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Costs have stayed the same for many Accounting software products
Successful Farming magazine Business Editor
Phyllis Parks still meets with farmers who use paper ledgers
and simple computer spreadsheets to track expenses. Parks is a CPA and
certified valuation analyst with Daughhetee and Parks Management Consulting in
Danville, Illinois. She doesn't think that's enough today.
"They need to keep track of what they're doing, year to
year, because prices are so volatile," she says.
At a minimum, you should have accounting software, ideally a
program that allows detailed reports on enterprise or cost centers and profit
centers. It could be just three profit centers -- corn, soybeans, and custom
work, for example -- or scores of individual fields and farms.
"You need it to know if you're making the right
decisions on seed," she says.
Or to know the cost of trading in a combine annually.
"To have it sitting in your shed 10 months out of the year," she
says. "Is there a better way you can do that -- maybe by sharing
Parks, president of the Farm Financial Standards Council
(www.ffsc.org), has taken her message on the road, along with her partner, Joe
Daughhetee. At Farm Bureau meetings and elsewhere, she makes a pitch for better
"We always say you don't have to jump in with both
feet. You can start small," she says. "But we stress if you don't do
this, you don't know where you're at, really."
Next step: Buying right
Off-the-shelf products -- QuickBooks, Peachtree, and others
-- are cheap ($100 and up) and work reasonably well. QuickBooks remains widely
used in farming. But quantifying income by agricultural units such as bushels
can be cumbersome. For $149, Flagship Technologies (www.goflagship.com) sells
add-on software, ManagePLUS, that also makes it easier.
If you want detailed reports by enterprise or field, Parks
says you're better off with software for farming and ranching.
The Farm Financial Standards Council is a brand-neutral
nonprofit, so Parks doesn't recommend any product. She and Daughhetee have farm
customers using QuickBooks, Farm Works, CenterPoint, PcMars, and FBS Systems.
QuickBooks buyers are among the consulting clients of Paul
Gorman, farm business management instructor at South Central college in North
Mankato, Minnesota. "I've got a couple small beginning farmers with day
jobs who are using it," he says. As their businesses grow, he'll encourage
a shift to ag software.
"It's virtually impossible to pull the value of growing
crops and growing livestock from QuickBooks," says Gorman, who is also on
the FFSC board.
With more advanced products such as FBS Systems,
CenterPoint, Ag Manager, and Farm Works, "you get an income statement
that's tightly wired to the balance sheet," he says.
"These higher-end softwares are not for
procrastinators," he cautions. "If you're not going to stay within 60
days of being current, they're going to be a challenge."
Gorman also has clients and students using PcMars, a program
used by several state farm business associations and recommended by Extension.
Gorman sees it as a good financial accounting program that is harder to work
accrual values into profit center reports than some programs. A few of his
clients have used FarmBiz.
Gorman likes the ease of porting combine yield monitor data
and planter data from Farm Works mapping programs to its Farm Funds accounting
"Until you integrate production with financials, you're
not going to get managerial accounting," Gorman says.
Managerial accounting uses the accrual accounting system
found in most of the business world to set up cost and profit centers on a
farm. Managers take that information to decide how to increase profitable crops
and cut losses.
Idaho farmer Dick Wittman teaches managerial accounting
every winter at The Executive Program For Agricultural Producers (TEPAP) held
in Texas. Since 2003 he has asked the operators of large commercial farms in
his class to list the software they use.
"As you would expect, QuickBooks is by far the most
prevalent," he says. Out of 269 producers, 48% listed it, followed by Red
Wing products (15%), Farm Works (6%), Quicken (5%), AgriSolutions (3%), and FBS
Systems (2%). And 16 other products were listed by about one user.
Wittman disagrees with Gorman on the importance of
portability from equipment in the field. Yield monitor data rarely matches
eventual sales receipts, for example. "We've overplayed the value of
integrating field records and the accounts, because you always have to
reconcile these," he says.
Wittman is on the FFSC board too, which obviously has
healthy debates. The board agrees on one thing, though: You should have farm
accounting software, and you should use it to manage costs as margins tighten.