Farm Progress

Cloud-based accounting software offers added opportunities for collaborative decision-making.

Willie Vogt

August 10, 2022

3 Min Read
Tablet with cloud-based computing icons
NUMBERS IN CLOUD: The rise of cloud-based accounting systems offers an opportunity for farmers to have more advanced financial analysis and support for precise decision-making. ra2studio/Getty Images

There’s a long-standing tradition in agriculture regarding bookkeeping. Often that’s an on-farm task where the information resides in a paper ledger. Sure, more farmers are moving their accounting to programs on a computer, but usually those programs are local — any sharing has to be done manually with printouts or flash drives to an accountant.

But there’s a change happening in the accounting world, including in agriculture, with services migrating to cloud-based systems that can create a new approach to keeping the books.

“We’re seeing more ‘CFO-in-a-box’ kinds of approaches,” says Tanner Hoffman, general manager for small-business growth at Xero, a cloud-based accounting system. “We work with a number of accountants and accounting firms that use our tool when working with farmers. These accounting partners are looking to move beyond being a resource for yearly taxes and compliance to higher-level advisory services for the farmers and agricultural business they support.”

KCoe Isom is one firm that uses Xero to engage clients, and Hoffman notes large and small accounting firms are finding value in an accounting system that’s cloud-based.

Hoffman is clear to note not all cloud-based accounting systems are the same. “Some are simply using cloud storage for your information,” he says. That can be a benefit because having farm information stored someplace safe matters if disaster strikes.

However, some systems are becoming fully cloud based, where the math and analysis happens away from the computer. This creates an opportunity for accountants to engage customers in new ways, including the CFO-in-a-box concept, where your accountant is engaged in real time and can work off the same accounting system.

This approach allows accountants and bookkeepers to work more frequently with your farm business data to make sound financial decisions because the information is more easily available.

Complexity brings opportunity

Farming is getting more complex. Often as farms get larger, they create different entities to better manage tax risk, or liability risk. But rising complexity can impact financial management, too. Hoffman explains that a financial adviser using a cloud-based accounting solution can better analyze a business and find opportunities for improving performance.

Hoffman doesn’t see the bookkeeper’s job on the farm going away. “Someone on the farm can still be there to enter the transactions into the system, to keep track of income and expenses,” he notes. “But with this system, the information is more easily available for analysis.”

Having your financial information available right from your smartphone could make farm management easier, too. Hoffman cites the example of a farmer who finds out one morning that a neighboring quarter-section has come up for sale. In that example, using traditional bookkeeping, which doesn’t happen every day, the farmer would have to scramble to pull information together for the bank. “It could be a missed opportunity,” he says.

Xero’s cloud-based approach combined with its artificial intelligence capabilities would allow that farmer to simply share information electronically with the bank as needed. “You can turn that on or off as needed,” Hoffman says.

He adds there’s value in today’s banking relationships to have this up-to-date dashboard of financial information available regularly.

Back to the land-for-sale example, the banker could easily see the state of the farm’s financial position to speed determination of loan availability.

And as for the smartphone? With a cloud-based program, entering transactions no matter where they happen is easier. “I can use my smartphone or the Xero app anywhere I am to capture a transaction and move into the system,” Hoffman says.

As you look at your accounting system, the idea of using a cloud-based service like Xero may offer you improved management opportunities. Cloud-based information is already common on the farm, thanks to systems like John Deere Operations Center and Climate Corporation’s FieldView. It makes sense to look at how your accounting could be handled the same way. Learn more about Xero at xero.com.

 

About the Author(s)

Willie Vogt

Willie Vogt has been covering agricultural technology for more than 40 years, with most of that time as editorial director for Farm Progress. He is passionate about helping farmers better understand how technology can help them succeed, when appropriately applied.

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