As we kick off the year, February is a great time to assess your farm’s financial health. By taking a close look at your business plan and financials you can determine if your farm performance is adequate and on a pathway to longer term sustainability. RFCS NSW recommends that farmers  review these outputs with their locally based rural financial counsellor. RFCS NSW is  here for farmers in the Central and Southern regions of NSW providing free, confidential and professional support.   

How to assess your farm’s financial health in 2025:

1. Conduct a financial analysis

A Budget for FY25 should have been developed for the farm business prior to 1 July 2024. Now we are just over the half way point in the cycle it is an appropriate time to measure actual expenditure and income against what was specified in the Budget. Differences between line items should be highlighted and explained. This provides a foundation for change.    

2. Set clear goals

Setting clear, actionable goals is essential for any farming business looking to grow and thrive. Often, we become so focused on the daily tasks that we forget to step back and plan where we want to be in the future. Based on the financial analysis we need to set  SMART goals: specific, measurable, attainable, relevant, and timely to improve our farm performance. Whether it’s improving financial management, planning for succession, or balancing personal and professional needs, setting and writing down your goals is a powerful  step.

3. Review your business plan

A business plan shouldn’t be a document that you look at once and tuck away in the filling cabinet for the rest of the year. It should be something that you review regularly at least every quarter to make sure that the actions and targets you have set to achieve your goals are being delivered and achieved.

When reviewing your plan ask yourself:

• Are your expectations realistic?
• Have there been any significant changes in the market or your business that needs to be addressed?
• Are your priorities still aligned with your vision and goals for the farm business?

4. Avoid falling into old habits

It can be easy to fall back into old habits, especially when times get tough. Whether it is putting off important financial decisions or ignoring cash flow issues, these habits can be detrimental for your farm business.

To avoid this, make it a priority to:

• Set clear routines: regularly check your financial statements, review your spending and keep track of outstanding debts.
• Delegate tasks: If you aren’t skilled in financial management consider working with a financial professional.
• Stay accountable: Hold yourself accountable by setting monthly or quarterly check ins to evaluate your progress on your financial goals.

5. Get professional help when needed

Remember that you don’t need to face financial struggles alone. Contacting a professional earlier rather than later can help you avoid more serious financial issues down the road. Working with an accountant, financial advisors or RFCS NSW is valuable to get expert assistance that can provide insights and helps you make informed decisions for your farm.

Financial health is a continuous process not a one-time task. Stay focused, stay proactive and seek professional advice when needed to keep your farm business on track. Regularly reviewing your financial goals and business plan is key to long term success, making small adjustments now can save your farm business from bigger problems later.

As the year unfolds it is important for farmers to assess their financial health to ensure their business is on track for sustained success.

“Assessing your financial health early in the calendar year provides time to make adjustments or improvements before the end of the financial year. Tax offsets, vehicle sales, productivity enhancements and other investment or savings’ initiatives can be executed” says Craig Hough, CEO of RFCS NSW.

RFCS NSW encourages farmers to conduct a comprehensive review of their finances, comparing actual performance against the budget they’ve set. This analysis identifies strengths and weaknesses in the financial position which provides the foundation for prioritising corrective action.

“Our Rural Financial Counsellors work closely with farmers to complete and analyse their financial documents. They are looking for numbers out of the ordinary and trends across line items. Some of these may include higher expenditure than what was budgeted, reduction in sales, unusually high or low cash flow or anything else that doesn’t look right. Most importantly the check will determine viability of the business” he says.

A viable farm business is one that is profitable enough for the business owner to have a liveable income, is satisfying commitments with creditors and has sufficient cash resources to continue in times of adversity.

“Financial reviews can often be put in the ‘too hard’ or ‘I’m too busy’ basket and not get done or get done poorly. If this is the case seek professional help. The work is essential for every successful business” he says.

RFCS NSW provides free, confidential, and independent financial counselling services for farmers across the Central and Southern regions of New South Wales. For more information or to speak with your local Rural Financial Counsellor, please contact RFCS NSW on 1800 319 458.

