Farm Financial Management FAQs
Farm financial management is a comprehensive process that involves planning, tracking and analyzing financial resources to ensure profitability, sustainability and stability of operations. Effective management includes a robust accounting program focused on budgeting, cost control, cash flow management, projections, and informed investment decisions. Armed with accurate financial information, farmers can make important decisions about:
- investing in crops and livestock,
- managing debt,
- maximizing profits and
- the pros and cons of loans and government programs
AgriBuilder creates the most value for agricultural businesses by integrating:
- intuitive accounting software (Xero)
- seamless and actionable farm management software (Figured) and
- ongoing advice and support from seasoned agriculture financial consultants.
A robust farm accounting program helps farmers manage finances, expenses and income while seamlessly integrating with your farm management system. In addition to these necessities, your farm accounting software must help you streamline the process for annual tax filings. Check out these common signs that your accounting system is broken.
An effective farm accounting process delivers updated financial reports that empower decision making. There are three standard financial statements including the balance sheet, income statement and statement of cash flow. The balance sheet conveys details about the farm’s assets, liabilities and overall net worth. The income statement reports revenues and expenses over a specific period of time, and the cash flow statement highlights the movement of cash.
Adams Brown regularly reviews financial reports with agriculture clients to monitor operations, assess profitability, identify trends for planning and make informed decisions. Together, we also review:
- accounts payable and receivable,
- budget versus actual,
- break-even analysis,
- cost of production,
- crop gross margin,
- depreciation schedules,
- inventory breakdowns by field and/or crop
- market value balance sheet and
- tax projections.
A holistic approach to reviewing your financial and farm management data ensures your ability to make sound business decisions for your farm while planning for future initiatives, investments and goals.
Additional farm financial management insights:
While each farming operation faces unique and different challenges and opportunities, there are some general guidelines which can help improve cash flow. These include:
- timing large purchases with revenue cycles,
- ensuring a diverse source of income (for example, agritourism, integration of wind farms, leasing hunting ground),
- negotiation of payment amounts and terms with vendors/suppliers,
- leveraging lines of credit and
- maintaining an emergency fund.
Understanding your farm’s value is important for various reasons, ranging from financial planning to strategic decision-making. Whether you are buying, selling, planning your estate or evaluating operational success, knowing what your farm is worth can provide critical insights to help you achieve your goals. A thorough farm valuation will help you conclude the true value of your farm.
Map of Scott City (KS)
About Scott City (KS)
In the heart of western Kansas lies Scott City, a small town known for its vibrant agricultural community. Nestled amidst vast stretches of golden wheat fields and sunflower farms, agriculture is not just a way of life here; it’s the beating heart that sustains the town and its people.
Every morning, as the sun begins its ascent, farmers and ranchers rise early to tend to their land. Scott City’s fertile soil, nourished by the Arkansas River, provides a perfect foundation for a variety of crops. Wheat, corn and sorghum dominate the fields, their emerald stalks swaying in the gentle prairie breeze. These hardworking men and women know the land intimately, understanding its rhythms and adapting their practices to the changing seasons.
The town’s agricultural landscape is a testament to the ingenuity and resilience of its farmers. They embrace technological advancements to maximize productivity while preserving the delicate balance between tradition and innovation. Modern machinery, GPS-guided tractors and precision farming techniques have revolutionized the way they work the land. Yet, despite the advancements, the essence of Scott City’s agriculture remains rooted in the generations of knowledge and a deep respect for nature.