Budgets

In this module you will learn about cash flow budgeting. By completing this module, you will be able to:

• set-up an annual cash budget for your business

• identify, collect and organise information required for a cash budget

• use a cash-flow budget to provide information about your business, which will help inform future financial and management decisions on your farm.

The module should take about 120 minutes to complete. Within the module there are six activities to complete and a video to watch as well as text to read on the topic. The activities will help reinforce the material being presented and help you learn the topic.

You should also download the following resources which you will use throughout the module:

• Dairy Australia Cash Budgeting Tool
• Smiths Farm Cash Budgeting exemplar

The following terms will be used throughout Budgets and Balance Sheets. It's a good idea to be familiar with these before reading the module.

To access the module select the tile below and follow the prompts.

Finally, always remember Matt's Top 10 Budget Tips. Keep these in mind when completing your budget/s.

• GST is in a monthly cashflow budget (income and costs including GST)

• On an Annual performance budget, generally keep GST out

• Cash Flow budget = Cash world, so when the bills are paid and when the income is received

• Annual Budget= accruals basis, so keeping all income and expenses relevant to that year/season

• Be wary of splitting costs over 12 months unless that is how they are definitely split. The actual timing of the income or expense is important.

• Get the timing of the ‘big bills’ right- Grain, Fert, fodder, Income (milk and stock sales)

• Remember to include any deferred terms payments or unpaid bills, and when these may be paid.

• If you get an estimate from your milk company, make sure it is reflective of your production month by month, not just “last year’s figures”.

• Aligning with SCoA is critical

• Having costs split according to the SCoA is easier than to have lots of categories “lumped together”.

Balance Sheets

In this module you will learn about completing a balance sheet for your farm business. By completing this module, you will be able to:

• define assets and liabilities

• identify and organise the information required for completing a balance sheet

• analyse a balance sheet to determine equity percentage, debt to equity ratio (leverage) and debt to asset ratio

• create a balance sheet and determine any financial risk in your farm business and also identify your net worth using your balance sheet

The module should take about 45 minutes to complete. Within the module there are four activities to complete and a video to watch as well as text to read on the topic. The activities will help reinforce the material being presented and help you learn the topic.

You should also download the following resources which you will use throughout the module:

• FBF Balance Sheet Tool

• Smiths Farm Balance Sheet exemplar

• Jones Farm Balance Sheet exemplar

To access the module select the tile below and follow the prompts.