A previous installmentof Growth Path Accounting covered the Step Two question, "What are your information goals?" Before we go into an in-depth comparison of the methods, we're pausing to answer potential objections to this "GPS" accounting implementation strategy.

Last month we reprised a series that was first published over 20 years ago documenting a proven process used by a generation of FBS users. While technology has advanced in quantum leaps, the growing complexity of farming operations requires the same core decision-making processes to select, implement and grow an accounting system.

The Assumptions Behind Growth Path Accounting 

Prescription Farming for Your Financial Records

1. Connecting production data directly with accounting software.  FBS already includes “tight and right” integration between production activities/inventories and accounting based on common definitions that simplify input and produce comprehensive reports.
   
   
2. Dozens of data silos.  Last month we touched on the 50 or so sources of data we can import from, including precision farming technology, feed mills, packers and Conservis apps.  Perhaps these diverse products will be more standardized in the years ahead through initiatives from organizations like AgGateway and informal market forces.
   
   
3. Converting production to accrual.  E.CLIPSE managerial accounting automatically converts activities to costs that flow from raw materials through work in process through finished goods on the balance sheet to cost of goods sold on the income statements.
   
   
4. More accurate equipment and labor records.  E.CLIPSE also performs activity-based-costing to monitor the resources consumed through each phase of production and match those costs with hours, acres, miles, bushels, pounds and head.
   
   
5. Electronic invoices.  Even though there’s little standardization yet in agribusiness FBS can already import invoices and sales receipts from a wide range of formats and transfer the management detail (quantities, groups, fields, products) as well as the dollars into the farm’s central accounting and management information system.
   
   
6. Smart data/measuring what you manage.   Rather than viewing accounting as a “rear-view” of a business used to determine historical “cost of production” for raised products (which are often affected by external factors like weather and disease), activity-based costing evaluates the efficiencies and margins of each responsibility center.
   
   
7. Virtual CFO.  Just as progressive, growing operations rely on internal specialization and outside consultants for production analysis they are also tapping into virtual CFOs and controllers who can remotely oversee the financial details of the business.
   
   
8. Google Glass.   OK.  Unlike the other technologies, most of us will have to wait a few more months before we find this “toy” in our stockings.

The November 2013 issues of Farm Futures Magazine is packed with valuable tips for guiding you to the financial future of your farm.

Life's been good…and easy…for most crop producers in the past seven years.  Changing conditions, though, will require a new emphasis on proven farm management accounting principles aided by 21^st Century technologies.

Two recent articles in the farm press validate how far farm management technology has come, yet how far it has yet to progress to make a serious business impact.

"The next generation of agricultural managers are asking how the industry can enable seamless data exchange between machines and Farm Management Information Systems.  The costs of exchanging data are high due to the lack of common implementation guidelines, data transfer protocols, message standards, and standard reference data.  Producers report that it is difficult or nearly impossible to move data from one system to another.  To do so almost always requires data reentry, manual data transformation, and/or specialists to manage data."

The PC industry has been in a funk this fall, not just from competition with tablets but also from waiting for the arrival of Windows 8.  Now that Win8's the default operating system at "big box" stores and Windows 7 is getting harder to find on shelves which is your best option--especially if your goal is business applications rather than social networking?

“Choose your rut carefully. You’ll be in it for the next two hundred miles.”

They're widely used to to slaughter sassy pigs with angry birds, but how well do tablets and smart phones work to manage actual production of pigs or crops?

You can count on the "Extra" edition of Farm Futures magazine to concentrate on relevant management topics.  The 2012 edition, Power Up Profits, contains two articles that dovetail nicely with the objectives of FBS Software.

We ran across this AgTalk post by Mark Wilsdorf, who markets an add-on to Quickbooks for farmers.  If anyone has figured out how to make this ubiquitous small business accounting program function as an effective farm financial management tool it would be Mark.

Attendees at the 2011 Ag Bankers Conference experienced a warping of the time-space continuum as 93 percent reported that their farm customers were managing their farms like it was 1981, not 2011.  Unbelievably, only seven out of 100 lenders had clients using accrual accounting.