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Roy Wendte, Altamont, Ill., finds farm spreadsheets streamline planning and analysis:
- Having all of your data in front of you in a spreadsheet makes it easier to analyze; the larger the computer screen or the use of multiple screens makes it even easier.
- Utilizing spreadsheets allows for multiple "what ifs" using different inputs to solve complex problems.
- Spreadsheets track multiple types of data such as crop planning, yields, commodity trades, expenses, incomes, land purchases, crop insurance and more.
Another option is purchasing accounting software online for analyzing business decisions, from very basic to managerial accounting capabilities.
Farm Biz (www.farmbiz.com), for example, is a cash-basis farm accounting program. Reports, such as the transactions with enterprise selections report, can be customized in Farm Biz. Reports are pre-programmed within the software. Ultra Farm offers expanded capabilities for analyzing various enterprises.
"Reports are pre-programmed and ready to use out of the box," says Wally Hoffman, president. "Farm Biz allows farmers to do enterprising, cash flow, check writing and profit and loss statements. Ultra Farm allows enterprise analysis and inventory control and payroll, 1099s and check writing."
Hoffman notes farmers that use the University of Minnesota's FINPACK program for financial planning and 'what if' analysis can export their data from Ultra Farm into FINPACK. FINPACK’s (www.cffm.umn.edu/FINPACK/)long-range strategic plan option where farmers can determine which options offer the best returns.
PcMars (www.iowafarmbusiness.org/pcmarsaccounting.html) is used by several state farm business associations for similar uses, including Iowa, Illinois and Minnesota. Kent Vickre, state coordinator for the Iowa Farm Business Association, says the program’s been popular with farmers because it is relatively simple to use on a cash or accrual basis.
"We try to keep data entry simple and familiar. An expense transaction entry looks just like a handwritten check. The program walks farmers through more complicated transactions like crop-insurance proceeds or sealed grain transactions to enter data. Farmers can explore tax-management 'what ifs' and do five-year profitability or enterprise reports," he says.
For management decisions, Vickre recommends farmers use PcMars Plus. "We maybe only have 5-10% of purchasers that use the enhanced program, which can generate accrual enterprise reports from cash records by tracking field and livestock inventory. Most people do not go the extra step. But those who do choose to delve into it can make tax management decisions, for example, and get a complete financial picture with a click."
Ron Swanson, farmer from Galt, Iowa, uses the PcMars Plus program. He and his son Stuart farm together and come up with an annual budget each winter, which Ron tracks against actual on a monthly basis. He monitors corn and soybean sales against expenses, and can run a balance sheet at any time.
"You have to have the diligence to stay on top of the program and make it effective for your operation," says Ron, who also serves on the Farm Financial Standards Council. "We use the program to explore 'what ifs' for cash flow for the upcoming year. I also like the family living (non-farm item) option that allocates money to our families on a monthly basis."
Swanson says if a shoebox is the lowest rung on the planning tools ladder, PcMars may be a few steps higher. "Someone more enterprising may want to look at full-blown management accounting programs from FBS Systems or Red Wing that allow more 'what ifs,'" he says. "Another option is to use a program like PcMars and work with a farm-business association consultant on 'what ifs.' The two dovetail together nicely. You also can benchmark your performance against other farmers in the association."
Swanson recommends that, especially as an operation grows to the $2-3 million gross revenue threshold, farmers may want to add a part-time accountant. He also suggests farmers consider ordering and reviewing the Farm Financial Standards Council's management accounting guidelines for agricultural production (www.ffsc.org/guidelines/).
"The guidelines opened the Pandora's box of financial and management reporting criteria, from the shoebox some may still use, to professional managerial accounting. The information is useful for any size operation or expertise level," he says.
"Farmers should pick one they are comfortable understanding," Swanson says. "Some programs like QuickBooks that are not built on an agriculture format can frustrate farmers. Choose something that doesn't force you to determine a bunch of workaround solutions."