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My parents have expressed interest in me helping with the
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sand85
Posted 4/18/2017 08:53 (#5968985 - in reply to #5968249)
Subject: RE: My parents have expressed interest in me helping with the


C IL

You can buy many financial accounting programs that will do that for you.  Redwing is one.  It is a LOT of work to go to management accounting from simple tax (cash) accounting.  I wouldn't call it hard.  Just a lot of bookwork.  Redwing, and presumably some other accounting programs, allows you to do calendar year while also entering a crop year (essentially, accrues to the crop year) for each entry.  You can also use profit centers or other project features to split out each field, but it is a lot of data entry.

If you do cash accounting while also doing crop year accruals, you are in the top 5% of farm financial managers, I would say.  Not many folks know how much their net position changed last year on an accrual basis.

 

For tracking field profitability, we use two systems.  We do tax (cash financial) accounting, and we use MapShots EasiSuite to do field budgets. 

Even just using the MapShots planning function gives a pretty accurate way to track product costs and quantities.  You can input different prices - budget prices, cash prices, discounted prices.  Different input prices by different landlord/tenant, if they are paying at different times and therefore different prices.  You can tie the yields back to each field.  Spread fixed costs out over all fields.  Assign a cost for machinery operations.  I always thought this was the real strength of MapShots, even when they have spent 15 years on different GIS tools and not much advancement, to my knowledge, in strengthening the business tools.  But I gave up on that more than 5 years ago, so I don't know what has happened lately.

The entire system, whether done through management accounting or MapShots, relies on spreading fixed costs and revenues out over all fields appropriately.  The only way to do that is to sum up your yearly costs and divide by acres, whether a constant price/ac (building insurance) or a cost per applied acre (how many passes with the FC).  Same with crop sales - take the total revenue divided by the total bushels to get an average price, and then assign it to all bushels, figure up field bushels, to get field revenues and cost/bu for that field.  No matter how you spin it, you are going to do that with a spreadsheet, or some software program is going to do that with a spreadsheet in the background.

 

It's a process, it takes a lot of time, it's really powerful business information.  It's not as fun as driving a tractor.  It pays you back really, really well.

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