Money

It is easy to avoid talking about money, but having an understanding of your farm’s finances is essential. An awareness of your finances, coupled with small changes, could increase your income and reduce stress. It can also be important to protect yourselves and your farms in the future.

Financial management is all about understanding how money moves in and out of a business and analysing this to make business decisions. It also involves protecting equity (anything the business owns, e.g. a farmhouse) from various sources of risk (e.g. the farmhouse being remortgaged to pay the farm’s bills). Good financial management activities include: maintaining financial records; implementing control systems (e.g. looking over the farm’s accounts to check for anomalies); analysing whole-farm profitability; investment analysis (e.g. looking at beef price forecasts before buying more cattle) and capital acquisition (e.g. buying the land previously rented). Financial management tasks often fall outside the interest and expertise of many farmers therefore it is important that you have the right support to help you.

There are many experienced accountants, financial advisors and software packages available to assist you. Still, it’s crucial to have a good understanding of the key measures that inform you of the financial status of your farm. Become friends with your financial advisor and your financial statements! Benchmarking and budgeting information can also help strengthen your financial management.