Check These 5 Items Off Your Mid-Year Financial Check-In
It’s hard to believe only a few months ago we were setting goals for the new year. Since then, the crops have grown, the markets have changed, and we are already more than have way through the year. And, like it or not, we’re only a few calendar pages away from flipping to a new year once again.
While summer is often filled with crazy schedules and extra chores, it also serves as the perfect time to conduct a mid-year financial checkup. And though it might not be the most fun process, it does serve as an opportunity to review the progress you've made toward goals set at the start of the year and make plans for the remaining months.
According to Samantha Gehrett, extension educator for Pennsylvania State University, reviewing the past six months’ worth of activity can do wonders for achieving your financial aspirations by year-end. If uncertain what to look for, start by analyzing the financial goals set earlier in the year, and focusing on each major aspect of your financial plan. She suggests checking these five items off your list.
Update Your Books
Ideally, accounting and financial reviews should take place on a regular basis – preferably monthly at the minimum. However, if you find yourself falling behind on bookwork, consider blocking out some time in your schedule to bring records up to date.
Review Business Goals
What goals did you set at the beginning of the year? Are you making progress toward them? If not, what is holding you back? According to Gehrett, these are all important questions to ask yourself.
“Your business goals are more than items on a list. They are a glimpse of the phase your business was in when you set them,” she says. “As such, they might need modifications from time to time. And your mid-year review is the ideal time to assess that. Businesses change and evolve, for different reasons.”
Gehrett recommends asking yourself these additional questions:
- Are your initial goals still appropriate?
- What have you achieved so far?
- Any achievements missed? Why?
- Any new needs that should have a new goal?
Evaluate Strategies and Methods
Bookkeeping is a tedious process, and unfortunately, there’s not a one-size-fits-all program that works across operations. The system must be fine-tuned to fit the specific needs of your farm. Gehrett suggests taking time to organize your business management toolbox to figure out what is and isn’t working for you.
“Organizing can be viewed as the activities to collect and configure resources to implement plans in a highly effective and efficient fashion,” she says. “Making sure you have all the income, expense, asset, and liability information ready and in an organized format, will make the often-dreaded meeting with your accountant bearable for all involved.”
Take a Look at Your Cash Flow and Budget
Budgeting is a big part of financial success. During your mid-year check-in, ask yourself:
- Are there any outstanding payable issues that need attention?
- Are your expenses being managed properly?
- Are you on track to meet your target income?
If you are struggling, consider working with your accountant to help identify potential areas of improvement and/or adjusting your marketing activities.
Review Financial Statements
“Running a business can be stressful. During a profitable year, there never seem to be enough hours in a day. Challenging years have the possibility to induce financial concern. Regardless of your operation’s performance, a mid-year check-up helps you understand how profitable you are, whether you can take on more debt, and how healthy your cash flow is,” Gehrett says.
To properly assess your farm's financial health, Gehrett recommends looking over your year-to-date income, balance sheet, and cash flow statements. These documents should help provide context on what has happened so far this year, as well as what to plan for in the months ahead.
Don’t Wait
While conducting a mid-year financial check-in doesn’t sound like the most fun activity, it’s an item your farm should plan to check off its summer bucket list.
“The mid-year check-up is an excellent opportunity to evaluate how your operation is doing and adjust for the remainder of the year,” Gehrett adds. “It is crucial to stay organized and have a team of professionals in your corner to help your business succeed.”
