By Peter Martin
In a tough farming environment, a competent financial team has never been more important. There’s no room for mistakes in your numbers. Whether you have a whole department or just one person to handle finances, your financial team needs to:
- Perform data entry that accurately captures and reports all financial information and fulfill daily functions, such as paying bills. This typically is done by someone with a title of bookkeeper.
- Ensure financial records are accurate, reconciled and routinely closed, ideally on a monthly basis. Often known as the controller, the person in this role oversees financial checks and balances and confirms the numbers make sense.
- Think long-term about where your company is going, what it will take to get there and whether you will have adequate capital to accomplish your goals. This is the role of a chief financial officer (CFO). It’s often, but not always, filled by the company’s owner.
Who’s serving these needs on your farm? Many farms can’t justify hiring a controller, relying instead on a low-paid data-entry person or outsourcing the controller responsibility. Whichever you choose, take an extra level of precaution to make sure your financial and accounting records are accurate. Nearly every farm I visit has room to improve the quality of information it relies on.
If you can’t serve as your company’s CFO, consider hiring a professional, outsourcing the job or partnering with a neighboring farm to share the expenses of an expert. A good CFO has an accounting or financial background but does more than crunch numbers. He or she understands the big picture and can help you realize a vision for progress. Ideally, your CFO will produce a monthly “dashboard” report that quickly and easily displays critical information, from costs and revenues to cash flow and operating metrics. Sure, a certified public accountant understands the numbers, but I’m talking about an expert who can be part of your leadership team, who can use his or her accounting and finance knowledge to elevate the conversation about your organization’s growth.
Yes, there are costs associated with filling these financial roles. A return-on-investment analysis will determine whether or not the cost justifies hiring one or more financial professionals. Not long ago, I spoke with a farmer who had hired a CFO a year earlier. He had been nervous about bringing on a financial specialist, but the benefits have far outweighed the cost. In fact, it’s worked out so well for his bottom line he has abandoned plans to share the CFO and related costs with another farm.
Anyone focused on growth must consider bringing financial experts on board. As CEO, you likely have a full plate of responsibilities and little time to examine all your farm’s financials. You require timely access to accurate information to make the best decisions possible. To move forward, you will need others to help you think through—and execute—your growth plan, to share your vision and help enlighten it.
You might find your financial team members among lenders, accountants, attorneys or other advisers. Just be sure your team is generating accurate and timely information, then analyzing what the numbers really say and helping you make the best use of those results.
The right financial team can free you up to focus on generating revenue or creating other opportunities. You just have to be willing to take the plunge.
This column is not a substitute for financial advice.