Farmers are one of the most important parts of the economy, and the world will always depend on them. They carry the timeless responsibility of providing food for human and animal consumption. Yet, farming is one of the slowest sectors when it comes to leveraging technology to maximise productivity.
If you are to run your farm as a business, you need to put technology at the forefront of your farm operations. Not only should you adopt systems that help to improve your harvest and the lifespan of livestock, but you should also organise financial transactions. In this article, we’ll look at why you should get started on cloud accounting for your farm.
What is Farm Accounting Software?
Farm accounting software provides financial management and reporting for stakeholders in the agribusiness sector, including large-scale agricultural operators, small-scale farmers, farmers’ markets, and abattoirs. It helps them to manage inventories and orders, plan expected harvest quantities, turn a profit, and be tax compliant.
Farm accounting software addresses the specific needs of farmers and agricultural businesses. It was developed with farmers in mind and provides industry-specific features, functionalities, reports, and benefits.
Key Features of Farm Accounting Software
Accounting for farmers differs greatly from accounting for other sectors, such as retail or construction. It is a niche of its own in the tech world.
Apart from the common modules of any accounting software such as accounts payable, accounts receivable, and payroll, farm accounting software should include key features such as:
- Crop/Livestock Inventory Management
- Warehouse Management
- Agricultural Ratio Analysis
- Breeding & Growing Calendars
Benefits of Using Farm Accounting Software
Some of the benefits of using farm accounting software include:
1. Better understanding of the profitability of your farm
Farm accounting software will give you better metrics on the financial performance of your farm. This will enable you to make data-driven decisions on how to improve your profitability while minimizing working costs.
2. Make decisions based on comparable product costs
The agricultural sector is a very volatile industry. As a result, farmers usually don’t have the luxury of enjoying constant prices on farm products. It’s also difficult to price your output because of the market volatility.
A good farm accounting software will let you see all the direct and indirect costs you put in production so you can price your output accordingly for better margins. It can also help you to find better deals on various production expenses.
3. Protect the future of your farm operations
Good farm accounting software will also help you prepare your taxes, keep accurate records of your production levels in compliance with insurance, and monitor the movement of assets in and out of the farm. These are very crucial to future-proofing your farm and ensuring long-term profitability.
4. Simplicity
Most farmers are not bookkeepers or accountants. They, therefore, find most accounting tasks quite challenging. Cloud accounting software solutions are easy to install, learn, and use. They make it easy for farmers to accurately track their financials by providing prompts for the data type that should be entered in each section.
Once you’ve established your accounting system with bank accounts, debts, and vendors, you’ll only need to update information as it comes in.
5. Ability to collaborate
Lastly, farm accounting software will enable you to easily collaborate with the other departments on your farm. You can integrate the software with your other systems such as the warehousing or procurement systems to reconcile accounts and import information for review by advisors.
List of Farm Accounting Software
Xero
Xero is cloud-based accounting software that, while not specifically designed for farming, can be adapted for agricultural use with add-ons and integrations. It is also the easiest software to learn and use.
Pros:
- User-friendly interface
- Cloud-based, allowing access from anywhere
- Real-time financial data
- Strong inventory management features
- Integrates with many third-party apps
- Good for multi-enterprise farms
- Robust reporting capabilities
Cons:
- Not farm-specific out of the box
- May require additional agricultural add-ons
Xero’s flexibility makes it suitable for farms, but users may need to customize it to fit specific agricultural needs. It connects with apps like Figured, Vinsight, and Asset.Guru. Its strength lies in providing a comprehensive financial overview, which can be valuable for farming operations of all sizes.
QuickBooks
QuickBooks is a widely used accounting software that offers features adaptable to farm accounting. While not exclusively designed for agriculture, it has capabilities that can be tailored to farm operations.
Pros:
- User-friendly interface, especially for those familiar with basic accounting
- Offers both desktop and cloud-based versions
- Customizable chart of accounts for farm-specific categories
- Robust reporting features for financial analysis
- Tracks income and expenses by enterprise or field
- Integrates with various third-party agricultural apps
- Handles payroll and inventory management
- Provides tools for tracking loans and equipment depreciation
Cons:
- Not specifically designed for farms, requiring some customisation
- May lack some farm-specific features like crop or livestock tracking
- Can be more expensive than some dedicated farm accounting software
- Some advanced agricultural features may require add-ons or workarounds
Overall, QuickBooks can be a solid choice for farmers who need a versatile accounting solution and are willing to invest time in setting it up for their specific needs. It’s particularly suitable for farms that have diverse operations or need to integrate their accounting with other business aspects.
