The beginning of the new year is a good time to plan your farm budget. You can use the Budget Management Tool included with AgExpert Analyst to estimate your farm’s projected income, expenses and net profit for the year.
When you’re projecting your farm’s income, take into consideration expected production such as crop yields, livestock births and projected prices. To budget expenses, project price increase or drops on input and operating costs such as fertilizer, chemical, seed, feed, land rent, fuel, repairs and labour.
The budget tool allows lets you edit these numbers anytime, since factors like yield or price changes can result in a need to change your budget throughout the year.
The budget feature also allows you to compare actual income and expenses to the budgeted income and expenses. As you enter daily transactions, the budget tool pulls actual numbers in from your entries, allowing you to analyze the performance of your operation. You can also set your budget so you can look at a specific parts of your business, such as grain or livestock, or you may set the budget to look at the farm as whole.
Steps to create a budget
The budget screen has two sections. The header section allows you to select options such as fiscal year, date range and enterprises. The middle section holds the income and expense sub-sections where we can edit the budget and view actual versus budgeted amounts.
To get there, select Management > Budget >
- Fiscal Year: Select the current fiscal year.
- Date Range Type: Select period. Tip: “Period” should be selected if you’d like to create or view the budget for a specific month, quarter, or the entire fiscal year. If the “as at date” is selected it will include all numbers up to the end of a specific month or quarter.
- Show: Select progress Tip: “Progress” compares the percentage difference between your actual and budget amounts. “Difference” compares the amount difference between actual and budget amounts.
- Accounting Method: Select Cash
- Enterprises: Select All. If you’ve set up “enterprises” you can choose to look at certain aspects such as grain or livestock.
- Time Period: Click on “fiscal year” button to highlight it in blue. You also have the option of selecting a month or quarter.
Defining budget values
In the income and expense sections:
- Select “edit budget” at the top.
- Select the account you’d like to enter data for. For example, select “wheat sales” by clicking it to highlight it in blue.
- Right click on that line and select “add budget” or click on the plus sign to assign a budget value. You can specify a yearly, monthly, or monthly variable amount. A “monthly variable” specifics an variable amount per month, and could be used if you expect to sell wheat in, for example, September and October.
- You can add notes. If, for example, you expect $30,000 worth of feeder cattle sales in the fall, you can add a note to say how you came to that number. This is your management tool, so add any information you’d like.
- When you’re done, click the “done editing” button.
Reviewing the budget
First, compare actual versus budget columns. If you have created the budget before entering any data for the selected period, the actual will be zero. Once you enter your transactions, numbers will begin to pull into the actual column, allowing you to compare actual numbers to the budgeted amounts.
Tip: To view the list of which transactions make up the “actual” amount, right click on the amount and select General Ledger Report.
Hint: Because we selected Show: Progress in the header section, the progress column shows the percentage difference between the actual and budget amounts. You can switch the selection to Show: Difference to view difference in amount between actual and budget.
To view and print the budget report, select Page View.
Once the budget has been created for the fiscal year you can make changes as necessary throughout the year. Check back with the budget tool often to evaluate the performance of your farm.