MEET IN MISSOURI NEXT WEEK
The only
Computers on the Farm Conference in the country is coming to Columbia,
Missouri on January 4-5, 2005. Sponsored by the University
of Missouri, this is the longest-running farm computer seminar and covers
a wide range of topics relevant to users of technology. In
one general session Norm Brown will be describing how producers can benefit
from the new Farm Financial Standards Council managerial accounting practices. Computers
on the Farm is a great opportunity to catch up on the latest technology
and meet who share your interests and is open to everyone. For
more information or to register, click on the following link: Computers on the Farm Conference
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CROPSHOP.2005: HELPING YOU POSITION FOR LONG-TERM PROFITABILITY
Many of
you will be coming to the massive 2005 National Farm Machinery Show in
Louisville, Kentucky to shop for the latest high-tech, big-ticket equipment. Unlike
some of your neighbors, though, your purchasing decisions are never
based on impulse or emotions, but rather sound economic analysis that
weighs each investment alternative by its effect on long-term profitability.
Right?:
Unfortunately, in real life such rationality is
easier said than done. First, good suppliers have already done their research
and can present an attractive R.O.I. for their products based on ideal
scenarios that may or may not be duplicated in your operation. Second,
your actual costs and returns are driven by a unique, complex interaction
of variables: production labor availability and costs, internal maintenance
costs, land costs, transportation costs, government farm programs, product
mixes, general and administrative overhead, finance costs and alternative
uses of capital. Some of these costs are fixed, some are variable, few
are direct and most are a challenge to predict and manage in an expanding
operation.
If you're serious about learning more about your
operation (and managerial accounting) so that you can make better-informed
purchasing, production and marketing decisions, then we invite you to
Louisville one day prior to the National Farm Machinery Show (February
15th ) for CROPSHOP.2005. This year we'll be
presenting case studies of growers who have adopted Activity-Based managerial
accounting over the past three years and begin interpreting and benchmarking
results. We'll also disclose updates in reporting standards
and refinements we're making in our e.CLIPSE
software to better adapt to specialized conditions. Plus, you'll be the
first to see some revolutionary new data collection technologies and FBS
modules and have the opportunity to interact with other leading growers
from around the country.
The final agenda will be posted on our website
in early January. For
more information follow this link.
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REMEMBERING A REMARKABLE MAN
.
Most of you never met Wes Prosser, but you'll immediately recognize his
work. Even those who knew him will be surprised about his life
accomplishments.
Wesley Lewis Prosser, FBS Director of Marketing
Communications and editor our FarmSmart and e.farmsmart
newsletters, died on November 28th, 2004 after waging a heroic battle
with emphysema. His stellar career in marketing communications
spanned five decades and included hitches with Bozell & Jacobs, Vangard
Communications, Fletcher/Mayo/Associates, Abbot Laboratories, Farmland
Industries and Allis-Chalmers.
Wes joined us in 1990 and immediately transformed
our image and constantly honed our message. He coined the terms,
"SeRVware," "TiMEsavr,"
"Top Manager," "PROMIS," "MaCH
1.0," "e.CLIPSE," as well
as conceived and supervised all of our printed marketing materials and
advertising.
Wes was an Oklahoma State University Business
Journalism graduate and loyal supporter, an Air Force veteran (piloting
nuclear-armed B-47 bombers during the Cold War) and a die-hard Cubs fan. He
was preceded in death by his wife, Doris. While he'll be deeply missed
by his colleagues and friends, he remains an inspiration for excellence
for all of us.
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THANKS, DAVID!
Over the
past month, David Rick has been contacting FBS clients to see how they're
getting along with their software. If you haven't talked to
FBS in the past year or so, Dave may have already spoken to you or left
a message on your answering machine. We appreciate him helping
us with this important project and will miss him when he starts his busy
tax and financial planning season.
