Farmers’ work is one of the essential parts of the economy, and the world continues to heavily depend on it. An unprecedented rise in the world’s population and consequent surge in demand for food has brought monumental shifts in farming operations.

Technological advancements, in addition, have exponentially increased the output of most industries, and the agriculture industry is no exception. With innovative farming equipment such as autonomous machinery with IoT sensors and techniques like precision farming, farmers can use land and other resources more effectively. These technologies help increase the yield of their harvest and generate more profit.

However, with the rapid expansion of farms and increased revenues, farmers must be able to document and manage their finances appropriately. In recent times, smart agricultural machinery and farm management software has paved the way for farm growth and success. Subsequently, understanding how to do farm accounting can help ensure efficiency and accuracy.

What Type of Accounting Do Farms Use?

Unlike standard business accounting which depends on accrual accounting, farm accounting relies on cash accounting. Moreover, accrual accounting is used for financial reporting in farming. Since farm accounting uses both styles, it is important to understand how and when to use them.

Additionally, keeping accurate and up-to-date records helps farmers prepare for taxes, create financial statements, make well-informed decisions, and measure their farms’ financial health. When it comes to a large number of farms and remote farms, accounting for agribusinesses can be tricky. Farmers may also need to follow different critical rules.

Today, one of the best ways to stay on top of agricultural accounting responsibilities is to invest in farm accounting software which is designed to manage and handle every rule of farm accounting.

Farm Accounting Software: A Brief Introduction

Farm accounting software is designed for the needs of farms, ranches, and agricultural businesses. As with any accounting tool, farm accounting software provides features such as budgeting, inventory management, financial record-keeping, asset deprecation, and more that are essential for proper accounting for farms and agribusinesses.

Moreover, farm accounting software has made it easier to manage farms as businesses, regardless of size. By keeping track of their farms’ performance, farmers can easily determine their expenditures, costs, and revenue through farm accounting software. These financial insights further help farmers increase their farm productivity and profitability.

Factors to Consider When Choosing Farm Accounting Software

1. Type of Buyer

Before choosing the right option, farmers need to determine what type of buyer they are. Small agribusiness buyers may need farm accounting software that supports more sophisticated agriculture accounting functions such as farming expenses, financial records, and profit margins. As the farm businesses reach a certain size, these businesses will need to upgrade their systems for seamless integration into the software. Enterprise and large buyers may also need stand-alone farm accounting software solutions for specific functions.

2. Cost of Farm Accounting Software

Calculating the cost of farm accounting software is equally important as finding the right solutions. Before evaluating the options, the buyers need to find out the costs associated with farm accounting software and when they must be paid. Some typical farm accounting software pricing models include perpetual license, flat subscription fee, and contingent subscription fee. Additionally, there may be fees for implementation, training, data migration, and maintenance.

3. Accounting Programs

Agriculture accounting software solutions should be primarily able to handle a wide variety of agricultural costs. When evaluating these solutions, buyers may also consider if the system supports different types of agricultural inventory, includes appropriate industry standard ratios, handles financials of different farm operations, and forecasts cost based on environmental and market conditions.

FarmERP: Farmers’ Pick for the Best Farm Accounting Software

Agriculture accounting is a niche of its own in today’s tech world. In addition to common modules of any accounting software including payable and receivable accounts and payroll, FarmERP helps farmers keep track of all their accounting transactions and make better financial decisions.

• FarmERP Promises Simplicity

It is clear that farmers are not accountants or bookkeepers, and hence, accounting tasks become quite challenging for them. FarmERP’s farm accounting software is designed keeping these challenges in mind and made easy to install, learn, and use. Easy-to-navigate ‘Help’ icon and immediate prompts for the type of data to be entered in specific sections help farmers track their financials accurately.

• Insights into Comparable Product Costs

Volatility in the agriculture industry continues to persist, and farmers are unlikely to have the luxury of experiencing constant prices on their farm products. FarmERP’s farm accounting software gives detailed insights into the direct and indirect costs farmers put into production. As a result, they can set the price of their output accordingly for better profit margins. This further helps in finding better deals on different production expenses.

• Streamlining Accounting from Farm to Table

FarmERP’s suite of accounting features tracks farmers’ earnings from production processes to sale, providing a report on their financial performance of a season compared to previous seasons. It also aids farmers in setting inventory limits and whole pricing options, as well as charging fees and collecting secure payments. Moreover, better metrics on the financial performance of farms help make data-driven decisions on how to improve profitability while minimising production and labor costs.

• Efficient Record-keeping and Understanding of Taxes

When it comes to agricultural accounting and taxes, farmers need to consider various factors such as knowing what costs need to be capitalized, what needs to be claimed as income, and others. FarmERP’s farm accounting software provides necessary information regarding taxes on different types of income sources and resources for efficient payment and savings.

• Protecting the Future of Farm Operations

FarmERP’s farm accounting software helps keep accurate records of farmers’ production levels in compliance with insurance and the movement of farm products in and out of the farms. It also helps farmers prepare their taxes and update account information on debts and vendors. These are important for future-proofing farms and ensuring long-term profitability.

To know more about how FarmERP’s farm accounting software helps farmers meet their financial needs, reach out today.