Bringing the cloud onto the farm.
I met up with Tom Hanning, a farm accountant with our sister firm Polson Higgs, after his trip to the Mystery Creek Fieldays 2019 in Cambridge.
Rhodes: Tom, you've recently been up to the Mystery Creek Fieldays in Cambridge. Was there some exciting new technology on display? Aside from test driving a new work ute, what were some of the highlights?
Tom: It was a great trip and cool to see the latest and greatest in the agri-space. There was (not surprisingly) a focus on the environment and sustainability, from irrigation sensors which link to your phone, to advanced effluent treatment systems. Health & safety is another key area on farm nowadays and some of the technology available, such as farm-track driving simulations, were amazing.
Rhodes: Was there anything that surprised you at Fieldays?
Tom: I spent a bit of time at the Xero and Figured exhibitions, which for those that don't know are a leading accounting software option for farming businesses totally based in the cloud. I expected to see mainly rural accountants visit the stall, but I was blown away by the number of farmers that were calling in and asking questions on how to use the software more effectively. They weren't just stumbling across it either. They were actively seeking out the stall for a live demo. That was great to see, and it shows the ownership farmers are taking around the financial side of their businesses. It has taken a step in the right direction, especially with the arrival of cloud accounting.
Rhodes: Come on Tom. What do you mean by 'cloud accounting'?
Tom: Sorry about that Rhodes. You are right. We get caught up in the jargon sometimes. 'Cloud accounting' in short is accounting where all the data is on the internet rather than being in a computer on the desk at home or at the accountants.
Rhodes: Have you seen a shift in the level of involvement from farmers on the financial side of their businesses with the arrival of cloud accounting?
Tom: Yes definitely. Online software is easy to use and provides up-to-date information for the whole rural team including the farmer, their manager, the accountant and their bank manager. There has been strong uptake. It's much easier to train farmers on how to use these types of systems because we're not restricted by having to install clunky desktop-based programs and we are able to talk through any issues easily over the phone from anywhere on any internet-capable device such as a computer, tablet or cell phone. Gone are the days of the shoebox being dropped into the accountant... Almost!
But I think it's more than just a change in what tools are available. There's also an attitude of 'if you don't measure it then you can't improve it'. So, farmers are taking more of an interest in the numbers. They're wanting to track performance to identify areas they can tweak, and they are also wanting to plan ahead so they have a map for the season ahead.
Rhodes: How has this changed your role in working with farmers?
Tom: I think you've covered it there Rhodes. We are increasingly working with" farmers as part of a rural team, to plan and track performance. Rather than simply filing their tax returns and preparing a set of accounts for the previous season, looking backwards. We are more with them, looking forwards.
Rhodes: Is there any general advice you could give to people involved in rural business that want to upskill themselves and get a better understanding of their financials?
Tom: There is some great information and resources available on the NZ Beef & Lamb and the Dairy NZ websites. As a starting point I would suggest exploring some of the business modules, budgeting tools and interactive videos.
The Red Meat Profit Partnership (RMPP) also offers funding to Action Network Groups to research areas for farm improvement. The feedback from these groups has been positive and I would encourage farmers that aren't already to take part. I recently co-facilitated a "Taking Ownership of Your Financials" workshop where we looked at the key areas of financial statements, going on to calculate a set of key performance indicators and using these to benchmark the season against other similar farms.
I would also recommend discussing a budget with their accountant/rural advisor. It's important to take part in preparing your seasonal plan and to understand what is behind the numbers. If you have an input, you'll feel a sense of ownership and will be more driven to achieve the targets you set out to achieve.
Rhodes: Thank you Tom. Big things are happening and making a difference down on the farm where the concept of clouds takes on another meaning.
By the way Tom, how old are you?
Tom: 28. But don't worry about that Rhodes. A lot of the farmers taking up cloud accounting are in their 50s and 60s. It crosses all ages and boundaries. It is so 'now'.
Keep asking great questions ...