| For many of us, just the thought of financial record | | | | previous year(s), whatever analysis you need to |
| keeping, budgets or tax returns, gives a chill up our | | | | make better financial decisions for your operation. |
| spine. But the truth is, a lack of proper financial | | | | - How about that accountant? If you are currently |
| management within an operation can lead to | | | | using the shoe box accounting system, at best your |
| un-informed decision making and your bottom line can | | | | accountant can give you the basics: a 1040 Schedule |
| take a real hit. | | | | F, or cash accounting information within your general |
| While attending a large agricultural trade show | | | | ledger, etc. However, by utilizing a computer and |
| recently, I was surprised to meet so many producers | | | | accounting software, you can find out so much more |
| who still use the shoebox method of financial | | | | about the elements of your operation. Let us take |
| management. You know, take one or more shoe | | | | that big shiny tractor for a minute. Click that mouse |
| boxes, fill them with all of your operations receipts, | | | | again and you can find out so many things that |
| check stubs, and invoices, etc. At the end of the | | | | tractor or fixed asset adds or subtracts to your |
| year bring them to your accountant and await your | | | | bottom line. For instance; you can depreciate your |
| completed tax return. While this method satisfies | | | | tractor over time, track repairs, fuel, any cost |
| Uncle Sam, it does nothing to help you track your | | | | associated with that asset. With detailed information |
| operations profitability, efficiencies, or the true | | | | about your operation, your accountant or financial |
| financial picture of your operation. Stop and think for | | | | adviser can give you financial advice for planning |
| a minute, would it not be great to know how | | | | future asset purchases based on the depletion of |
| profitable each crop you produce really is? If you are | | | | your existing assets and their current costs to your |
| like most producers, you probably have more than | | | | operation. You can also get reporting on your yield by |
| one entity within your operation. Is one of those | | | | acre or revenue by crop, the cost of production, etc. |
| entities weighing down your whole operations net | | | | The list goes on and on. |
| profits? | | | | - Is your operation run by you and members of your |
| With just a couple clicks of a mouse and easy-to-use | | | | family? Nothing can be more rewarding than running a |
| accounting software, you can generate information | | | | family-owned operation providing everyone is on the |
| that concerns every aspect of your operation. When | | | | same page and in agreement on all aspects of the |
| it comes to using financial management software, by | | | | operation. If you and your family members have a |
| entering your data once, the ability to analyze data | | | | hard time making decisions regarding the operation, |
| and generate in-depth reporting is limitless. You can | | | | chances are there are personal feelings involved in |
| personalize your reports, profit centers, accounts, | | | | the decision making and the process can be more |
| inventories and track data specific to your operation | | | | personal rather than business oriented. When you |
| or its entities. I know you are asking yourself, Why | | | | have your operations finances on the computer and |
| would I want to use financial management software? | | | | you can access current and historical data to analyze |
| My shoe box has fulfilled all of my needs? | | | | where the strengths and weaknesses are within the |
| You likely work with a banker, an accountant, or a | | | | operation, it will help take the personal element out |
| university extension program, family members, and | | | | of the process and sets the tone for better business |
| let us not forget the government. Like it or not each | | | | decision making. |
| of these are partners in your operation and reporting | | | | - One of the responsibilities we all have as individuals |
| to them requires some element of financial record | | | | and business owners is to pay taxes to the |
| keeping. Financial accounting software can provide | | | | government. The federal and state governments |
| unlimited analysis to those members in your | | | | require us to file tax returns as well as pay taxes. |
| operation. For instance: | | | | Depending on where you live, you may also be |
| - When you decide to make a major purchase for | | | | responsible for paying a local tax. When you have |
| your operation, most often that requires a visit with | | | | your financial data on the computer, all of the |
| your banker to take out a loan or a draw from your | | | | information you need to file a 1040 Schedule F is |
| line of credit. You may be your bankers top client or | | | | quickly available for your return. Also, in today's |
| even dearest friend; you will still be required to | | | | market, it is more important than ever to have |
| produce a financial statement or balance sheet. The | | | | concise records for the Environmental Protection |
| bank needs to see a financial picture of your | | | | Agency (EPA), with regard to any restricted use |
| operation, including all assets, liabilities as well as | | | | chemicals that may be used in your operation. |
| anticipated future profits. In fact, if you can borrow | | | | In today's competitive market, every producer |
| your operations funds based on your profits instead | | | | should have computerized farm records. Good |
| of your assets, you would not be forced to liquidate | | | | financial data gives you the competitive edge and the |
| any of your assets, providing you pay your loan in a | | | | confidence needed to make the best decisions for |
| timely manner required by your lender. By using | | | | your operations profitability and efficiency. Decisions |
| financial accounting software you are able to quickly | | | | that will affect your future and that of your family |
| run balance sheets by book value, market value, and | | | | for years to come. Go ahead; recycle the shoe box, |
| even modified cash value. You can view an actual | | | | the path to sound financial management is but a |
| time period to budget, year-to-date, current year to | | | | mouse click away! |