Are your farm accounts records giving you the information you need?

Could you benefit from farm accounts software?

Effective financial record keeping in business relies on a well structured farm accounts system.

Close control of costs, being able to quickly find the information you need, spending wisely to get a good return on investment and being able to quickly and easily consolidate information to pass to accountants, your bank and HMRC can all be dependent on how good your financial system is.

5 signs of good farm accounts and farm accounting software:

1, Accurate records. This gives you a true picture of the financial position of your business. Information recorded accurately can also save your accountants time so it could save you money in accountants fees.

2, Current cashflow view. Businesses often struggle because of cashflow. Spending when you don't necessarily need to can be risky, it can also be costly from a loan and overdraft point of view. If you know the exact details of your cashflow you can reduce the risk of a cashflow problem because you can make expenditure decisions based on your actual situation e.g. delay expenditure on things that can wait and spend on the priority things.

3, Bank reconciliation. Ability to easily reconcile what has happened in your business with what goes through your bank account. Some farm accounting programs can help you reconcile payments and receipts leaving you with a long term record that you can easily refer back at any time. This means it should be simple for you to show in detail your business accounts if you undergo, for example, an income tax, PAYE or VAT inspection.

4, Budgets. You have a budget for the year that you can easily monitor. A budget means you can see how your business is performing at any point in the year compared to expectations. You can get a good understanding of what has or has not met financial expectations, the impact that has had and from there you can evaluate what you can do to improve business finances going forward.

5, Efficient data entry. If you can enter data just once e.g. a payment or an invoice, and your system applies that single entry across your accounts (such as cashflow, customer & supplier payments and invoices, journal, profit & loss statement etc.) without you needing to re-enter/re-write the data. This single entry can reduce the chances of human error compared to entering the data a multitude of times, will save you time and means that if you make a mistake and need to change it then you only need to do so in one place for it to update everywhere else.

If you have started looking for an alternative from your current accounts system, maybe because you've got too much paper, can't find the information you need, don't like your current software, manual calculation issues or it's a time consuming process then factors to consider when searching for a new system include what information can I record? Does the system suit agricultural businesses including financial years and farming years? Can I easily refer back to information? Can I easily use the system to produce financial information required by my accountant and bank?

Switching to a new farm accounts system can be daunting but if you choose an agricultural accounts software solution that offers good quality training and support then you'll find the switch a much easier process - and you'll have someone there at the end of the phone if you need help during the course of the year.

Justifying the cost, particularly for smaller businesses, can be a challenge. However, when you take into account your time when you could be doing something else or your accountant's time trying to understand your accounts you could save time and money.

A range of accounts packages from basic small business cashbook software through to advanced software for larger enterprises are available from Farmplan.