David is a true financial professional who happens
to have a dairy farm background. He's the owner of Rick
Financial Services, a Certified Financial Planner™, a Chartered Financial
Consultant, a Chartered Life Underwriter and a LPL Registered Representative
(securities sold through Linsco/Private Ledger (LPL)–member NASD/SIPC).
David's independent office provides comprehensive
financial planning, business succession planning, trust work and buy-sell
agreements and serves clients across the country. If you're
looking for honest, professional help in these specialized areas we highly
recommend you speak to David. He can be reached at 309-582-5711
or david.rick@lpl.com.
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BONUS BENEFITS FROM
MANAGERIAL ACCOUNTING
In November, 2004, software companies providing managerial
accounting to agriculture shared their experiences at the Farm Financial
Standards Council annual meeting in Sacramento, California. The
Council is active in coordinating the introduction and standardization
of management accounting (M.A.) in agriculture. (FBS's entry
into this category is called e.CLIPSE.) Click
here for more information.)
Participants were asked to reflect on 1) who's
the target audience for M.A., 2) who is not the target audience, 3) prerequisites
for success, 4) specific benefits clients are achieving from M.A. and
5) opportunities for partnering with professional financial service providers.
Last month we looked at issues #1-3. This month we continue by examining
the benefits (expected and unexpected) that farmers are experiencing from
management accounting.
| • |
Make marketing
decisions based on reliable, comparable product costs. Unlike
conventional manufacturers and retailers, ag producers have traditionally
not had the luxury of "setting" prices based on pre-determined,
positive sales margins every year due to commodity market
volatility. However, the transition to marketing contracts
permits producers who are confident in their costs of production/sales
the opportunity to lock in a modest, but dependably-positive margin.
This strategy works better with livestock than with crops
because the cost per unit (bushel, pound, etc.) of crop "finished
goods" is so significantly affected by yield. |
| • |
Specialize
in your most profitable products. Unless you only
raise one crop or animal production segment, determining your best
product mix is a critical management decision that is obscured by
all the indirect costs (labor, equipment, fuel, etc.) consumed unequally
by those products. Again, crop returns are further complicated
by government and crop insurance programs, varying yields and prices,
secondary products and synergetic effects from crop rotations. |
| • |
Benchmark
owned and rented farms and facilities. While yields,
prices and returns between products are hard to predict and
control from year-to-year, the internal costs of owned and rented
farms and facilities can be meaningfully benchmarked and effectively
managed. |
| • |
"Right
size" your overhead and production capacity. Management
accounting can do much more than simply determine historical product
costs. All operations are organized around recurring
cost center "activities" (planting, spraying, feed preparation,
trucking, shop, etc.) rather than products. Knowing your
internal cost of performing an activity will allow you to implement
these strategies: |
| ° |
Cost control
at a measurable, manageable and repeatable level |
| ° |
Optimize
cost center capacity to match levels of production |
| ° |
Optimize
levels of production to match cost center capacity. |
| ° |
"Sell" excess
cost center capacity by providing custom services to outside entities. |
| ° |
Replace
sub-optimal cost centers by outsourcing custom field operations,
contract feeding, toll milling or turnkey management services. |
| • |
Simplified
data entry. Rather than attempting to split every indirect invoice
between final products, users simply drop those expenses into a
limited number of cost center "buckets," which are later allocated
to products using "cost drivers." |
| • |
Real-time
financial reporting. As management accounting adjusts inventories
from raw materials to work in process. |
| • |
Continuous
improvement. Although it usually requires two years
to fully utilize management accounting due to agriculture's long
production cycles, many users find that the journey is just as beneficial
as the destination. e.CLIPSE
users typically begin with rough assumptions regarding how costs
are created and allocated within their operations. By regularly
monitoring and tweaking allocations in the starting phase they gain
a better understanding and control of the interim internal processes
even as they wait for the big picture to come into focus. |
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PAYROLL UPDATE NEWS
Version 9.0 of Red Wing Windows Payroll has now been mailed
to users, and the 2005 Payroll Tax Updates are now available for immediate
download. (Note: Install the 2005 Tax tables after running the last payroll
for 2004.)
