Buyers' Guide: Accounting software
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 equipment?"
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 accounting.
"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."
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.