Financial record-keeping tips

By: University of Illinois Extension

Keeping good financial records is vital for the farm's long-term success.

Farm records can get neglected by most farmers who prefer to be out on the property instead of in the office. The following tips, if implemented, can make the farm operation more efficient and stronger and prepare the farm for a family’s future generations.

Previously, the author served as an ag loan officer, and he had farmers come into the office to apply for or to renew loans carrying their receipts and invoices in a shoe box. During the loan application process, recommending loan approval was much easier when the farmer clearly understood their farm's financial health, even if the finances were not particularly strong. Knowledge is power.

Take a Course

Take advantage of adult short courses on record keeping and accounting offered by your local community college. You do not need to become an accountant, but understanding basic financial terms and reports will be helpful. Of course, you can hire professionals to do the work for you, but you are the decision maker. The more you understand your farm finances, the better your operations will be, even if you already have good financial advisors.

Purchase a Good Farm Records System

The system you choose does not have to be the most sophisticated you can buy. The one you choose should fit your needs, personality, and ability. Start by asking your financial advisor or bookkeeper about systems. Research and trial a record-keeping system before you buy. Some products want to save money by using Excel, but professional systems are better with better reporting. This will be beneficial in an audit.