Budgeting & cashflow

Why every farming business needs a robust budget

A budget is an integral management tool for any farming business, regardless of the historic financial performance.

Effective budgeting provides greater financial control by allowing income and expenditure to be monitored closely, highlighting areas of the business or individual enterprises that require investment, support or strategic change.

A clearer financial picture enables decision‑making to be improved — such as decisions on cropping, labour and machinery. Budgets also help identify internal and external risks, enabling strategies to be developed and implemented to mitigate their impact on the business.

Robust budgets and cashflows are fundamental in facilitating discussions with banks and illustrating the mechanics of a business, supporting overdraft facilities to ensure limits are correct and to forecast the timing of cash requirements throughout the year. They are also essential when it comes to exploring future lending requirements, demonstrating that the business can service new or additional debt.

Detailed financial planning will forecast any breaches in an overdraft facility allowing a potential problem to be addressed and managed to prevent it from occurring.
The short-term focus of any business needs to be on working capital requirements to ensure trade can continue - this could mean reviewing existing facilities, forecasting future requirements, and reviewing long-term debt obligations.

A budget offers a standard for evaluating and monitoring business performance and the data can be used for benchmarking and setting financial objectives. When setting targets, it is imperative that progress is measurable, reportable and able to be analysed to ensure efficient delivery.

Brown&Co’s agricultural business consultants prepare detailed farm budgets by collating information on cropping, yields, variable costs, other business income, fixed costs, ‘one-off’ capital costs, director’s costs, private family costs and more.

We have a bespoke farm budgeting tool that can be tailored to an individual business to provide a detailed overview and analysis of key physical and financial aspects. This allows plans to be created which are based on performance evaluations while identifying new opportunities and areas for improvement.

When setting targets, it is imperative that progress can be measured. This can then be reported back and analysed to ensure efficient delivery.

Brown&Co’s agricultural business consultants create detailed farm budgets by collating information on cropping, yields, variable costs, other business income, fixed costs, ‘one-off’ capital costs, director’s costs, private family costs and more.

We have a bespoke farm budgeting tool that can be tailored to an individual business to provide a detailed overview and analysis of key physical and financial aspects. This allows plans to be created which are based on performance evaluations while identifying new opportunities and areas for improvement.