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. 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.

This is part of Accounting Software Helps You Go Paperless, continued from the prior blog post.

Create, send and track purchase orders electronically.

Do you run out of your most popular products, while the slow movers just keep sitting on the shelves? Are you unsure of how many of an item to order? Perhaps you have a giant folder labeled with your vendor’s name that is overflowing with paper copies of purchase orders and other vendor information. These are just a couple of the major functions that can be solved by electronic purchase order management. A purchase order system within your accounting software can suggest, produce, process and receive purchase orders for items and/or services. Your whole purchasing process is made more efficient, and will save money by having the right products on your shelves at the right time, when customers need it.

Create and send reports within the system and via e-mail.

Most companies run their financial reports every month, print them and distribute them to the appropriate parties. The reports are typically viewed and then stored or disposed of. By distributing reports via e-mail instead of in print, you will save on paper and also reduce the chances of sensitive financial information going around the office. Also, create the reports in Adobe PDF files, and everyone (even those without your accounting software) will be able to easily view the reports. Your data is safe and accurate in a PDF format as it allows the user to make notes on the report but won’t allow them to change the original.

Cut down on printed invoices and statements.

Yes, it’s an old habit that’s hard to break. But think about it, do you really need all those printed copies of invoices and statements? A good accounting software program should allow you to reproduce/reprint any invoice or statement from history, so there’s really no reason to keep a copy. If you want to keep copies so people without authorization to the accounting software can view them, you should print to PDF files (which does not physically print them but instead saves them into a PDF format) and keep them in a safe/organized place on the server. To do this, just name the file and folders the same way you would if it was a file cabinet. If you would normally have a file cabinet full of folders for each customer, then you would create a folder on the server called “Invoices”. And within that folder, you would have a separate folder for each customer. When you print the invoices to PDF files, you would name them with the customer code and invoice number, and save them within the appropriate customer file.

On the other hand, some businesses now keep a three-ring binder that has a copy of every invoice/statement in it, sorted by invoice number. If you are currently doing this and would like to continue doing it with electronic copies, then you would create a folder on the server called “Invoices”, and all invoices would be saved in that folder. When you print the invoices to PDF, use the invoice number as the file name, or the invoice number and customer code.

Don’t forget that there’s always the possibility of having an interim period where you still print a copy and then keep a PDF copy. However, this often leads to employees reverting back to old ways, so it’s typically best to make the change ‘cold turkey’.

Old habits die hard, but going paperless or at least reducing the amount of paper you use can greatly benefit your business and our environment. Let accounting software help you and your business on your path to going paperless!

No matter what type of business you operate, you have surely heard about businesses trying to reduce the amount of paper they are using. It all seems so easy in theory, but it can be challenging to actually change the processes you and your colleagues have been used to for so many years. According to www.electronicpayments.org, “…every year Americans mail 26 billion bills and statements and 9 billion payments in paper form. The production and transportation of those paper bills, statements, and payments consumes the following resources: 755 million pounds of paper, 9 million trees, and 512 million gallons of gasoline.” Visit their Web site for more interesting facts about going paperless. Here are some of the ways you can use your accounting software to help put your business on the road to eliminating the need for paper.

Send invoices and statements via e-mail.

All of the paper and envelopes that go into sending your customers invoices and statements really add up. Many accounting systems now allow you to set up your customers’ e-mail addresses within the system, and then send all invoices and/or statements to those with e-mail with just a few clicks. If you send out five invoices/statements per day, that’s 1,300 sheets of paper and 1,300 envelopes per year! Just think of the time saved, not having to print, collate, stuff, stamp and send all of that mail. Your customer gets the invoices sooner, and you might just get paid faster, too.

Store customer pricing in the system.

Do you find yourself flipping through disorganized folders of information, seeking the customer’s most current pricing sheets? Not only does this waste paper, but it also leaves the customer waiting while you search. Keep track of pricing in your accounting software and it will always be just a few clicks away. Do keep in mind that accounting software does vary in its capability to store pricing information. Some systems let you store one set of pricing, some store multiple sets and some even allow for unlimited contract pricing. Make sure your system allows you to store pricing in a way that will work for your business!

Enter and store customer orders in the system.

Here again, if you are storing customer quotes and orders in a paper file, things will be much harder to find. You will have a multitude of papers floating around, and it will take longer to access them. Instead, create and save customer quotes and orders in your accounting software system. Quotes and orders can then be searched for by number, customer name, etc. for easy access. The information will be easier to find, and you will consistently provide better service to your customers.

The second part of this blog will be continued in the next blog post.