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Farm Accounting Software – How Creating a Budget can Impact your Operation
Creating a budget for your farming operation may seem like a
daunting task at first, but it can make a big difference in the profitability
of your operation. You can choose to create a budget by hand, by using a
spreadsheet, or you can use your farm software to help
you. Either way, the outcome remains the same: increased confidence in decision
making and increased profits for your farm.
A budget provides guidelines to help you organize and
control your financial resources and also helps you uncover your operation’s
strengths and weaknesses. Have you ever come face to face with a large
purchasing decision, and then made that decision based more on emotional
“wants” and not on the actual business need? If so, you are not alone.
Unfortunately, this method of making purchases does not take into consideration
every aspect of your farming operation. By setting up and following a budget,
your purchasing and buying decisions can be made more confidently, and can keep
your operation growing strong.
The process of managing a budget involves examining your
historical data, to show you which areas in your operation are generating the
most profit and which areas need attention. With this information you can easily
make long-range projections and increase your profits through better decision
A budget also helps you gain
control of your finances and gives you the tools you need to project future
cash flow and helps you manage your assets and liabilities. A budget helps
answer the “what if” scenarios such as buying more land, expanding a crop,
purchasing new equipment, etc. Planning your future business strategies becomes
easier with the information a well thought out budget can provide.
Creating a budget can provide
smart decision making for your farming operation, which can lead to more
confidence and increased profits.