Cash flow is the life blood of every business. According to a U.S. Bank study, poor cash flow management causes 82% of U.S. business failures. Although seemingly counterintuitive, many experts advise putting cash flow management before profits.
While profits are how any business survives, a failure to manage the operation’s cash flow can mean running into problems that one profitable accounting period might not be able to offset.
Another study, this one by Intuit, revealed that 61% of small businesses around the world struggle with cash flow and 32% are unable to pay vendors, pay back pending loans, pay themselves or their employees due to cash flow issues.
Cash flow management: 101
In essence, cash flow is nothing more than the movement of money in and out of a business. Cash flows into the business from sales of goods, products or services. Money flows out of the business for supplies, raw materials, overhead and salaries in the normal course of business.
An adequate cash flow means a steady flow of money into the business in time to be used to pay those bills. How well an entity's cash flow is managed can have a significant impact on the bottom-line profits of the business.
More often than not, the operation’s cash inflows will lag behind its cash outflows, often leaving the business short of money. This shortage, or cash flow gap, represents an excessive outflow of cash that may not be covered by a cash inflow for weeks, months or even years.
Properly managing the operation’s cash flow allows that cash flow gap to be narrowed or closed completely before it reaches the crises stage. This is usually accomplished by examining the different items that affect the operation’s cash flow — and looking at the various components that directly impact on cash flow. This analysis can provide the answer to a number of important questions such as:
The “in” of cash flow
In a perfect world, there would be a cash inflow, usually from a cash sale, every time there is an outflow of cash. Unfortunately, this occurs very rarely in an imperfect business world. Thus, the need to manage the cash inflows and outflows of the business.
Obviously, accelerating cash inflows improves overall cash flow. After all, the quicker cash can be collected, the faster the business can spend it. Put another way, accelerating cash flow allows a business to pay its own bills and obligations on time, or even earlier than required. It may also allow the business to take advantage of trade discounts offered by suppliers.
An important key to improving an operation’s cash flow is often as simple as delaying all outflows of cash as long as possible. Naturally, the operation must meet its outflow obligations on time, but delaying cash outflows makes it possible to maximize the benefits of each dollar in the operation’s own cash flow.
As mentioned, outflows are the movement of money out of the business, usually as the result of paying expenses. If the business involves reselling goods, the largest outflow will most likely be for the purchase of inventory. A grower’s biggest outflow most likely involves the purchase of plants, raw materials and other components needed for the growing process. Purchasing fixed assets, paying back loans and paying the operation’s bills are all cash outflows.
A grower can regain control over their finances by adopting best practices and proper tools for invoicing. A good first step involves how the operation pays its bills.
Many credit cards have a cash back bonus program. Even if the program offers only 1% cash back, that could equate to a sizeable monthly amount for many greenhouse owners and operators. Of course, because credit cards tend to have a higher interest rate, they should only be used if the balance can be quickly paid off in full.
Improving the invoicing process is another key step in cash flow management. A grower can adopt incentive strategies to be paid faster. A business enjoying a 10% gross margin that offers a 2% rebate in exchange for early payments might not be appropriate. Giving away small extra services, on the other hand, might work. Incentives might include the following:
Some customers are just late payers and need to be nudged. The way that dunning is handled can, however, greatly affect the collection process. Timing and the quality of message content are the two main factors in the success or failure of these prods.
The manner in which the grower gets paid not only affects its profitability but also its cash flow. Today, paper checks remain as the standard method of payment. However, paper checks are slow, highly susceptible to fraud and bear “hidden costs” such as additional work and back office processing. They are also inadequate for recurring invoicing.
Something as simple as asking customers to switch to electronic funds transfer (EFT or ACH), providing incentives, etc., are among the tips that can be offered for faster, more secure, reliable and cheaper payments.
Improving cash flow
Profit doesn’t equate to cash flow because, as mentioned, cash flow and profit are not the same. There are many factors that make up cash flow, such as inventory, taxes, expenses, accounts payment and accounts receivable.
The proper management of cash outflows requires tracking and managing the operation’s liabilities. Managing cash outflows also means following one simple, but basic rule: Pay your bills on time — but never pay bills before they are due.
Having a cash reserve can help any business survive the gaps in cash flow. Applying for a line of credit from the bank is one way to build that cash reserve. Once qualified, lenders will grant a predetermined credit limit which can be withdrawn from when needed.
