By Jason Fewell
Originally published by Dakota Farmer at farmprogress.com
The busyness of spring is upon us. Calving is in full swing and spring planting is beginning soon. As you get busy outside this year, it is easy to leave the office and not look back, returning in the fall to a desk full of papers, dust, and cobwebs.
But record-keeping should never stop. Keeping up on records alleviates a great deal of stress later in the year. Having updated records allows you to update your cash flow projection for the year. Recording transactions when they occur and the details are fresh in your mind provides greater accuracy too.
Updating the cash flow projection as you pay for inputs or forward contract grain will give you a more accurate picture of where the year will end. As calving concludes, update your cash flow with the number of live calves—not just what you expected earlier in the year. Don’t just “have it in your mind”—write it down! Update your spreadsheet or hand-written projection as you go through the year and share it with your lender.
Once the crops are planted, take a few minutes to record your actual seed, fertilizer, chemical, etc. costs for the crop. It is easier to decipher the bills when you remember what you did instead of waiting till the end of the year.
Record the feed fed to cows and calves for the winter. Keep track of dates cows and calves went to pasture, as well as how many went to each pasture. Have some kind of record to keep track as you rotate pastures and record how much mineral, creep feed, etc. you used.
Monthly balance sheets!? How often do you update your balance sheet? Most farmers and ranchers do this once a year for their lender. Completing an accrual-adjusted balance sheet at least a couple extra times throughout the year will provide an accurate number for your liquidity and solvency positions. If you are planning a capital purchase part way through the year, having an updated balance sheet and cash-flow projection are essential to make a well-informed decision.
If you want to do some tax planning in late summer, you will need to update your financial records. This allows you to decide if you should take or defer income from grain hauled to the elevator at harvest and is part of a good tax management strategy.
A great deal of uncertainty surrounds farming and ranching. It seems that black swan events happen more often than they should. Having accurate, up-to-date records can help make quick decisions when the unexpected occurs.
The North Dakota Farm Management Education Program provides lifelong learning opportunities in economic and financial management for persons involved in the farming and ranching business. Visit ndfarmmanagement.com, Facebook @NDFarmManagementEducation, or contact Madison Bodine, State Supervisor for Farm Management Education, at mbodine@nd.gov or 701-328-4567 for more information. The ND Farm Management Education Program is sponsored by the North Dakota Department of Agriculture.