F or some, this may mean dispensing with a manual cashbook and embracing computer software or outsourcing their book-keeping to their accountant or perhaps engaging a farm secretary to assist. For others MTD may require an upgrade to an existing software package or a consideration to change their accounting systems at a time when technological change is happening at a rapid pace, not only in the accounting sphere but across the whole agricultural sector, including machinery use, crop management, marketing and retail. We are living through a time of uncertainty, but anxiety about change and risk of financial distress can be mitigated if reliable, regular data is available upon which informed decisions can be made. Accounting software should be the foundation of sound financial data. MTD is a government tax compliance initiative, but it should be viewed as a challenge to the farm business owner as to whether or not their systems are delivering what they need to know about the financial performance of their business. Not another spreadsheet With the best will in the world, a business’s financial systems can be fragmented. A farm’s core accounts package may track the bank account and generate some financial reports, but other key records are often maintained on spreadsheets outside of that software package, for example the fixed asset register, stock and crop records, the budget or cashflow. Software selection should as far as possible identify a solution which can integrate as much of the financial data on one platform, so that it can be easily scrutinised, and variances understood. The right fit It sounds obvious, but software should fit the needs of the business, and it is important that the any solution is not over-engineered since that will be counter-productive. Nobody wants to pay for equipment they don’t really need! For a simple less sophisticated business the solution may be to opt for a generic accounting package to maintain the cashbook, since the key measure is how much cash is in the bank. This might also suit the individual who is charged with keeping the books. The advent of cloud accounting provides an opportunity for a straightforward business using a generic software package to link with other applications that may assist with a specific aspect of the business, such as retail if there is a farm shop, or management of property if some cottages or holiday lets are part of the business.
Integration Every farm enterprise will use a variety of data sources, and using that data effectively will drive success. This requires integration. There are established platforms such as Farm Plan and Gatekeeper or Landmark and Geofolia for crop management which integrate with financial software to good effect. Cloud vendors use Application Programming Interface (API) links to enable different software applications to work with each other. This enables bespoke software solutions, often referred to as app-stacks, to be built for a business. Xero, a cloud accounts package, and Figured, a farm financial management application, are good examples of how data can be linked and adapted to provide crop production trackers to measure gross margin and advanced financial forecast modelling. Data aggregator platforms also utilise API technology to provide one-point-access for business intelligence in order to collate financial information, machinery data and other sources of data that may be available if the data source is accessible. This can enable a farm business dashboard to give a real time snapshot of the farm or estate’s financial wellbeing, using key data and performance indicators. Informed decisions The objective of any software change or application must be that the business owner is able to use it to make informed and timely decisions. Scrutton Bland work with clients to assist them in finding the right software solution for their needs. Scrutton Bland regularly work with farm businesses and farm business consultants to deliver cloud based solutions and can provide an out-sourced book-keeping service. To find out more contact Nick Banks at nick.banks@ scruttonbland.co.uk or tel 0330 058 6559 .
Larger diverse businesses and estates may opt for more sophisticated software that is designed specifically for farm and arable enterprises. These systems offer a high level of analysis of cost and revenue centres and can appear relatively complex to those who are less confident with accounting, but the businesses adopting such software will often have a suitably qualified person managing the farm or estate finances on a day-to-day basis. Unlock efficiency Any system should drive efficiencies within the business. Technology and changes in banking regulation have created opportunities to reduce the administrative burden of maintaining the farm finances. In recent years, as data is held in the cloud, applications such as Receipt Bank can process invoices from a photo, scanned image or email and enter those invoices directly in to compatible accounting software, retaining a copy behind the transaction for ease of reference. Data feeds from your bank can enable your business’s software to ‘talk’ to your bank and pull the bank transactions in to the software to assist with completing the bank reconciliation. In time, you should be able to transact bank payments through your software. Software applications that are not cloud based are also introducing functionality to import bank statements to assist with reconciliations. Developers are working on solutions to capture digital invoices and have established links with certain suppliers to automatically import purchase data to the farm purchase ledger. Cloud, desktop or hosted Traditionally, software has been desktop based and this continues to be the preference of some who are still wary of the cloud and the security of data. My personal view is that cloud vendors’ security is so vitally important that their servers will be subject to the most robust protection against cyber attack, which means that it is more likely that a business’ data is more vulnerable to being hacked from an email the owner may download inadvertently. Some software packages have evolved to offer a hosted version. The programme is hosted on a server that the software vendor maintains, but it enables multiple user access such as the business owner and the accountant. The cloud though does offer the most accessible and versatile route to the farm’s data since it can be accessed on a computer or mobile device such as a smartphone and tablet.
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