> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/use-cases/agriculture-and-primary-production/farm-level-working-capital-planning.md).

# Farm-Level Working Capital Planning

This use case explains how to plan farm level working capital needs for agriculture and primary production using Model Reef.

You will:

* Model seasonal patterns of receipts and payments.
* Track receivables, payables and inventory like effects.
* Understand cash draw, repayment and surplus periods.
* Plan working capital facilities and buffers.

Model Reef is not a banking system. It provides a planning view that connects enterprise forecasts to working capital and funding decisions.

{% hint style="info" %}
Model Reef provides a planning view (not a transaction banking system) that connects enterprise forecasts to working capital and funding decisions.
{% endhint %}

## When to use this pattern

Use this pattern when:

* Your farm or agribusiness has strong seasonality in cashflows.
* You use overdrafts, trade finance or supplier credit.
* You need to understand cash peaks and troughs across seasons and years.
* You want to connect enterprise level plans to funding requirements.

It is usually built on top of:

* Crop Yield Forecasts
* Livestock Production Modelling
* Seasonality and Commodity Pricing

## Architecture overview

Farm level working capital planning uses:

* Enterprise cashflows
  * Revenue timing from crop and livestock sales.
  * Input, labour and overhead spend timing.
* Working capital drivers
  * Debtor days for customers or buyers.
  * Creditor days for suppliers.
  * Inventory like behaviour for stored product.
* Facilities and funding
  * Overdrafts or seasonal working capital facilities.
  * Term debt that interacts with cashflows.
  * Equity contributions or drawings.
* Reporting
  * Cashflow Statement and Cash Waterfall.
  * Cash balance, headroom and covenant metrics.

{% stepper %}
{% step %}

### Ensure enterprise models have realistic timing

First, ensure crop and livestock models apply realistic timing settings for:

* When revenue is recognised versus when cash arrives.
* When inputs, feed and labour are paid for.
* When storage, freight and other costs fall in the calendar.

This timing will automatically create receivables and payables in the Balance Sheet and drive working capital needs.
{% endstep %}

{% step %}

### Define working capital drivers explicitly

In the Data Library, create drivers such as:

* Debtor Days for major buyer segments.
* Creditor Days for key suppliers.
* Average Storage Period before sale.
* Target Cash Buffer (for example minimum days of cash).

If you want to approximate inventory, you can:

* Use Asset variables to represent `Inventory - Grain` or `Inventory - Livestock` with inflows from production and outflows to sales.
* Use Liability variables for deferred payments or advances.

These variables will interact with revenue and cost timing to shape working capital.
{% endstep %}

{% step %}

### Add working capital facilities

Create Liability variables for working capital facilities, for example:

* Debt - Overdraft Facility.
* Debt - Seasonal Working Capital Line.

Decide on a representation:

* Simple planning: represent these as interest only facilities with balances that you set via drivers or scenarios.
* More detailed: link facility drawdowns and repayments to cash balance thresholds using manual schedules or scenario specific assumptions.

Set interest rates and payment timing so that:

* Interest expense appears in P\&L.
* Cashflow Statement and Cash Waterfall show draw and repay movements.
* Balance Sheet reflects facility balances at each period end.
  {% endstep %}

{% step %}

### Build cash and headroom dashboards

Create dashboards focused on working capital, including:

* Cash balance over time at farm and group level.
* Net cash including overdrafts and working capital lines.
* Highest and lowest cash points per season or year.
* Utilisation of facilities versus limits.
* Simple covenant or threshold metrics, such as minimum cash days or maximum facility utilisation percentage.

Use these views to identify:

* Periods where additional funding or cost deferral may be required.
* Opportunities to deploy surplus cash to capex or debt reduction.
* The effect of operating changes on working capital needs.
  {% endstep %}

{% step %}

### Use scenarios for seasonal and funding risk

Clone the model into scenario models for:

* Adverse seasons with lower yields or prices and similar fixed costs.
* Favourable seasons with strong production and prices.
* Changes in payment terms with buyers or suppliers.
* Changes in facility limits, interest rates or availability.

In each scenario, adjust:

* Enterprise production and price assumptions.
* Debtor and creditor day drivers.
* Facility limit and pricing assumptions.
* Any planned capex or equity movements.

Compare scenarios using:

* Cash balance and facility utilisation patterns.
* Periods where facilities are fully drawn or breached.
* Sensitivity of working capital to key drivers.
* Implications for discussions with lenders and investors.
  {% endstep %}

{% step %}

### Integrate with whole farm and group planning

Because working capital facilities and drivers operate at farm and group branches:

* Farm level reports show cash and facility needs per farm.
* Group level reports show aggregate requirements and headroom.
* Boards, investors and banks can see a coherent picture from enterprise forecasts through to funding needs.

You can also connect working capital planning to:

* Capex and expansion decisions.
* Risk management and hedging choices.
* Long term strategy for gearing and resilience.
  {% endstep %}
  {% endstepper %}

## Check your work

{% hint style="info" %}

* Debtor and creditor day assumptions reflect actual terms and behaviour.
* Cashflow patterns make sense when compared to bank statements or historical cashflow summaries.
* Facility limits and terms align with actual banking arrangements.
* Scenario outputs line up with management experience of stress and recovery periods.
  {% endhint %}

## Troubleshooting

<details>

<summary>Model shows more cash than expected in busy seasons</summary>

Revisit timing of input costs and ensure that you have not used overly optimistic creditor days.

</details>

<details>

<summary>Facilities appear insufficient or excessive</summary>

Adjust facility limit drivers based on scenario analysis and consider different strategies for drawdowns and repayments.

</details>

<details>

<summary>Difficult to trace working capital effects back to enterprises</summary>

Use reports and dashboards that show enterprise level cash contributions alongside facility utilisation and changes in receivables and payables.

</details>

## Related guides

* [Build a Working Capital Model](/how-tos/operations-and-unit-economics/build-a-working-capital-model.md)
* [Build a Capital Raise Model](/how-tos/investment-and-transactions/build-a-capital-raise-model.md)
* [Fundamental Data Mapping](/help/stock-ticker-fundamentals/fundamental-data-mapping.md)
* [Using Drivers in Formulas](/syntax/drivers-syntax/using-drivers-in-formulas.md)