Financial record keeping is essential for agricultural producers, especially in times of distress.
A new publication from South Dakota State University Extension provides tips on how to establish a good record keeping system and how to use the information for efficient farm business management.
SDSU Extension Extra 5054, "Record Keeping in Farm Management" is available from local country Extension offices. Or find it online at http://agbiopubs.sdstate.edu/articles/ExEx5054.pdf
"Most producers keep records for tax and banking purposes. But without a proper use and maintenance of farm records, it is extremely difficult to determine farm profitability and to make appropriate managerial decisions," SDSU Extension Area Management Specialist Agustin Arzeno says.
Arzeno suggests that good record keeping has four basic phases:
- Recording receipts and expenses,
- Keeping and using inventories,
- Recording crops and livestock information,
- Using the information to analyze the farm business.
"The last phase is the part that completes the picture and allows the producer to fully understand the farm business operation," Arzeno says.
"Records that are properly kept, organized, and analyzed can provide answers that lead to better management decisions."
A producer should always maintain a balance sheet and statements of income, owner equity, and cash flow.
"Good record keeping and sound data interpretation allow producers to understand how and where their business is going," Arzeno says. "It will help you define possible problem areas and take corrective action."