Financial risk, like the other sources of risk in an agricultural operation, can be managed.

The first step to managing this type of risk is to determine the acceptable level of this type of risk.

Secondly, controls and tracking mechanisms should be put into place to maintain that level of risk and corresponding levels of return.

Budgeting cash inflows and expenses for the year should be the foundation to whatever control systems that are implemented.

Accurate, up-to-date records of actual financial performance are the second essential ingredient for success in the operation. Without these management cannot make sound decisions based on a factual understanding of business standing.

And finally, without some financial analysis of the records maintained, a sound business can easily drift into an unsound condition over a period of years. Furthermore, accurate financial statements compiled each year can provide the documentation needed to convince a lender that the operation is worthy of their trust and backing in a new venture.