions, outdated services, or inefficient systems can quietly drain your budget. This isn’t about cutting corners—it’s about running lean and smart. Even small changes, like adjusting irrigation methods or upgrading to more efficient equipment, can lead to meaningful long-term savings. The more intentional you are with spending, the more cash you’ll have available when you need it most.
4. Increase Accounts Payable (AP) Balance
Managing payment terms strategically can give your cash flow a helpful boost. If your suppliers offer net-30 terms, make full use of that window instead of paying early. Holding onto cash a little longer—even just a few extra weeks—can provide valuable breathing room. Don’t hesitate to ask if extended terms like net-45 or net-60 are an option, especially if it helps better align your outgoing expenses with incoming revenue. It might feel counterintuitive, but delaying payments (within agreed terms) is a smart way to improve short-term cash flow. Just be sure to stay in good communication with your suppliers and maintain strong relationships—reliability goes a long way when negotiating flexibility.
5. Decrease Accounts Receivable (AR) Balance
Speeding up collections puts more cash in your hands, faster. If you sell to restaurants, retailers, or distributors on credit, don’t let payments drag. Send invoices promptly, follow up consistently, and don’t hesitate to tighten your billing cycle. Every dollar tied up in unpaid invoices is cash you can’t use. Consider offering small discounts for early payments or requiring deposits on large orders—these incentives can motivate faster turnaround without straining customer relationships. The faster you collect, the more cash you’ll have on hand.
6. Sell Unused or Underutilized Assets
Idle assets don’t just sit—they cost you. Old equipment, unused land, or underutilized buildings quietly eat up space, maintenance, and opportunity. Selling off what you no longer need can free up immediate cash and lighten your ongoing expenses. Not ready to sell? Lease out storage, machinery, or facilities to bring in steady income from assets that would otherwise sit idle. These moves may not feel urgent until cash gets tight—but acting early can give your operation more flexibility, more breathing room, and a stronger cash position when it matters most.
7. Increase Liabilities (Borrow Wisely)
While taking on debt should be done carefully, strategic borrowing can help improve cash flow. Short-term operating loans can provide much-needed liquidity during planting season, when expenses often outpace income. Longer-term financing may support growth projects, like expanding acreage or investing in more efficient equipment. To keep borrowing costs manageable, look for low-interest options such as USDA-backed loans or farm credit programs. A loan or line of credit can temporarily boost your cash position—just make sure the terms are reasonable and repayment fits your future budget. When aligned with your financial goals, borrowing can help bridge short-term gaps and support investments that lead to long-term returns.
8. Secure Equity Investments
If you're looking to grow but want to avoid taking on more debt, consider alternative sources of capital. Bringing in investors—through partnerships, equity agreements, crowdfunding, or agricultural investment funds—can provide a cash injection without adding to your liabilities. Selling equity requires careful planning and trust, but in the right situation, it can fund expansion without straining your cash reserves. Structuring ownership and decision-making in a way that works for both parties is key. You can also explore non-repayable funding options, such as grants like the Business Builder Farm and Food Grant, which are specifically designed to support farm and food business growth without the burden of repayment.
Final Thoughts
A farm’s financial health depends on smart, intentional cash flow management. By increasing revenue, cutting unnecessary costs, and managing payables and receivables strategically, you can keep your operation stable and resilient—even in uncertain seasons. Small shifts, like negotiating better terms with suppliers or speeding up customer payments, can have a big impact over time.
Implementing these strategies takes planning, discipline, and regular financial check-ins. Cash flow management isn’t about doing just one thing—it’s about understanding how the pieces work together and choosing the right moves for where your business is right now.
At Good Roots, we believe a strong financial foundation is what helps small farms and food businesses grow with confidence.
Want help building your own cash flow plan? Let’s talk.
