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Farm Accounting Software – Three Signs it’s Time to Switch to Agricultural Specific Software

Using accounting software to help manage your farm and its
finances is a wise decision. Software can help you become more organized and  profitable, and can also provide tools to
manage taxes, write checks, enter payables and receivables, manage your general
ledger, and so much more. But how does a farmer know when to switch from a
basic accounting program to an agricultural-based program? Use this article to
help you decide if it’s time to replace your general accounting software with
agricultural-based accounting software. Here are signs it’s time to make the
switch.

1.      
You are unsure of your farm’s financial future.

Entering data into a software system is
beneficial because all of your financial information is organized in one place,
and is easily accessible. Yet a true agricultural accounting system can do more
for you than just organize data. It can help you project future sales and
create ‘what if’ scenarios for your farm, which can help you accurately plan
for future business strategies. Some systems even include ratio analysis, which
helps you calculate standard agricultural-specific  ratios, and also understand trends. Knowing
where your farming operation stands with ratios can help you address issues and
become more profitable.                        

2.      
You don’t know your true crop and livestock
costs.

Knowing the overall profitability of your
farm is extremely helpful, but which of your enterprises are generating the
most profits? The key to increasing profits is knowing where to focus, and an
agricultural-based accounting system can help with this. Production analysis is
a tool that provides detailed crop and livestock information on a cost per unit
basis. With that information, you can see where changes need to be made, and
make intelligent decisions on how to increase your profits. Another helpful
tool is the ability to distribute complex transactions across multiple accounts
and production units, rather than simply attributing the transactions to a
single account. Multiple account distribution, which most basic software
programs do not offer, can provide a more accurate financial picture for your
farming operation.

3.      People are requesting crucial information you
cannot provide.

As your operation grows, it may become
necessary to provide more detailed financial information about your farm to
third parties such as bankers, landlords, managers, consultants, and others.  Having the ability to track detailed
information about each aspect of your farm, allows you to pull that information
when you need it, making it easy to provide third parties the detailed
information they require. A good agricultural-based system provides in-depth
financial analysis with the ability to structure and segment entire operations,
profit centers, accounts, and inventories to track data, combine entities, and
receive relevant farm reporting.

If any of the above signs ring true for you, it may be time
to find agricultural-specific accounting software for your farm.

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