5 reasons why bookkeeping is important for your farm
Record keeping can be one of the more boring parts of farming, but it is one of the most important. It only works, however, if the records are accurate and honest, reflecting a true picture of what is happening on your farm. Record keeping means that these records will mostly be the farms’ financials; and we all know how exciting that can be. To motivate you to keep your financials up to date, here are 5 reasons on the importance of bookkeeping for your farm;
- Looking at the bigger picture
First of all, you need to know what your farm looks like. We don’t mean where the boundaries are or where the borehole is located. Mapping out your farm means that you get a proper outlook on what is going on on your farm. It lets you know what you have on your farm in terms of assets and liabilities. For example, having a borehole is an asset, while salaries to farm hands and staff can be listed as liabilities. If you are serious about farming as a business, then bookkeeping can help you see the bigger picture. Click To Tweet
- What’s working and what’s not
After helping you map out your farm and getting the bigger picture, records help you find out what works and what doesn’t. It is not only a waste of time, but also a waste of much-needed finances when you invest in something that is not bringing in profits. When you look at your farm records, you can tell whether the tomatoes are a viable option to replant or it would be a better option to try baby corn next time. When you know what works and what doesn’t, it makes you a better farmer.
- Get loans and financing
Banks are a stickler for records. Government financing organizations like the youth fund are also more receptive to a farmer with clearer record keeping. Records help the financial institutions see how viable it would be to give your farming business a loan. They call this justifying the financial case.
While bookkeeping does not guarantee that you will get a loan approved, it will surely go a long way in helping the bank’s decision lean further in your favor. Your outfit looks more professional and you appear someone who can be trusted to use the money as prescribed.
- Proper planning
To be forewarned is to be forearmed. This is probably the best line that shows preparation and proper planning is half the battle in any sort of business. With proper record keeping, it is possible to plan for the future. We have already seen that they help you see the bigger picture when it comes to your farm and that they let you know what works. You can then make appropriate plans to suit your farm’s business model. Here is a great topic on common mistakes first-time farmers make that can shed more light on why you need proper planning before you begin your farming journey.
- Change of management
Making a change of management in your agribusiness could be as a result of many factors. It could be as a result of the replacement of the manager due to change of occupation, or maybe he just was not good enough and you fired him. It could also be that the original manager, God forbid passed away. Having proper bookkeeping for your farm could assist the incoming manager to familiarize themselves with the farm better. The changeover is, therefore, a lot smoother.
There are a few places that can help with bookkeeping for your farm so as to treat it as a real business and not just a hobby. One of those is a company called Farm Books East Africa which is located on the 3rd floor of Njengi House, along Tom Mboya Street in Nairobi. They have flexible pricing depending on the scope of their engagement, so do not be afraid to reach out to them, especially if math is not your cup of tea. They can be reached through their twitter account @FarmBooksEA, through the email address firstname.lastname@example.org, or by calling their contact person Wanjiru Tamiru directly on +254727887000.