These are some of the things I check with my clients to assist with keeping the numbers in check. These are not entirely farm-specific practices or a new view; it's just making sure the basics are in place.
Moving farming practices to the digital age
I'm still surprised at the number of farms that still have manual processes in place.
I've learned that a gently, gently approach is required to convince people to change their practices, but I've had no complaints or going back once they're implemented.
We might usually start by setting up computerised payroll systems, then once that's rolling running them for a while before moving to computerising accounting systems.
Software will reduce error in your compliance and give you immediate reports such as up-to-date holiday pays and much-needed real-time profit reporting. It will also more than halve your time on the paperwork.
There are some great apps that you can use on your smartphone while you are out in the field, giving you immediate up-to-date data when you need it.
Checking in with ACC
When incomes change its always important to check what you could be paid in the event of an accident.
There is nothing worse than suffering an accident that puts you off work and finding your ACC income is going to be calculated based on a very lean season last year, ACC CoverPlus is designed for self-employed people and allows you to set the amount that you would like to receive in the case of a payout, and sets the premiums accordingly.
This could be good in farming situations if you are part of a farming business structure where income is distributed evenly, but only one of you does the on-farm work while the other handles the administrative work.
In these circumstances, you need your ACC payout to be enough to cover the cost of getting a worker in to cover if it is the on-farm person who is injured.
ACC Cover Plus Extra is also something your insurance broker can help with when reviewing your life and disability insurance, to ensure that you'll get the most appropriate insurance cover out of your policies.
Managing your debt
I know many banks are being proactive with farmers and doing their best to help them through the periods of low payout. Those who have the most sound business models are likely to get the most support.
If you have large amounts of debt, talk to your bank about how that can be structured. Is there a way to fix it at a lower interest rate? Could you transfer some of your credit card debt on to a zero-interest card?
Ensuring that you're paying the right debt first can also mean savings. Are your loans structured in the best way from a tax deductibility point of view. Aim to pay off personal debt first as it is not tax deductible.
Reducing costs
Some banks have been in touch with farmers asking them to reduce their costs if they are seriously struggling. Whether you are in that situation or not, it's a good idea to assess your costs and work out whether there is any fat to trim.
Reviewing line by line expenditure while keeping a mind on what needs to be done will help to set this years budgeted spending. This is a report the banks will want to see and also give advice and support on.
Some of the larger cost reviews focus around maintenance and while some maintenance like buildings and trees maybe on the wish list there are some repairs that continue to sneak through because gear is old.
Replacing some gear can actually save money on maintenance costs as well as down time when the sums are done.
This year its about making sure you get a return on your dollar spend while also being organised.
Get help from an accountant who specialises in the rural sector.
- Jeremy Tauri is an associate at Plus Chartered Accountants.
