In this article, we will explain the computerized farm record keeping through various commercial software programs that can do an excellent record-keeping job on the farm especially as most people begin their search by asking: Is there a simple computer program that will keep my records like the farm account books?

A concern of many financial consultants and lenders is that many farmers lack adequate records to monitor and analyze the financial health of their farm business. Lack of financial data makes it difficult to determine proper debt loads or to develop plans for businesses with major financial problems.

A variety of methods could be used in collecting the necessary farm record information: hand-kept records, and simple or complex computer systems. As farm size and or debt increases, many farmers and lenders look for computer programs that allow fast data entry, have internal checks for accuracy, and allow summarizing the data in a variety of ways.

In recent times, numerous commercial software programs can do an excellent job of recording basic income and expense data for farmers, plus quickly summarizing and preparing a variety of financial reports, while not ruling out hand-kept records, there are some basic questions to consider in selecting a computer record-keeping system.

In today’s agriculture, record keeping has gone beyond the manual work and use of computers to enter records of farm activities. Record keeping and accounting have been further made simpler to shorten the time spent and improve and increase accuracy and efficiency.

Numerous software such as Agrivi, Quicken, Granular, Trimble, FarmERP, Farmlog, Quick Books, DacEasy, Agworld, and Peachtree to mention a few are available today and their uses range from Managing risk, forecasting and measuring profit, measuring and tracking field activities to developing crop plans. Of course, the need, relevance, and usage of this software will depend on the size, scope, and sophistication of the various farm enterprises.

The focus will be on software (a computer program that performs various tasks) rather than the hardware (computer and printer).

Farm record keepers can pick their software from four groups:

1. Simple cash systems: Quicken

2. General cash accrual accounting system: Quick Books, DacEasy, peachtree

3. Farm Cash accrual accounting systems – PCMars, Transactions Plus (TA+) by FBS Systems, Redwing

4. Add-ons for analysis: Spreadsheets, FINPACK, AFRA by FBS.

Advantages and Disadvantages of Each Systems

1. Simple cash systems

In a simple cash system, users can record all cash transactions of both the farm and family. Quicken is the only program listed due to its widespread use across the United States of America. Its popularity is due to the ease of data entry and to its low price. This single-entry system is essentially an electronic checkbook. However, it allows users to track loans, stock portfolios, and other financial/assets.

The ability to easily enter data, write cheques from the computer, reconcile the checkbook with the bank statement, and quickly create reports for financial and tax purposes explains its broad acceptance, there is a payroll module that can be added which is adequate for the firm with only a few employees.

Critics of Quickenpoint to producers with limited knowledge of accounting concepts who fail to properly classify income and expense entries that lead to flawed reports, Quicken does not have a chart of accounts with income and expense categories specific to agriculture users can correct this problem by contacting extension agents for training and obtained a sample chart of accounts to use with their farm records. Others fault Quicken for the lack of fields to track physical quantities.

Properly used, Quicken can provide useful, accurate summaries of all cash transactions, including sales and purchases of capital assets such as machinery and breeding livestock. Once the depreciation schedule is created, not by Quicken, producers have all the data needed for tax reporting.

2. General cash accrual accounting systems

Three programs: Quickbooks, DacEasy, and Peachtree are listed under general accrual accounting systems. QuickBooks is representative of this group. QuickBooks has an excellent chart of accounts specific to agriculture. Reconciliation of computer accounts with bank statements is quite easy. Double-entry features allow either cash or accrual reports, and firms with employees enjoy the ease of generating payroll checks and all related employee reporting.

The user begins by entering a beginning cost basis balance sheet. As daily receipts and expenditures are entered, the balance sheet is updated. But unless the user also records transfers of feed from inventory to livestock, monthly depreciation, etc the intra-year balance sheets are not correct. For farm users, a balance sheet once a year is typically all that is useful and necessary.

This is accomplished by taking a year-end inventory and entering the adjustments, including depreciation to make the year-end balance sheet. The beginning and ending balance sheets, plus cash receipts and expenditures give the user an accrual income statement, thus providing your basic financial statements.

The use of a program such as QuickBooks does require some knowledge of accounting. Again, these are general accounting programs and may not allow for recording physical quantities. There are some training materials and Web sites that can assist producers who wish to use such programs. Like Quicken, it allows you to separate the data into enterprise groups, such as dairy versus crops.

To produce accurate financial statements, only information relating to the farm business should be recorded. If a computer is used to track family income and expenses, you should have separate checkbooks and use Quicken to record all nonfarm transactions, while more expensive than Quicken, the price tag is still attractive to many small businessmen, including farmers.

3. Farm Cash accrual accounting systems

The farm cash accrual accounting systems require some knowledge of accounting. Most focus only on the farm business, but some allow family or other business data to be kept in the same system.

Trying to integrate many programs, especially the integration of feed produced, purchased, fed, and sold with all cash transactions can be a daunting task. By starting with the basic program and adding others as needed, major problems should be avoided.

Getting Beyond Just Keeping Farm Records

Guide on How to Use Computerized Farm Record Keeping

Any of the above types of record systems can get annual summaries of cash receipts and expenses. This includes the sale and purchase of capital assets, principal and interest payments, and additions/borrowings. Obtaining a financial statement and analyzing financial position requires using the data in a separate program.

This may be an additional module from the software company, or it may be a separate program. In either case, the chart of accounts used must match up with the grouping of income and expense categories in the other program.

Spreadsheets are available that can be used with year-end inventory data to develop balance sheets, income statements, and analyses. Check the Montana State University website for ones currently available, little cash outlay is required, but you will need to spend time to understand how to collect and enter the data to do it right.

FINPAC provides another way to develop and analyze financial statements. It is also possible to use a program that is integrated with the basic software like TA+ or Red Wing.

The Best Program to Use for Computerized Farm Record Keeping (System) for Farm Business

Which program (system) is best for your farm business? No one can predict which program is best. The following may help in the decision.

1. Examine farm-specific program if you:

a. Need complete, well-documented financial statement

b. Have, or are planning on a large amount of debt

c. Have many employees

d. Have someone who has some knowledge of accounting

e. Foresee a need for more extensive records in the future.

2. Examine cash-based or generic programs, e.g Quicken if you:

a. Keep records primarily for tax purposes.

b. Prefer to use spreadsheets, FINPACK, or an accountant to generate and analyze financial statements.

c. Have few employees

d. Can get needed production data elsewhere

e. Have little knowledge of computers.

In summary, we have learned that:

I. All accounting software discussed in this unit allows checks to be written with the computer as the data are entered.

II. All allow for reconciliation of accounts with bank statements- a major step in improving the accuracy and completeness of farm business records.

III. Reports can be tailored to the needs of the tax preparer, accountant, and manager using the computerized software program for record keeping.

IV. The major disadvantage for some is that they all require the use of a computer.

V. Any program can get the needed cash receipt and expense data. However, to get useful financial statements an inventory must be taken at the end of each business year. Without this, it is impossible to develop accurate balance sheets and income statements.

VI. Farmers who need accurate, complete financial statements and analysis should consider using some form of computer record system.

VII. Such statements can be prepared using a simple cash-only system like Quicken when used in conjunction with spreadsheets other software programs such as FINPACK or the AFRA program by FBS or in conjunction with an accountant.