Do you have a farm budget? If you don’t why not and if you do what do you do with it?

 

 

Farm Budgets are a crucial management tool that allows you to know where your business is. It should be updated regularly and be a rolling entity so that informed decisions can be taken quickly at any time.

A budget should tie in with your monthly farm accounts and headings can be made as simple or as complicated as interests you. That said all budgets should show you the following: -

  • Gross Margin information (including sales and variable costs for each enterprise)
  • Overhead details (fixed costs)
  • Cash Flow  
  • Source and Distribution of Funds (If I’m making a profit, where does the cash go??)
  • Budget Assumptions.

The assumptions are perhaps the most important part of a budget. These give the detail behind the numbers and make it easier for others to pickup the budget and understand it straight away.

 So you have a budget, but what do you do with it? You monitor it against actuals. Either monthly or more normally quarterly we compare your actuals to the plan. Are you £10,000 behind because of more expensive feed costs or is it the load of fertiliser that’s in the shed that wasn’t due until next month? These things matter and can save a few sleepless nights!

 

 We have recently started using a new budget program that makes all of this fairly straightforward for you. All we need is your most recent set of accounts initially. This lets us setup the budget, and then visit the farm to produce the next year. We’ll always work from your year end so that any improvement in recordings helps your accountant.

 

 If you would like to discuss producing a budget, please give us a call on 01461 600540.

 

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