Timing is Everything

Have you experienced any of the accounting issues described in the "Timing is Everything" story in the January FarmSmart newsletter?

The (Accounting) Golden Rule

What do you think about this approach to synchronizing accounting and production data? Does it make a difference if dollar values don't tie out? How much work and effort would you save if everything was all in one spot?

Responses to New Website?

What do you like? What do we need to add or change?

(How) Do You Manage Margins?

The traditional marketing objective in agriculture is to maximize prices received. However, Moe Russell of Russell Consulting Group recommends the "crush margin" approach, locking in a target margin per head or acre by computing the spread between costs and revenues rather than focusing only on product market prices. Commodity and Ingredient Hedging (CIH) follows a similar strategy and compares potential margins against historical margin percentiles.

FBS software is designed to 1) accurately compute your own historical margins, 2) project production input requirements, and 3) account for the complex marketing transactions and match them to the appropriate time period and product.

Are any of you doing this, and if so, how? Are you interested in learning more?

Here's a recent article citing Dr. Steve Meyer's emphasizing feed's role in margins this winter.

World's Craziest Motorcycle Commute

Ride along with Andy Brown as he circumvents traffic on the streets of Nairobi, Kenya, during a typical ride home from work. Definitely not for the faint of heart.

http://brownsinafrica.com/

When You Can't Count on Your Accounting Program

Last month we compared the accounting power gleaned from management segments (usually called “cost/profit centers”) versus the “big bucket” accounting approach still used by many producers. This month we’ll switch to another, equally-important dimension: units of measure.

Accounting that counts dollars but not quantities can’t tell you much about your operation. Here’s why:

• Most everything in farming is purchased, sold, used and valued in standardized units of measure (bushels, gallons, tons, etc.)

• In order for accounting entries to drive inventories, quantities must be captured.

• A “per-unit” approach allows meaningful comparisons between segments and operations of varying scales.

• Units explain the source of variance from budgets.
Units of measure in the ag world are much more complex than most other businesses.

• A single transaction can incorporate dual quantities (head-pounds, wet bushels-dry bushels, tons-bales).

• Often the units of measure change between the point of purchase and application (bags-kernels of seed or gallons-ounces of chemicals).

• In addition to these “direct units” associated with accounting transactions, agriculture relies on a wide variety of “indirect units” (acres, animal capacity, hours).

While some of these indirect measurements can be “folded in” after-the-fact, direct units must be captured within the same transaction as dollars, accounts and centers. Numerous work-arounds (recording quantities in notation fields or separate quantity accounts) have been attempted in Main Street accounting programs, but the results literally don’t add up.

November Webinar Schedule

Start you work week off with instant and free training delivered right to your computer screen. Our Monday morning webinars run from 10:00 am-11:00 am CST.

Smart Feeder User-Defined Reports, November 1st.
Preparing your accounting records for year end, November 8th.
Integrating FBS with DTN market data, November 15th.
Accounting for hedging transactions, November 22nd.
Advanced livestock budgeting and margin analysis, November 29th.

To register, e-mail support@fbssystems.com by 9:00 am CST on the day of the webinar.