Farming is not a cashflow business.  You can't drive your enterprise from bank statements and expect it to thrive.  That might seem self evident, but I regularly come across farmers that are convinced otherwise.  These people see cashflow reports as a major part of financial planning, believing that it keeps the bank manager happy if some income appears in their accounts every month.  Their thinking goes something like this:

"The insurances are due in November, so I'll sell a few cull cows to pay that bill.  I wont have much to pay for in April, so I'll hold over half the lambs until May when the fertiliser account comes in.  In between I'll sell a few bulls each month to keep the overdraft down and the bank manager happy.  I should be able to get a few cheap replacement stock to control feed, even if they are only dairy heifers." Regular dollops of income do seem to comfort old-style bank managers, especially in times of falling farm gate returns. However, wiser bankers realise it is a recipe for financial mismanagement, and that they are doing themselves and their clients a disservice. 

Farm businesses run to conform to a farmer's outdated view of what the bank manager wants inevitably end up with too many classes of stock.  Some of the best stock get sold while they are still growing rapidly and there is plenty of feed around.  The replacements are often unsuitable and feed conversion efficiency drops.  Early sales sometimes create feed surpluses that are not converted into profit - in fact I believe that a huge amount of valuable feed is wasted this way.

The net result is inevitably more effort for less profit.  However, the farmers involved don't recognise it, and are often very pleased with their management.  Some have worked this way for years and got away with it financially by increasing production. This is absolutely not sustainable. These analyses are posted on the secure website each month and facilitate sound decision management in line with the farmer's unique vision.

Others wonder why their business isn't doing as well as it should - but at least the bank manager is happy (or so they think). It's nonsense, of course.  Like any other business, farms need to be operated for maximum profit on investment over a reasonable time-frame, not for short-term comfort. Now that we have the ability to measure the daily profit per Kg of feed eaten incredible gains in profit are achieved and that is what drives good decision management, certainly not cash flow. It is good sustainable profit that allows the new car and holidays to happen.