Insights in Agriculture

Now’s the time to make up-to-date farm books a priority.

Mykaela Buhr, CPA

 

Inadequate record keeping can can push farmers into making uninformed decisions that may be hurting their bottom line.

Without up-to-date records, how are decisions on your farm being made?

Is your bank balance or available line of credit your deciding factor? Is this tying your hands into selling grain when your bank balance is low at unfavourable pricing?

Or after the excitement of a bumper crop wears off, are you scrambling to make input or asset purchases to avoid paying taxes?

These factors can push you into making uninformed decisions that may be hurting your bottom line, which might go unnoticed until you review your financial statements months after year-end has passed.

With the new year upon us, now is the time to start being pro-active with your farm books.

As farms consistently grow year over year it is time to make a shift in mindset when it comes to record keeping. As you are dusting off the stack of papers to complete your 2025 fiscal year, keep your foot on the gas and start organizing yourself to stay up to date in 2026.

Many farmers can openly admit to the lack of enthusiasm for bookkeeping.

There is a lot involved in running a farming operation, and updated books are often the easiest to push aside when there are grain contracts to fill, crop rotation planning to complete or input purchases to be made.

Shifting your mindset into using your farm books to track trends and profitability can help you understand your business and make decisions to optimize your operation rather than having your hands tied by the fear of taxes or your cash balance.

Advantages of up-to-date bookkeeping include:

  • Monthly or quarterly updates to your farm books can help identify trends in expenses, shifts in inputs or changes in profitability long before your accountant is preparing your financial statements and tax return.
  • Over time, your ability to track trends in cash flow can be used to avoid cash shortages and manage grain sales and purchases as efficiently as possible to reduce financing charges.
  • Lenders appreciate current financial information. New financing will be easier to obtain if lenders have your current financial position rather than just your previous fiscal year financial statements.
  • It’s important to have the ability to make informed, real-time tax decisions rather than spending unnecessarily as year-end approaches. While no one likes paying tax, there may be better uses for your cash if you proactively manage taxable income year over year, ensuring you pay the lowest possible tax rate based on up-to-date financial information.

Farming is already an uphill battle because of challenges such as unpredictable weather, fluctuating grain prices and rising input costs. Taking control of your financial data and collaborating with your advisers can help you make informed decisions.

Record-keeping options

Quickbooks Desktop is a common platform used by many farmers to summarize their farm books.

In recent years, the desktop platform is becoming obsolete and no longer available in Canada for new customers. This shift is forcing producers to change to QuickBooks Online (QBO) or another platform.

QBO is a cloud-based accounting software that allows you to manage your finances anywhere at anytime.

This online software requires a monthly subscription that varies in price depending on the features your operation needs, such as payroll, number of users and ability to create budgets.

QBO has a unique feature built in that allows you to link your bank and credit card accounts to automatically upload your activity and reduce the amount of data entry. There are applications such as Dext that can be used to upload copies of your receipts before they get lost in the endless stack of papers.

AgExpert is a popular farm management software designed specially for Canadian agriculture producers. It is available in both desktop and online versions.

With its focus on the agriculture industry, it provides benefits in terms of inventory and capital asset tracking.

AgExpert Online also has applications designed to assist with uploading your banking activity or uploading copies of your receipts into their software. These features are relatively new to AgExpert Online, but they are actively updating the usability for producers.

Making the transition or shift to a new accounting software can also be an initial investment, but just like upgrading to use GPS when it was first introduced, it can help you make more informed decisions on your farm in real-time.

You can start by setting aside time each month (or quarter) to organize your statements and receipts before entering them into your preferred accounting software.

As you become more consistent, take the next step by reviewing reports directly from your software such as your profit and loss and cash flow statement.

When reviewing these reports, identify trends by comparing to the previous year or month, identify outliers that may require closer attention or compare the year-to-date amounts to your anticipated budgets. The opportunities to analyze and use your data are endless, and your advisers are here to help.

Can you make it your new year resolution to stay up to date on your farm books in 2026 to allow you to use the information to make better business decisions?