Accounting Software for Farms – Increase Profitability

Farmers have a lot to think about. While some things are out of a farmer’s control, such as the weather, one important aspect of a farmer’s business is fully within their control. It’s their finances. Using accounting software made specifically for farms can help farmers gain control of their finances and profitability (Source: http://www.redwingsoftware.com/rwssn/home.aspx?page=308).

Production analysis

Production analysis can be measured by predefined quantities such as per bushel, per head, per box, per acre, or any unit tracked. Expenses can then be applied to multiple account levels, such as a fertilizer account with segments for blend, lime and nitrogen. Knowing your operation’s profitability by production center helps you understand what needs to be improved. You can then use this information to help make smart decisions for your operation.

Ratio Analysis

Using ratio analysis helps you pinpoint areas of strength and weakness within your farming operation, so you can make changes accordingly and increase your profits. Ratio analysis takes data that is already within your accounting system, and allows you to see the data behind the indicators (Source: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/econ2198). Trend information can then be graphed and analyzed for the time frame of your choice.

Budgeting

Setting up and following a budget is another way to make a difference in the profitability of your farm. A budget helps you gain control of your finances and gives you the tools needed to project future cash flow, and helps you manage your assets and liabilities. Using a budget allows you to help answer “what-if” scenarios, such as expanding a crop, purchasing new equipment, buying more land, etc. Simply put, implementing a budget for your farm can provide smart decision making for your operation, which can lead to increased profits.

Take control of the things you can as a farmer. Financial management should not be left to chance. Use financial tools made specifically for farms, and you will be on your way to increased profitability.