Farmers urged to take new approach

Accounting for the farming sector can be complicated, as it is one of the most unique and varied industry sectors. More so than most businesses, they experience factors beyond control that can affect finances. Here ANDREW RAWLINGS of Whittingham Riddell looks at the benefits cloud accounting software can bring.

Cloud accounting softwares offer multiple benefits, which is why many of our farming clients are making the switch. Additionally, they will be and should remain compatible with the 'Making Tax Digital' project as they receive free regular software updates.

There are three main reasons that clients are making the switch:

1. You can update your accounts record at anytime from anywhere on the farm: farmers, often have little spare time, whereas cloud accounting software can free up time, by enabling you to update your accounting records instantly.

You can keep a record of almost anything: here are some examples:

Subsidy schemes

As one of the most critical industries, subsidies and grants are often available to farmers and landowners to help them maintain the countryside and support agriculture. It's important to keep track of subsidies, especially direct payments because then the correct accounting treatment can then be considered with your accountant and tax advisor.

Stock levels

Working with livestock can be problematic for many reasons, including keeping track of stock movements. You can access the software from your mobile device and record stock movements instantly rather than waiting for the accounts year end and questions from your accountant.

Capital Expenditure

The costs for new equipment can affect your tax bill and cash flow. Cloud softwares allow you to keep a proper record of any purchases and sales, meaning cash flow budgets and tax forecasts can be updated instantly.

Profitability

Farm profitability can be difficult to measure without accurate records as costs per hectare/ milk yields or livestock market values only give an idea of current farm performance. Good quality farm accounting software can help you understand farm profitability, as it takes overheads and any underlying costs into account. It can then produce forecasts and predictions based on past trends.

2. Cloud packages offer a simple and effective way to review and manage existing and future maintenance costs and the expenses that come alongside. Ineffective management of agricultural land and buildings may result in depreciation and a lack of productivity. High costs can be accounted for and reviewed quicker with the support of Cloud software.

3, You can let your accountant know what’s happening in real-time which can improve your farm's efficiency: cloud accounting can have direct feeds in place for banks and farm suppliers, running in the background, allowing access to all your resources, suppliers and partners in one place.