Managing the pressures of farming
[Table of Content]
What is farm financial performance and farm financial position?
Financial Performance of the farm is an indicator of how well the farm business has been operating in terms of whether cash generated from the farm is adequate to meet farm input costs, including servicing debt and meeting goals.
The Financial Position of the farm is the balance between assets owned by the farm
business and liabilities to be met.
Why is it important to have accurate and timely reports of financial performance and financial position?
If the farm business regularly reviews these reports of the true position of the business then planning for the future is made on a solid information base, and management, particularly in crisis situations. If we don’t know the true financial position it can be far more worrying than facing the facts and making business decisions based on these facts. (Of course, it may well be that if the business is failing, the loss will be greater if the position is not known early)
Understanding financial performance is important for farm business partnerships to know where the farm business is now and where it is going in the future, and communicate these plans.
What does understanding financial performance involve?
All farms should have:
- Annual cash flow budgets, and projections for the medium term
- A statement of assets and liabilities
- Annual review looking at past years’ performance
Where could I get help with improving our financial management
systems?
- Rural Financial Counsellors are there to provide this help – see Rural Financial Counselling Services
- Your accountant can help, or refer to specialist help
Where can I get help to upgrade our skills in financial records?
A range of skill based training courses are available to develop skills in business financial management. If you are interested in training courses in understanding financial performance please refer to the training directory under the following topics of interest.
- Financial performance analysis
- Cash flow budgeting
- Book keeping