Another option might be frugality. If you’re aiming to keep the greenhouse lean, evaluate it. Is the purchase of new equipment really necessary? Is hiring new employees really cost-effective? Weighing the pros and cons of all business needs and wants enables the business to retain cash flow and avoid unnecessary expenses.
Cash flow gaps
Remember, the cash flow gap in most businesses represents only an outflow of cash that might not be covered by a cash flow inflow for weeks, months or even years. Any business, large or small, can experience a cash flow gap — it doesn’t necessarily mean the business is in financial trouble.
In fact, some cash flow gaps are created intentionally. That is, a business owner or manager will sometimes purposefully spend more cash to achieve some other financial results. A business might, for example, purchase extra inventory to meet seasonal needs, to take advantage of a quantity or early-payment discount, or might spend extra cash to expand its business.
Cash flow gaps are often filled by external financing sources: revolving lines of credit, bank loans and trade credit are just a few external financing options available to most grenhouse owners and operators.
Cash flow loans
Cash flow-based loans rely on the value of the operation’s cash flow. If the operation has a strong cash flow stream, it can be used to get significant loan amounts even if there are few business assets. Although cash flow loans can be expensive, they play a key role in a business that is expanding.
An advantage of cash flow loans is the repayment period. These loans are usually designed according to the needs of the borrower with repayment periods lasting between five and seven years. And, since cash flow loans are different from asset-based loans, rarely does collateral have to be put up.
Cash flow consequences
Assessing the amounts, timing and uncertainty of cash flow is the most basic objective of cash flow management. Positive cash flow indicates the liquid assets of the business are increasing, enabling it to settle debts, reinvest in its business, return money to shareholders, pay expenses and provide a buffer against unanticipated financial challenges. The impact of a negative cash flow can be profound with so many operating on margins so thin that frequent lost opportunities will put them on the path to closing their doors.
Every business can improve its cash flow. Of course, in order for this to happen, they need to adopt best practices in the way they invoice, follow up with customers and monitor outflow. Without the help of a qualified professional, these best cash flow practices may be more difficult to achieve.Mark is a business writer based in Pennsylvania. His tax and financial features have appeared in business magazines and trade journals for more than 25 years. MEBatt12@Earthlink.net
Plant pathogenic fungi is one of the most common causes of root impairment in greenhouse crops. Accurately diagnosing what pathogen has invaded your growhouse is paramount in both managing the problem and preventing future incursions.
Controlling fungal root disease is a challenge largely due to the ubiquitous character of certain pathogens, note experts interviewed by Greenhouse Management Magazine. Organisms such as pythium, phytophthora and fusarium are natural inhabitants in soil and form survival structures allowing them to endure for years.
In greenhouses, pathogens proliferate in plant debris and can be introduced into the growth medium by soiled hands, tools, flats and colonized transplants. University of Maine’s Alicyn Smart, a plant pathologist and director at the school’s plant disease diagnosis laboratory, points to fungus gnats and shore flies as another vector for root-damaging disease.
These annoying insects are attracted to damp locations where fungi are apt to flourish, Smart says. While adult fungus gnats are more of a nuisance, their larvae feed on plant roots and decaying organic matter. Feeding damage creates wounds that allow soilborne pathogens — including pythium and fusarium — to enter and kill plants. The larvae themselves may also carry deadly pathogens, making swift eradication all the more important for growers.
“Both fungus gnats and shore flies can move pathogens around the greenhouse, which is something that people don’t often think about,” Smart says. “Gnats can deposit their spores into roots and stems.”
Pythium, one of the most common organisms found in the roots of greenhouse crops, is commonly associated with excessive nutrient levels or ammonium toxicity. With a genus comprised of more than 100 species, pythium can lead to any number of diseases, among them crown and stem rot and damping-off.
Damping-off affects seeds and new seedlings by rotting stem and root tissues at and below the soil surface. Though infected plants may germinate problem-free, within a few days they can become mushy and water-logged. Species of fusarium, phytophthora and rhizoctonia can cause damping-off, but greenhouses with poor soil draining and high humidity are more likely to invite pythium into the grow space.
“Pythium is not a true fungi, it’s a water mold,” Smart says. “With damping-off, another symptom for growers to look out for is when the plant flops over at the seedling stage.”
Where disease finds a home
Pythium is a classic “root nibbler” that can kill greenhouse plants outright, says Mary Hausbeck, a professor of plant, soil and microbial sciences at Michigan State University.