To download tax tables, follow either of these methods:
Method 1: In the Payroll 9.0
system, click the Download / Review Tax Tables button on the main
payroll menu, change the Review Current Tax Information for to
2005, click Download Tax Tables, and then click OK
to install a copy of the tax tables. This selection will copy the tax
tables from Red Wing's FTP site and will automatically install them in
your payroll system.
Method 2: Download the Tax Update
from the FBS Web site. Click on the link http://www.fbssystems.com/html/support_patches.html
or type the FBS Web address into your browser and follow our online instructions
to install your new tax tables. Download the tax table update
to your desktop. After downloading the file open the taxtableupdate
icon and go through the installation wizard. The installation path will
be the same location as your FBS software with "\sys" on the end. (Example:
C:\fbswin\sys).
You can verify that the tax tables were properly
installed by clicking the Download / Review Tax Tables button from
the Payroll main menu. Verify that the Review Current Tax
Information for year is 2005. Look at the FICA Company
Share entry (it should be the first entry in the list) and verify
that the Wage Base is $90,000. If you have any questions
concerning the installation of the Tax Table and Tax Form updates, please
contact the FBS Support department at 800.437.7638 or e-mail support@fbssystems.com.
We will also be resending the Payroll 9.0 and Payroll Tax Forms 9.13 software on a CD which will also include the 2005 tax tables. The CDs will be mailed this week.
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|
SOFTWARE Q&A
– WITH Q'S FROM YOU, OUR CLIENTS!
Send us
your questions/problems–be they short, long, simple or downright
frustratin'!–about SeRVware
and we'll handle them right "on the air" for the benefit of all.
|
Q.
|
Do I need to wait until I have closed my 2004 books before
installing the new FBS 7.6 version and the new Payroll 9.0
software? Do I need to finish the 2004 books before starting
2005? Do I need to do payroll W-2's before I do my first 2005
payroll?
|
| a.
|
No to all questions! To
be able to take advantage of the new software improvements
and enhancements you need to install the new software. There
is not a data conversion between versions 7.5 and 7.6 of FBS
software, but there are some new report options, an open task
bar and other features you will want to use. Click
here for a complete list of 7.6 changes. Click
here to download updates to the 7.6 software.
Windows 98 users please note that because of new Microsoft
operating system changes, you may need some assistance from
our support staff to install the 7.6 version.
You can begin a new year in FBS software before closing the
2004 year and do 2005 payroll before printing 2004 payroll
reports. Both systems allow you to change back
to the previous year. In FBS you have the ability
to continue to edit the previous year after starting the new
year and then recreate beginning balances in 2005.
In Red Wing Payroll you can begin 2005 payroll (Payroll
| End of Period | Month End Processing - close the month December,
4th quarter, and the 2004 year) and then switch
back to the 2004 tax year (End of Period |Change Tax year
| choose 2004 year) to run the tax reports.
|
Call in your questions (800.437.7638) or e-mail them
to support@fbssystems.com. |
| |
|
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CLIENT'S CORNER
• In The News!
Our top
trainer/consultant and CFO of Jorgensen Farms, Daryl Ellis, was
featured in the article, "Should you hire a CFO?" in the November-December
issue of Farm Futures magazine. This is not only a
great story, but a very relevant topic for many of you who feel overwhelmed
by information demands or just need outside expertise to formally compile
and interpret date you've worked so hard to accumulate. Click
here for the article.
For help or recommendations from Daryl Ellis, email daryl@fbssystems.com
.
Farm manager Dale Aupperle discusses the effects on land prices
from 1031 tax-free exchanges driven by urban sprawl in "Farming on
the edge" in the December 2004, Farm Industry News magazine. Click
here for the article.
• Welcome!
New client Ghrist Veterinary Clinic, Pittsfield, Illinois.
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