What does the profile of a “financially fit” farmer look like? If we look at the profiles of some of the better financial performers, one of their most important attributes is their strong focus on financial management.
These farmers generally prepare their own budgets in conjunction with their accountant /advisor and have full ownership of the figures.
Monthly cashflow budgets are monitored extremely closely and changes to inputs and output prices are updated within the budget make sure to keep the document “live”.
Adjustments are made to budgets as milk, cattle prices change etc, repairs, and maintenance costs etc. arise.
Detailed bench-marking is undertaken with their chosen peer group – discussion group, co-op, etc. so that these farmers know how they perform from year to year against their peers.
To become one of these top financial performers you need to start with creating a cashflow budget for your farm. It may seem like a huge task the first time you draft one, but budgets can make a big difference in improving the profitability of your farm by increasing confidence in decision making and increasing profits for your farm. By creating a detailed farm budget, you gain control over your financial resources and help you identify your farms strengths and weaknesses.
How do you decide to buy a machine or land?
Do you make this decision based on an emotional want rather than an informed business need? If so, then you’re not alone.
A cashflow budget helps you gain control of your finances and gives you the tools you need to project future cash flow and help manage your assets and liabilities. It helps answer the “What if” scenario such as buying more lands, purchasing a new piece of equipment – can the business afford to buy and does the business really need to buy?
We recently launched our new FarmPro service for farmers, supported by Bank of Ireland, which uses Figured, a leading New Zealand based farm accounting software, that gives you up to date and accurate data in one place. Populated with data collated by our bookkeepers, in conjunction with stock data provided by ICBF, FarmPro automates the significant manual effort required by farmers to complete and update their cashflows and budgets.