Non-uniform crop height is a telltale sign of a pythium invasion, particularly for groups of crops planted around the same time.
Soil with high soluble salt content is vulnerable to the pathogen, Hausbeck notes. Being a water mold, pythium will spread more rapidly when soil is saturated, or if staff members don’t adjust watering routines after a series of overcast days.
Like pythium, phytophthora favors excess moisture and nitrogen fertility. Though less common than its fellow water-loving cousin, species of phytophthora are more aggressive and ultimately quite harmful to a greenhouse crop.
“I’ve never witnessed a situation with phytophthora that was not highly destructive,” Hausbeck says. “A grower may see a problem they think is pythium, but it’s not responding to treatment how they thought it would. That’s when we find out it’s phytophthora.”
Although soaked soil and high nitrogen content provide optimum conditions for phytophthora to thrive, unattended plant material is thought to be the pathogen’s most likely source of origin. Phytophthora is not usually found in commercial seed, nor does it travel easily through air over long distances.
Both phytophthora and pythium are oomycetes based on their algae-like structure and preference for wet, humid conditions. Cultivated soils are a common home for fusarium, a fungus carrying at least ten different species known to cause root rot. Fusarium often occurs in soils where dry beans have been previously grown, with root rot severity depending on cropping history, plant spacing, moisture and temperature.
Catching the problem early
When combating any pathogen, catching the warning signs early is key to staving off plant death, experts say. Fusarium rot appears as reddish-brown lesions on the primary root two to three weeks after planting. Affected areas may gradually become brown, with symptoms extending up the main root to the soil surface.
Generally, greenhouse owners should check their roots regularly, either during watering or when examining foliage.
“Growers should actually take plants out of containers to look at roots,” says the University of Maine professor Smart. “They should also know what healthy roots look like. Good ones will be white and fleshy, while diseased roots may be brown or degrade in your hands. If you have any previous issues with root disease, you should look at them more often.”
As symptoms develop over time, confirming an accurate diagnosis can be problematic, remarks Hausbeck of Michigan State.
“In phytophthora and fusarium, you’ll see a wilt in the plant,” says Hausbeck. “What throws people is if they have a basket with three plants with one wilted and two that aren’t. That’s root rot that hasn’t yet moved on to the other plants. The best course is to remove the wilted plant and all soil associated with the root system, then treat preventively moving forward, because your other plants may have an infection that’s not visible yet.”
Disease insinuating itself into a greenhouse may not be inevitable, but it is likely that most commercial growers at some point will encounter an infection. The question remains – how can owners eliminate disease and, just as critically, prevent it from returning?
Janna Beckerman, a professor of botany and plant pathology at Purdue University, says too many growers choose to simply dispose of a few infected plants rather than taking a more merciless approach.
“That will just allow the pathogen to persist and require additional fungicide applications,” says Beckerman. “If you have to cull, be ruthless. The best greenhouses I’ve been in are absolutely ruthless in their sanitation.”
When and how to use fungicides
Fungicides are vital tools for managing disease when combined with proper vetting of products and their classifications. One method of categorizing fungicides is by their “modes of action” — or the way the fungicides affect a fungus. Site-specific fungicides react with one very precise biochemical process, called the target site. Multi-site products have multiple modes of action, impacting many target sites and interfering with the metabolic process of fungi.
Rotating fungicides, which requires alternating products with different modes of action, is crucial in limiting the amount of time a pathogen is exposed to any single product, says Beckerman. For best results, growers should also avoid consecutive applications of fungicides within the same chemical class.
“When you do use fungicides, make sure to apply the recommended dose as listed,” Beckerman says. “Skipping a spray is the worst thing you can do, because it allows the population to come back up.”Once the disease is destroyed, an increased focus on cultural controls can help stave off a potentially disastrous return. General practices for greenhouses include inspecting incoming plant material, avoiding overwatering and controlling insect pests and weeds.
Sanitation best practices can be as simple as keeping a watering hose off any surface that collects soil. Smart suggests cleaning reusable trays with one part bleach and nine parts water, as well as disinfecting tools with ZeroTol or other broad-spectrum fungicide.
“After removing the disease, sanitation and good cultural practices will alleviate reliance on fungicides,” says Smart.
Clean Grow and Green-Shield are just two EPA-registered disinfectants well-suited for disease control on benches and walkways. Steam-cleaning trays and pots are additional measures in keeping your growhouse free of root-ravaging pathogens, Beckerman says.
