To better understand the business side of their farming operation, real-time and accurate financial data including production information is essential.
OPINION: Advancements in technology might have made some aspects of farmers’ operations easier but they’ve also added layers of complexity. Today, farmers have to be skilled at everything – both on the farm and in the office. That’s a lot of pressure.
To better understand the business side of their farming operation, real-time and accurate financial data including production information is essential. But finding the time to dig into the numbers is a challenge for many farmers who are busy managing all aspects of the farm.
But this is one thing farmers don’t have to become experts in overnight. Leaning on trusted advisors and mentors can help with turning numbers into action. Working together and looking at data and past trends leads to more informed decisions.
By utilising software, previously laborious tasks such as planning and budgeting have become almost seamless, allowing for multiple iterations and a longer term view to improving the business, and it’s operations.
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Surprisingly few farmers are taking advantage of, or are aware of, the help they could be getting from their advisors. In fact, a recent survey of 600 farmers from across the country found around half (49 per cent) said their accountant isn’t involved with farm budgeting or financial planning.
We know that working with an accountant creates context and deeper understanding towards the numbers. For example: discussions about top line production results and being able to increase or sustain staff in future seasons is vital to the success of the farming operation.
Having clarity over the numbers can help reduce stress and give confidence to farmers in their decision-making and this is significant, given how closely linked financial security is with wellbeing. For most farmers, this doesn’t have to take hours out of the day if they are making the most of the technology and services available from their advisors.
When almost one third (32 per cent) of farmers would actively like more support and assistance with financial planning and decision-making, there’s a huge opportunity for accountants to add more value to their farming clients.
For example, moving from annual to more frequent catch-ups allows both farmer and accountant to regularly track results using up-to-date data and make any adjustments necessary to stay on plan throughout the year.
Unsurprisingly, our research shows the majority of farmers say their most prominent financial concerns in the near future are environmental compliance costs (70 per cent), as well as the price of commodities (48 per cent) and water (37 per cent) and land valuation (31 per cent).
These things aren’t going to disappear anytime soon. So how do we help our agriculture sector thrive in 2021 and beyond?
The power of bringing together real-time data, easy to use financial technology along with the expertise and perspectives of both farmer and accountant forms a bigger picture of the business as a whole, and leads to informed decisions that can help measure and achieve both operational and business goals.
And up-to-date data means more effective forecasting to plan and prepare for those compliance based costs and concerns. Being able to forecast for known concerns means you’re able to be proactive, rather than reactive.
If you want to get more out of your business, talk to your accountant about the information and tools available and how you can use these to prepare for FY2022.
Cameron Anderson is the head of Agribusiness at Xero.