Farm Management

Bookkeeping For Farmers And Agripreneurs


One of the most important aspects of running a successful business is bookkeeping, but it is often the most ignored especially by young or new entrepreneurs. Bookkeeping means recording all the money that comes in and out of your business.

A high proportion of small farmers and agripreneurs fail, and frequently it is due to poor bookkeeping. They do not keep records of their financial transactions either because they do not know how to, or they do not understand its importance or simply because they choose to rely on their memory, with the assumption that the business is still small and does not have that much transactions to record.

The purpose of this article is to make basic accounting approachable to people with little or no accounting experience and to encourage new farmers to develop good recordkeeping habits from the onset.

In the normal course of a business, a document or proof of payment is produced each time a transaction occurs. Sales and purchases usually have invoices or receipts, deposit slips are produced when deposits are made to a bank account and cheques are written to pay money out of the account. Bookkeeping involves, first of all, recording the details of all of these source documents.

Book keeping can be done either manually or electronically, depending on what you are proficient in. Manual entails recording on physical books or paper while electronic entails using simple accounting software such as QuickBooks, Sage 50, Slick Pie, Xero, Kashoo, ZohoBooks, CloudBooks, or simply using Excel spreadsheets.

Of what value is bookkeeping to farmers and agripreneurs?

Proper bookkeeping is critical to the financial well-being of any business and agribusiness is not an exemption. It enhances sustainability of a business and is vital for scaling or expanding a business.

Book records allow the farmer/ agripreneur to see how much they are earning and whether the business is making profits or losses, keeping track of how much customers have bought on credit and when they will repay, how much is spent to run the business and what the expenses are. Above all, bookkeeping helps in planning for the financial stability of the farm. For instance, if you can predict the months when your major expenses will occur, you’ll be better able to ensure that you have the cash on hand to pay for them. This is especially important for farmers who tend to have high costs periodically and don’t necessarily get paid immediately because they sell on credit.

Without proper bookkeeping, an entrepreneur runs the risk of hitting cash flow crunches, wasting money, and missing out on opportunities to expand their business.

Bookkeeping is also essential for seeking loans. Any financial institution looking to give you a loan would first want to see business records that show a realistic overview of your financial situation and ability to pay back your expenses including loans.

Best practices in bookkeeping

Here are best practices to make bookkeeping easier and effective for you:

  1. Equip yourself with basic accounting skills and understand the rule of what is involved in bookkeeping, to ensure that you rip the most benefits out of it. You could also hire someone to do it for you.
  2. Make a firm decision that you will do proper bookkeeping by being organized and committed enough to keep record of all sales, purchases and expenses related to the business, regardless of how little/small they could seem.
  3. Go through your books often to make sure your reconciliation accounts match what is in your bank statement. Spend 15-30 minutes each week balancing and another 10-15 minutes a month reconciling, and save yourself hours at the end of the year trying to remember why you wrote that cheque or whether a certain customer paid you or not.
  4. Record and keep track of Accounts Payable (money you owe other people/creditors) to avoid late payment fees.
  5. Record and keep track of Accounts Receivable (money other people owe you/ debtors) to avoid missing revenue if you forget to bill or your customer forgets to pay.
  6. Develop weekly and/or monthly reports. Reports include an Aging report which outlines all unpaid customer invoices. This report is used to determine which invoices are overdue for payment.
  7. Implement an efficient filing system for all your source documents as prove of work. Assign files for items such as vendor invoices, accounts payable, customer invoices, accounts receivable and additional documents as needed for taxes, contracts, bank statements, cheques, equipment warranty information and anything else you will be keeping in your accounting records.
  8. Keep your personal bank accounts and transactions separate from those of your business.

Joy Gichangi


  1. Record Keeping - What Every Farmer Must Know - Kilimo Insight
    February 10, 2020 at 9:14 am

    […] To read more about financial recordkeeping, refer to our previous article; Bookkeeping for Farmers and Agripreneurs […]

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