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 Fort Morgan (CO)
About Fort Morgan (CO)
Situated on the eastern plains of Colorado, Fort Morgan is a city deeply rooted in agriculture. Its agricultural heritage dates back to the late 1800s when settlers recognized the region’s fertile soil and vast open spaces as ideal for farming and ranching. Today, Fort Morgan remains an important agricultural hub, known for its diverse crops, thriving livestock industry and innovative farming practices.
One of the primary agricultural strengths of Fort Morgan is its ability to cultivate a wide range of crops. The region’s semi-arid climate, combined with irrigation systems sourced from the nearby South Platte River, allows farmers to grow various crops successfully. Wheat, corn, sugar beets, sunflowers and alfalfa are among the key crops produced in the area. These crops not only contribute to the local economy but also play a vital role in supplying food and resources to the broader region.
Fort Morgan is also recognized for its livestock industry. Cattle ranching is a significant part of the local agricultural landscape, with many ranchers raising beef cattle. The wide open spaces and abundant grasslands provide ample grazing opportunities for livestock, ensuring the production of high-quality beef. Additionally, dairy farming is a growing sector, contributing to the production of milk and other dairy products in the area.