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Fort Valley State
University
Small Farmer Outreach Training
and Technical Assistance Project
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THE IMPORTANCE OF GOOD RECORD KEEPING
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Present day farming operations
are becoming more and more business oriented than
yesterday’s farming operations. Being a good
producer is no longer good enough to remain in business.
The key to becoming a successful farmer in today’s
era is being a good producer as well as a good financial
manager. |
The first step in being a good
financial manager is keeping good, accurate records
and establishing a sound record keeping system. Too
often, there is a misconception that a person needs
records so that he or she can report their taxes.
However, record keeping plays a much larger role in
business. Farming is a business and records can be
helpful in planning improvements for that business.
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Record keeping information provides
the basis for the preparation of financial statements
used in analysis and monitoring the progress of the
business. A record keeping system should be: (1) easy
to keep, (2) provide the necessary information, and
(3) provide the information when needed. |
TYPES OF RECORD KEEPING SYSTEMS |
There are different types of
record keeping systems a person can use in his or
her operation. Four of the most commonly used systems
are: Shoe Box Method, Hand-Kept Record Ledger, Computerized
System, and Record Associations. |
Shoe Box Method
All receipts, checks, invoices and bank statements are
collected and stored in a shoe box |
Hand-Kept Ledger
Farm records are documented by hand into a record book |
Computerized System
Analysts provide assistance in preparing and analyzing
farm records |
Records Association
Analysts provide assistance in preparing and analyzing
farm records |
USE OF RECORD KEEPING |
Records can be used to determine and/or develop the
following things:
How much money was taken in
How much it cost to operate the farm
How much it costs the family to live
What crops were planted and how much was produced
The profitability of each enterprise
Records can also be used to develop sound marketing
plans, loan applications and reports to lenders. |
RESULTS OF GOOD RECORD KEEPING |
Improved decision-making skills
Ability to evaluate the farm financial performance position
Ability to identify production and marketing problems
Ability to decrease debt/asset ratio
Improvement in farm management practices |
When choosing the right record
keeping system to incorporate into your farm, remember
decisions made on the farm can be no better than the
information used to make them. A good record keeping
system is one that will provide the necessary information
and provide the information when needed. It will furnish
the necessary information for understanding the activities
of your farming operation. |
Reference: Castle, E.N.; M.H. Becker, and A.G.
Nelson, Farm Business Management: The Decision-Making
Process, Third Edition.
For more information, contact: |
Co-Directors:
Glenwood F. Hill, Ph.D.
Mark Latimore, Jr., Ph.D.
Project Coordinator: Marc A. Thomas
Small Farmer Outreach Training
and Technical Assistance Project
Fort Valley State University
Cooperative Extension Program
P.O. Box 4061 Fort Valley, GA 31030-4313
(478) 825-6269 |
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