In this Issue:

 Dear Friend,

You may have missed this year's FBS User Conference or you attended but want to review or share a presention.  With the exception of three sessions you can now watch the entire FBS 2016 User Conference online (nearly 12 hours).  (Links will also be maintained on the Conference Archives web page.)

Mogler Keynote Address (1:33)	Crop Cost Benchmarks(0:53)
Integration Partners Panel (0.35)	Conservis API Integration (0:18)
Future of FBS Software (0:36)	Basic Accounting Data Entry (0:52)
Essential Accounting Reports (0:47)	Everything Smart Feeder (0:44)
Controller's Corner (1:05)	FBS User Group (0:43)
FBS "Bells and Whistles" (0:39)	Automated Data Entry (0:34)
Budgeting and Monitoring (0:42)	"Operationalizing VFD" (0:49)
Pork Cost Bencharks (1:03)

Converting to Opportunity Accounting: Standarized Units

This month we’re continuing our series on Opportunity Accounting.  Here’s a review of what we’ve covered so far:

1. In today’s markets the best strategies to control the bottom line is to determine where inefficiencies are occurring and opportunities are going unrewarded. Opportunity costs are an economic concept to evaluate the trade-off between alternatives.   However, indirect and/or fixed costs are particularly difficult to model because most operations are made up of many related “moving parts.”   (January 2016 FarmSmart)
2. American agriculture is constantly reinventing itself thanks to an endless parade of innovators probing the boundaries of production and efficiency through trial-and-error experiments. (February 2016 FarmSmart)
3. In their book Great by Choice, Collins and Hansen describe this empirical creativity process as “firing bullets, then cannonballs.” (June 2016 FarmSmart)
4. There are four ways to categorize costs: direct, indirect, variable and fixed.  (March 2016 FarmSmart)
5. Cutting direct variable costs is an easy short-term solution but can result in reduced production margins. The effects of indirect variable cost adjustments are harder to analyze.  Direct fixed costs are the hardest to control, while indirect fixed costs management offers some of the best opportunities to remain competitive.  (April 2016 FarmSmart)

In this issue we’ll cover the first of eight processes that can transform your historical accounting records into opportunity accounting.

Process #1:  Standardized Units

In order to evaluate practices and decisions you’ll first need to reduce your records to the “lowest common denominator.”  While “main street” accounting systems do a good job of tracking total dollars by account they ultimately fall down when it comes to unit-based analysis. 

Cost Analysis Total Dollars	Cost Analysis Dollars per Acre

For example, Farm A may incur more total costs than Farm B, but unless you adjust by acres you really can’t compare performance.   Which “acres” should you use, though?  Here are some of the alternatives used for standardizing crop production performance:

• Planted acres
• Application acres
• Harvested acres
• Field boundary acres
• FSA acres

Livestock producers have similar standardized units.

• Head purchased
• Head moved in / out
• Head sold
• Head purchases + moved in
• Head sold + moved out
• Quantity died

Incorporating Multiple Units of Measure

Acres and head are just the start of the process.  Crops measure harvest units (bushels, bales, boxes) which are usually derived from weights which are then then adjusted by percent moisture.  Livestock producers record live and carcass weights of animals and feed in various intervals in the growing cycle.

Cost Analysis per Bushel

 How do these measurements get incorporated into opportunity accounting?  If you’re using a conventional, non-ag accounting program you could use a spreadsheet to divide accounting dollars by production units “after the fact.”  The resulting analysis, though, will be very “high level,” with little traceability to production activities and segments.

The best solution is to capture units and dollars simultaneously at each “entry point.”  This not only allows each step to be evaluated but also logs the date, adding time to the equation.

What’s the point of tracking all this detail?  These units will be used to generate Key Performance Indicators (KPIs).   First, however, there are three more standardization steps that need to be implemented.  We'll look at #2, Standardardized Segments, in the next issue.

Still Time to Register for the ASAC Annual Conference

There's still time to register for annual conference of the American Society of Agricultural Consultants (ASAC) will focus on sharpening skills to take you and your clients to Achieving Greater Profitability.  The conference, to be held November 13-15, 2015 in Fort Worth, Texas will take a comprehensive look at global agriculture and the impact it has on U.S. agriculture and how ag consultants can better serve their clients domestically.

“The face of agriculture changes daily, this conference will provides educational programming from leaders in agribusiness which will give ag consultants the tools they need to better serve their clients,” says program chair and ASAC vice president, Julie Strain.

Additionally, the society is reintroducing its one-day, intensive course, “Consulting Firm Management: Startup, Growth & Maintenance.”  The course touches on six essential principles of consulting firm management: business management, planning, marketing, analysis, project management, networking and concludes with a roundtable discussion of best practices. 

All events are being held at the Embassy Suites Fort Worth - Downtown. 

More information about the entire ASAC program and speaker rosters is available at www.agconsultants.org

FBS Users in the News

From a recent Associated Press story:  “Typically this time of year the dealership would be talking to me about getting a new planter, and they have talked to us and we told them we’re going to pass,” said Joe Steinkamp who farms corn, soybean(s) and occasionally wheat near Evansville, Ind.  “Obviously we’re concerned and we’re watching our pennies as we go.”

October   7:  Conservis integration.
October 14:  Setting up the new crop year.
October 21:  Looking towards the end of the year.
October 28:  Understanding cash vs. accrual.

Q&A of the Month:  Accounts Payable Warning

Sarah Dixon, FBS Sales and Support Coordinator

Q.  When I run the Accounts Payable Detail Report by option 7 some invoices with payments display in orange indicating there's an error; however, I don’t see anything wrong with the entry.

A.  If everything looks fine with the invoice number, payment amount, amount due and internal paid then look at the days open.  If the days open exceed 365 then the line will be orange just to notify you that the invoice is open for an excessive amount of time.  This warning will also appear in the Accounts Receivable Detail Report for option 7.  While you probably want to pay, write-off or convert this invoice to a note payable or receivable, there's nothing technically wrong with your data.

It's a pretty good rule of thumb that if the orange lines don't appear at the top of the report (indicating a payment without an invoice) then they should be treated more as a "friendly warning" rather than an error that needs correcting.