The following is a summary of a presentation entitled "Financial and Management Accounting Software--Developments, Implementation Challenges, and Integration Issues" made in July 2018 to the Farm Financial Standards Council Annual Conference in Champaign, Illinois.
Over the next few blog posts we’ll attempt to answer these questions:
- What do we do that’s unique?
- Who do we work for?
- What are the current technical tools of the trade?
- How we can support and leverage the Standards?
- What are the challenges to adoption?
- What are the opportunities for agricultural producers?
What We Do That’s Unique
FBS's mission statement is Integrated Information Systems (what we do) for Agriculture’s Top Managers (who we work for).
Let’s begin with who we “work for.” FBS users are among the most progressive, demanding, and complex farming operations in North America. You'll find examples of them nearly every month in the "FBS Users In the News" stories. These operations are managing diverse enterprises, and all are constantly growing in scale and accounting sophistication. Many are nationally-recognized leaders in their fields and some have been selected for awards such as Farm Journal Top Producer of the Year.
What’s the big deal about integration?
If you’re like many growing, progressive producers your scale and complexity are working against you because this vital information is housed in separate “silos” consisting of unconnected accounting and production software supplemented by countless spreadsheets.
These information silos exist to accomplish specific information goals:
- Cash accounting for taxes.
- Accrual accounting to accurately measure true profitability.
- Production records for insurance compliance and to evaluate best management practices.
- Inventory control to verify what’s available to sell and what’s been used.
- Cost/management accounting to determine your farm’s internal costs and margins.
- Budgeting to financially project your operation into the future.
- Benchmarking to standardize and compare your performance with industry leaders.
- And ownership accounting to automate and consolidate your complex business relationships.
Although each of these information silos share the same source data they appear to be incompatible in their timing and precision. For example:
Cash and accrual accounting rely on different transactions in the same time period
Crop and livestock production cycles rarely correspond to calendar years.
- Financial accrual adjustments don't tie out to field and group production/management level detail.
Next time we’ll look at the current “technical tools of the trade” that address these problems. Meanwhile we invite you to watch our introductory "Farm Software Success Through FBS" video.