Managing finances

INCLUDE 1.4 Smallholder enterprise economic model details from IAT User Guide R1.02D

For any farm there are overhead costs in running the farm. The financial resources of the farm are provided in the resources using a finance resource and any number of bank accounts (or lines of credit) as finance types. While often critical to farming systems, the finance is not critical to the operation of the simulation and most aspects will operate without finances included. 

While the majority of financial transactions will be undertaken by non-finance based activities as money is needed (i.e. crop activity fee used to pay for seed costs), there are three finance based activities used to pay expenses, earn income and calculate interest.

Variable costs are calculated using a variety of activities (e.g. crop activity fee and ruminant activity herd cost) while overhead farm costs can be calculated using Pay expense activity and selecting the switch to state that the expense is an overhead. Overheads can then be grouped in financial output.

Examples of farm overheads you may include in your simulation include:

• Farm maintenance
• Machinery maintenance
• Fuel costs
• Pest control
• Contractors
• Administration
• Rates and Fees
• Insurance
• Electricity
• Water

There may also be living costs incurred.

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