“There’s dozens of products you can use,” she adds. “Just follow the label correctly, and all will be effective against most pathogens.”
Many labs conduct a serological test to uncover harmful organisms. Meanwhile, disease resistant plant varieties can save growers from pathogen-inflicted pain. For example, Cora Vinca are the first varieties of the species resistant to phytophthora.
“When growing more vulnerable varieties like poinsettias, make sure to use well-draining media so there’s no water-pooling or puddling,” Beckerman says. “That’s true for mums, too. If there’s a history of pathogens in the greenhouse, you can treat it prophylactically with fungicides.”
Douglas is an Ohio-based freelance writer.
Plan, don't panic
When production ramps up and the greenhouse gets busy, small problems can snowball into serious issues. We reached out to two big greenhouse growers for their best tips on how to keep things running as smoothly as possible.
Ivan Tchakarov, chief horticultural officer at Metrolina Greenhouses in Huntersville, North Carolina, share his tips for keeping production on track during the spring months.
Greenhouse Management: How do you prioritize tasks in the greenhouse?
Ivan Tchakarov: Metrolina has two locations and more the 450 acres of growing space so task assignments, timing and execution are critical for our success. Ninety-five percent of what we do is rinse/repeat from prior years, and we use technology like Microsoft Teams and other workplace apps to have live reporting to assure those repetitive tasks are done efficiently. Remember what you did last year and assure 50% of your time is spent on repeating those tasks efficiently. This frees up the key time to work on the other 5% that generates new items, new efficiencies and new processes in the greenhouse. The reason we have worked and invested in these protocols is that it helps keep us focused on one of our core strategies of eliminating non-valued added tasks in our work each day.
GM: How do you stay organized during the most stressful times of the year?
IT: While stressful, we face the same stress each year where we are trying to push our 60% of our volume in 25% of the calendar year. We know this is going to happen, and we work together as one team with one goal to make it happen. Everyone knows the stress is coming and thrives on it verses letting it drag us down.
GM: How do you maintain communication with staff during the spring?
IT: It takes some a simple two-step process of 1) having a plan, and 2) adapting each day to the nuances of the spring. We have daily “tailgate” meetings between each shift change, shared documents so everyone is on the same page up to the minute, and MTV (Metrolina TV) where we have 18 monitors throughout the facility to communicate weekly results and key metrics that team members view at breaks, lunches and shift changes. We also have a virtual suggestion box process for employees to provide solutions as the season progresses.
GM: What technology are you using to help cut down on mistakes?
IT: Technology is the key in any work process to make it efficient, and we use a combination of programs to record, communicate, measure, scorecard, and improve each task or process. While we are working on an integrated work process flow tool to streamline this even more, today we use a combination of our ERP System (MAS500), Google Sheets, Microsoft Teams and internally designed apps to make work happen as efficiently as possible.
Amy Morris, vice president and head grower at N.G. Heimos Greenhouses and Millstadt Young Plants in Millstadt, Illinois, shares her thoughts on staying sane during the spring.
Greenhouse Management: How do you prioritize tasks in the greenhouse?
Amy Morris: We use a few basic rules of thumb. First, orders always come first. We need to make sure our customer is satisfied. If it is a season where we are not shipping heavy, then any URC that needs to be planted comes first. Every Friday we make sure the place is cleaned. As my father always said, “Start clean, stay clean.”
GM: How do you stay organized during hectic times?
AM: Stay calm and make sure you cross-train. Make sure you have a good team and make sure that two other people always know someone else’s job.
Number one is keeping sales and production on the same page. This always seems to be the number one issue in any greenhouse."
GM: How do you maintain communication with staff during the spring?
AM: One thing we do is create a traffic plan. This way every lead knows the goal and objective of the day and they can communicate with their team. And this way no one can say they were not informed.
GM: Is there any tech you’re using to help cut down on mistakes?
AM: Number one is keeping sales and production on the same page. This always seems to be the number one issue in any greenhouse. We have solved this with a middleperson. They sit in on all meeting for both groups and they also double check that production is understanding what sales is asking for. We have found this has helped so much.
The many methods of controlling and manipulating plant growth during the young vegetative period, whether by direct contact (i.e. pinching) or environmental control, are too numerous to list here. Historically, indoor floriculture farmers have often found going the chemistry route the path of least resistance.
