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.