New interactive software will sophisticate farm accounting
In the next 12 years, record keeping on the farm will undergo sweeping changes, and software experts are convinced that technological breakthroughs will provide farmers with even more crucial data and analyses.
"This will make farm management easier," says Ken Hilton, president of Red Wing Software. He says the No. 1 change on the horizon is connecting production data directly to accounting software.
"We’ve been working on an integrated solution since 1986, and we’re getting closer," Hilton says.
Kent Vickre, state coordinator of the Iowa Farm Business Association, agrees with Hilton. "GPS linked to accounting software—that’s what I see," Vickre says. "Farmers will be able to take variable-rate planter data and overlay that with financials."
Today, dozens data silos exist, and shifting data from one to another can be challenging, says Eric Jackson, president of Conservis. "By 2025, we’ll be able to merge all that," he says. "We expect to deliver most of that in the next two to four years."
It’s difficult for farmers to know what production data means on an accrual accounting basis, Hilton adds. As a result, calculating precise impacts to the bottom line can be complicated.
Technology that’s coming down the pipeline should lend itself to the collection of more accurate data.
Brian Stark, a spokesman for Trimble’s agricultural division, says cab displays will capture more accurate field records, including details about the equipment used and personnel working. "This will streamline the process of managing field records and tracking production costs," Stark says. Farmers will be able to view their information on the cloud or one central location, allowing for quicker decision-making, he adds.
Hilton uses fertilizer as an example. "By 2025, when a farmer calls a dealer to place an order, the dealer will send an electronic invoice, outlining how much fertilizer will be applied to each acre for each field and the cost," he says.
This data will automatically transfer into the accounting file. It will work with all associated farm input costs, Hilton predicts, noting that tomorrow’s software will also have the ability to calculate costs per acre.
Furthermore, invoices will be automatically paid. "This will make present-day book keeping obsolete," Hilton says. Norman Brown, president of the FCS Systems, agrees.
All data, from the size of equipment used to different production practices, will have a cost and return attached to it, Brown says, adding that all of these variables will be merged in one sophisticated system. "Too often, we’ve made decisions based on production coefficients without looking at cost," he says.
Smart Data. The increase in quality data puts a premium on analysis. Because the new software will automatically calculate costs and returns per acre, Hilton says analysis becomes easier. New accounting software will calculate whether a producer is overstocked or understocked with regard to equipment and make recommendations for the "right size." This could also apply to adding or selling land. Software could show per-acre costs of farm rental options.
Such advancements will radically change farm management. "A farm is really an open-air manufacturing plant, with weather," says Conservis’ Jackson. New record-keeping and analysis tools will enable farmers to become more like CEOs of mid-scale manufacturing plants, with the ability to make profit decisions at the micro level in a way not imaginable today. "You can’t manage what you can’t measure," Jackson says.
The increasing sophistication of data might require the expertise of a controller or CFO who specializes in data analysis. Brown says that farms might want to consider sharing one or the possibility of adding a virtual CFO to the team.
The way we traditionally access and input information could be forever changed. With the introduction of technology like Google Glass, Hilton says farmers will have the ability to see and comment on everything happening on their farms in real time.
"The future will be a more interactive approach to gathering and analyzing data with a new wave of sophistication and knowledge," Brown says. "We can get overwhelmed by it or surf with it."
For more information about advancements in technology that will change the future of farming, visit www.farmofthefuture.net.