ENDS

RFCS NSW Media Enquiries:Stakeholder and Communications Manager – Kate Anderson

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Mobile: 0487 731 788

Building on last month’s focus on the importance of Financial Health Checks, it's equally important to start your tax planning well before deadlines approach. Tax time often sneaks up quickly. It can be stressful for many, but it doesn't have to be. By ensuring your financials are up to date, you are best positioned to identify your tax deductions and offsets and know what you need to pay.

Taxation is a critical component of financial management. GST, income tax, capital gains tax, rates and other taxes are charges from government on individuals and businesses for public services. They must be paid, but how much you pay depends on how effectively you navigate the system.

Tax planning involves estimating your income and expenses for the remainder of the financial year, understanding your estimated tax position, and implementing appropriate strategies to better manage your tax. A well-developed tax plan ensures you pay only pay what you need to pay. 

The Rural Financial Counsellors at the Rural Financial Counselling Service NSW (RFCS NSW) are experienced in helping people understand and take control of their finances. While RFCs are not taxation experts and can not provide taxation advice, their case management model highlights tax requirements, issues, opportunities, and options to guide you.

The Rural Financial Counsellors are seeing an increasing number of farmers going through farm debt mediation as a result of making capital purchases. Farmers are commonly advised to make capital purchases such as farm machinery, to receive the initial tax deduction. However, if these purchases are made through financing, farmers need to ensure they can afford the repayments. We encourage farmers to consider other options, such as farm management deposits to reduce their tax bill.

The top tips for tax planning from RFCS NSW are:

1. Always talk to professionals: Engaging with tax professionals ensures that you benefit from expert knowledge and are up to date with information on tax planning and compliance. Professionals can offer tailored advice, identify tax-saving opportunities and assist in making informed business decisions.  
2.  The earlier you start the better: Commencing tax planning early in the financial year allows you and your accountants to proactively manage finances and implement strategies effectively. Waiting until the last minute may overwhelm accountants during peak periods.  
3. Consider some of the big issues: While having a tax professional on your side is imperative, their knowledge is only as good as the information you give them. To get the most from your working relationship, it is important that you know your business inside and out and spend some time considering some of the conversations and issues you are likely to discuss during the planning process, including:

• Bringing forward or delaying income and expenses to pre or post-30 June
• Trust distributions and the effects on beneficiaries
• Review of farm management deposits
• Superannuation planning/contributions
• Major capital purchases
• Debt reduction
• Changes in off-farm income
• Impact of accumulated losses
• Impact of deferred income/forced sales
• Review of averaging position.

RFCS NSW can guide you through your preparation work, analyse  your financial circumstances and develop an action plan to help you improve your tax position and profitability.

The business of farming is a constant process of decision making. In the complex world of farming, making productive and profitable decisions can be a significant challenge.

“Effective decision making is essential for successful farming. Any suboptimal choice about technology, marketing, staff, production systems, water security, land management or any other consideration on a farm, your productivity and profitability will be compromised,” says CEO of RFCS NSW, Craig Hough.

There are many ways farmers tackle decision making. Generally it comes to a combination of the head - a logical approach, the heart – an  emotional aspect and the gut - intuition shaped by knowledge and prior experience.

“Applying an appropriate balance of logic, emotion and intuition is often required to define what ‘acceptable’ means to a farm business. Farmer A may be willing to accept a lower profit margin to receive greater work-life balance whereas farmer B may want to maximise profit via scale and productivity. What works for one operation may not be suitable for another, but it needs to be driven by personal values, goals and risk tolerance” he says.

Craig says, “preparation is key. Establishing a purpose statement and clearly defined business goals helps keep the bigger picture in focus. Then data and analysis needs to be undertaken to determine what the best option is to provide the highest return on investment.”

Farmers are not alone in navigating complex decisions. RFCS NSW provides tailored support and guidance to help farmers access their unique circumstances. Engaging with a Rural Financial Counsellor can offer valuable insights to enable farmers to make better informed decisions.”

To get in contact with your local Rural Financial Counsellor and access the services of RFCS NSW call 1800 319 458.

ENDS

RFCS NSW Media Enquires

Stakeholder and Communications Manager: Kate Anderson

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Mob: 0487 731 788