We are referring, of course, to plant growth regulation (PGRs) formulations. For decades, these now-largely off patent actives have been greenhouse growers’ primary means of ensuring the plants they produce are short and compact, and flower (or, in most cases, don’t) in a timely fashion.
The successful (and safe) use of these practical specialty chemistries touches every aspect of the green industry product cycle: growers who apply them can fit more plants on benches and in greenhouse blocks, as well as in each pallet or shipment, and logistics companies can haul more plants at a time. And retailer and customer both get an easier to handle, perfectly timed flowering plant to sell or take home.
Let’s take a quick look at what Extension researchers are sharing of late on plant growth regulators.
Uttara Samarakoon, PhD., is an assistant professor and coordinator in the nursery and greenhouse program on Ohio State University’s ATI campus in Wooster, Ohio. Conducting her research and lab courses in a range of state-of-the-art greenhouses dotting the rural satellite outpost about 45 minutes north of the main Columbus campus, Samarakoon has done quite a bit of evaluation around PGRs and their use in commercial greenhouse floriculture.
“Most of the (popular) active ingredients for greenhouse growers are the inhibitors of gibberellin synthesis,” she says. “Gibberellins are plant hormones that are mainly responsible for cell elongation. We’re talking about things like daminozide, chlormequat chloride, paclobutrazol, uniconazole, ancymidol and flurprimidol.”
She adds that ethephon is another active ingredient favored among commercial greenhouse operations. It differs from the gibberellin inhibitors in that its active ingredient actually breaks down within the plant tissue, releasing ethylene to slow down vegetative development.
Asked her top tip for PGR application timing, she stresses that growers should get PGRs on when plants are small.
“PGR applications for plant height control work well when plants are actively growing, because you cannot make an already stretched plant shorter,” Samarakoon says. “You can only control future stem elongation.”
She also emphasizes growers read and closely follow all PGR product labels. Often the most accurate information can be found right there on the manufacturer’s product label.
“Efficacy of applications relies on various factors, including following proper practices during application, such as ensuring uniformity of the application, applying only on early morning or cloudy days (not in direct sunlight or when supplemental lights are running), applying when the leaves are dry and following the label recommended rates and application methods (spray, drench, or sometimes both),” Samarakoon says.
Something else to keep in mind is that, like many agricultural inputs, more is not always better when it comes to PGRs.
“Many of these compounds can cause phototoxicity, if applied above recommended rates,” she says.
Extension specialists Joyce Latimer of Virginia Tech University and Brian Whipker of North Carolina State University recently published a handy guide for ornamental growers interested in applying PGRs.
The study review “Selecting and Using Plant Growth Regulators on Floriculture Crops” is a one-stop shop resource for fitting PGRs into a greenhouse production system.
Once a grower decides to deploy PGRs instead of the other methods available through environmental and input control, choosing the correct active ingredient becomes crucial. However, growers must first consider which type of vegetative development they intend to control, or slow.
Want to hamper shoot growth? You are probably going to want a growth retardant. Trying to increase plant branching for enhanced cutting production? Sounds like a “chemical pincher” might be what you’re looking for. Looking to enhance or even sync up flower initiation? A PGR with chlormequat chloride or gibberellic acid is preferred.Also, when selecting a PGR, keep in mind that most of the widely applied actives in the greenhouse market are currently off patent, so there are a myriad of brand names and formulations available today.
Latimer and Whipker also emphasize that growers should carefully read product labels prior to making an application. Make sure you answer these key questions, and of course always follow the label for mixing and application guidelines:
- Is the chemical or active ingredient labeled for the crop you wish to treat?
- Is the active labeled for use inside a greenhouse or other growing structure?
- Are there any side effects, such as phytotoxicity?
- Are there label warnings for the effect on flowering?
The research duo also has useful suggestions on application timing, advising growers look at the label closely for information on timing of applications and plant condition at the time of application.
And make sure those applied molecules stay in close contact with plant tissue surfaces. For maximum uptake to be achieved, Latimer and Whipker advise the chemicals must remain in contact with plant tissues for as long as possible.
In closing, Latimer and Whipker surmise that “the multitude of variations possible in application methods, cultivar and species grown, and growing conditions makes it impossible to recommend specific product rates for all operations. Use the product labels and the appendix as resources for the use of PGRs on a variety of crops. Use the lower of suggested effective rates for starting your own trials.”