The software’s strength lies in its comprehensive financial management tools, which can provide valuable insights into farm profitability and cash flow. However, farmers looking for specialised agricultural features might find dedicated farm accounting software more suitable.
FarmRaise
What sets FarmRaise apart is its agricultural focus, incorporating features that general accounting software like QuickBooks may lack. A key highlight is its comprehensive library of funding options, helping farmers identify and leverage programs they qualify for. The software excels in tracking farm-specific assets, including inventory and livestock, addressing the unique needs of agricultural businesses.
Practicality is a cornerstone of FarmRaise’s design. It comes with a companion mobile app, enhancing its utility for farmers on the move. It can function without an internet connection, a valuable feature for remote farm locations with limited connectivity. Perhaps most appealingly, FarmRaise prides itself on being user-friendly, with an intuitive interface that reduces the learning curve often associated with accounting software.
One big con that needs to be highlighted is that the software is focused on the US and not the EU.
FarmBooks
FarmBooks stands out in the agricultural financial software arena with its refreshingly traditional approach. Eschewing the trend towards cloud-based solutions, FarmBooks refers to an era when software was installed locally and operated independently of internet connectivity. This design choice proves particularly advantageous for farmers whose work often takes them beyond the reach of reliable Wi-Fi.
But FarmBooks’ appeal extends far beyond its offline capabilities. It offers a robust suite of tools tailored to the agricultural sector’s unique needs. Farmers and ranchers can manage their financial operations effortlessly, from bank account oversight to tracking earnings and expenses. The software also facilitates payroll management and check issuance while providing comprehensive inventory and asset tracking features.
While FarmBooks may lack the funding library feature found in some newer solutions, it compensates with one of the most extensive arrays of farm-specific functionalities in the market. Its comprehensive approach to agricultural finance management makes it a compelling choice for farmers seeking a reliable, feature-rich solution that doesn’t depend on constant internet access.
Again this a US based software.
Traction Farm Management Software
Traction is a comprehensive, cloud-based farm management platform designed to streamline operations for modern agricultural businesses. It integrates field mapping, crop planning, inventory tracking, and financial management into a single system.
Pros:
- An integrated approach combining operational and financial tools
- Robust field mapping and crop planning features
- Weather data integration for informed decision-making
- Strong inventory management capabilities
- Mobile apps for iOS and Android
Cons:
- May be complex for smaller farms
- Requires reliable internet connectivity
- Learning curve for new users
- Financial tools may not be as comprehensive as dedicated accounting software
- Again US based software
Traction’s strength lies in its holistic approach to farm management, allowing farmers to see how different aspects of their operations interact. It’s particularly well-suited for medium to large-scale operations looking to digitize and streamline their processes. However, smaller farms might find some features unnecessary and the cost harder to justify.
Overall, Traction offers a powerful solution for farms seeking to improve their operational efficiency and decision-making processes, provided they have the scale and resources to utilise its capabilities fully.
How do I Choose the Best Farm Accounting Software?
Selecting the right farm accounting software is akin to choosing the perfect tool from your barn – it’s all about finding the right fit for your specific needs.
Don’t be fooled by price tags. In the digital world, ‘free’ doesn’t always mean ‘useless’, and ‘expensive’ doesn’t guarantee excellence. The key is to find software that aligns with your farm’s requirements, not necessarily the one with the most bells and whistles.
While offline capability can be crucial for rural areas, don’t underestimate the value of connectivity. Software that stays updated, especially with security patches, can be a wise investment in the long run. Sometimes, paying for ongoing service is the smarter choice, despite occasional frustrations.
You’re the expert on your farm. Take advantage of free trials and demos – they’re like test-driving a tractor before purchase. If a tool doesn’t feel right, don’t hesitate to explore other options. There’s no shame in trying multiple solutions until you find your perfect match.
Remember, functionality trumps flashiness. A simple, effective tool that meets your needs is far more valuable than a complex system you’ll never fully utilize. Balance your budget against the features you actually need, not the ones that merely sound impressive.
Ultimately, choosing farm accounting software is about finding a solution that works for you, not the other way around. Trust your instincts, do your research, and don’t settle for less than what your farm truly needs to thrive in the digital age.
Manage Your Farm Like a Business
The financial side of farming is complex. There are factors such as regulations, subsidies, and unpredictable weather that can affect your profitability. Farm accounting software gives you 24/7 access to crucial financial information for informed decision-making to avoid being negatively impacted by these factors.
Coffey & Co. offers a unique accounting solution with expert advice so farmers can focus on growing their business. Our farm accounting services will give you complete peace of mind. It’s time to start managing your farm like a business.