With volatility in the dairy payout, there has never been a more important time to have a clear picture of your farming business’ performance, says Dairy Women’s Network.
If approached carefully, this could be a challenge easily met.
So, how to approach it carefully?
There’s already plenty going on whose export value could be increased. But I prefer to focus on how to improve the efficiency of what we’re already doing.
I often find that farmers and farm suppliers are more comfortable investing in technology to be used at the front line of their business, rather than improving efficiencies in the back office. During a recent visit to a farm in the south, the owner proudly showed me his new irrigation technology. But in his office I noticed a pile of paper receipts he had ready to give to his accountant – something he did quarterly.
To run any good business, cashflow is vital. It’s critical that your business is paid on time and that you keep on top of payroll and what you owe other businesses. If not, this can have a negative impact on everyone.
Yes, there are challenges. Nobody loves invoicing, accounting and finance. So, what agribusinesses need are advisors and good systems that help them to be as efficient as possible in all areas of the business. An accountant can act as an invaluable source of business advice. With research confirming that small businesses working with an accountant grow their net profit 23% faster than those that don’t, why wouldn’t you?
An accountant can talk to you regularly about what you can do to improve your financial management processes, including investment in new technology. One thing to think about is moving your accounting to the cloud, which is cost effective and accessible. You have real-time access to information, which is easy with services like Xero’s Mobile app, meaning farmers and their suppliers can work off the same information. It also means you can recover files in the event of a disaster.
The other key thing every business should be doing is invoicing as soon as work is complete, rather than once a month, by setting up systems to automatically chase late payments. We all know that the sooner you invoice the sooner you get paid. And with Xero you can invoice on the go, so there’s no reason for a delay.
Following up payers, although vital for reliable cashflow, can be frustrating and time-consuming. Sometimes people simply forget to pay but that shouldn’t impact your business. Automatic invoice reminders, which can be sent to your customers at pre-set times, let you concentrate on tasks that are more important while your accounting system chases the payments. The amount of time you used to spend on admin tasks such as these can now be spent on leisure.
Growing agri exports as a country depends on businesses taking steps towards becoming more efficient, regularly reviewing processes across your whole business and investing in new technology where required. Improving the efficiency of your invoicing, accounting and financial management is a great place to start.
• Paul Churchman is the head of agribusiness at Xero.