Financial Management in Agriculture – Why It’s So Important

Many farmers spend thousands of dollars to improve production, but hesitate to spend money on tools that can help them improve their financial management. In fact, managing farm finances offers the best possibility for adding profits and ongoing profitability to an agricultural operation. Consider these reasons why financial management is crucial to the success of your agriculture operation.

GOALS: You cannot meet a goal if you don′t set one. Setting goals is a crucial aspect of maintaining a business. Whether your goal is to grow by a certain percentage over a certain period of time, retire early, or simply keep your operation running successfully, any of these goals are more easily achieved when a plan is there to back up the goal. Then, once your goal has been set, progress toward your goal must be constantly checked and evaluated. Your financial management tools can help you manage your progress, by using reports within your system.

SMART DECISIONS: Smart decisions lead to more profits. Using the information on reports within your financial management system can help you make the best decisions possible: ones that are based on real numbers and facts rather than feelings and assumptions.

Farm Accounting Software - How is it Different from General Accounting Software?

Thousands of Red Wing Software customers understand the benefits of using agriculture-specific software to manage their farm, rather than using a more basic program. Here are some compelling reasons to think seriously about implementing agriculture-specific farm accounting software instead of a more general program. Keep in mind that agriculture-specific accounting software will include the basics you need such as writing checks, entering payables and receivables, and managing your general ledger. Below are the additional tools Red Wing Software’s CenterPoint Accounting for Agriculture offers to help your farm see its true potential!

  1. Multiple Quantity Inventory Tracking:

    While basic programs often don’t allow for any inventory tracking, CenterPoint for Agriculture allows for inventory tracking in multiple quantities, so you can keep better track of your items no matter how you buy or sell them.

  2. Multiple Tax Entities:

    Allows you to track multiple tax entities in one database for keeping financial data separate, yet still perform combined business analysis when necessary.

  3. Book, Market, and Tax Asset Value Tracking:

    Know the true value of your assets for whatever purpose you choose.

  4. Transaction Distribution to Multiple Accounts:

    Easily distribute complex transactions across multiple accounts and production units, for an accurate financial picture.

  5. Information Tracking for Farms, Fields, Landlords, etc.:

    Always have access to information at your fingertips about your farm, land, etc. for yourself and your managers, landlords, bankers, and more.

  6. Ratio Analysis:

    Calculates ratios for your farming operation and shows trends, so you can address issues and become more profitable.

  7. Production Analysis:

    Provides detailed crop and livestock information on a cost per unit basis.

  8. Financial Analysis:

    Owners and managers can get in-depth financial analysis with unlimited ability to structure and segment entire operations, profit centers, accounts, and inventories to track data, combine entities, and receive the most relevant farm reporting available today.

  9. Budget and Forecasting:

    Gain the ability to create “what if” scenarios for your farm, and you’ll be able to project future sales, cash flow, income statements, and assets and liabilities. You’ll then be able to more accurately plan for future business strategies!