I joined Figured in July of this year having spent the past five years in rural banking. Why would I leave the perks and security of a bank job to join a startup you ask? The truth is that I believe farmers face enough challenges and I saw an opportunity to be part of a solution for at least one of them - access to real-time financial information to help make better business decisions to support them and their families now and into the future… and I wanted to be a part of it.
From a bank perspective, Figured plugs some critical gaps for rural financiers, and for me this was timely access to information, integrity of that information and visibility of the financial plan. After a few years in relationship management I ended up in credit - the cold, clinical, decision-making part of the bank where we were responsible for managing the risk of the bank’s rural loan portfolio, or in other words managing loans to ensure they can be repaid.
Decisions were made using an assessment of the farmer's physical and financial management ability, in addition to analysis of the financial information at hand. The former would be from the rural manager through their relationship with the farmer and their understanding of the business while the latter would often be the most recent financial statements (often over a year old) in addition to a budget prepared by either the farmer or the farmer and their rural manager together.
Right away, you can probably see the issues here. The most recent hard data we had was often over a year old and the budgets prepared by the farmer or farmer/rural manager not only varied in quality and consistency but also took up a lot of time - from the farmer finding the time to prepare, to scheduling a meeting with the rural manager and reviewing, to the rural manager having to re-enter into the bank's own system for analysis - which was often weeks from creation to actually utilising.
Where is the accountant or adviser in all this? In my experience the accountant or adviser were only brought in when things were getting tough or when the bank asked them to get involved. By this point there has usually been significant losses often accompanied by some firm words, tightening of loan conditions and, in some cases, increasing the interest rate (which is directly related to the risk of that loan). All of which comes at the cost of the farmer and all of which could so easily have been avoided.
While I wouldn’t go so far as to say lending decisions were made based on out-of-date information without the input of the accountant or adviser, all of this does indicate some gaps and inefficiencies in the budgeting and credit process where cloud accounting technologies can assist and help to free up time to ensure the right decisions are being made to benefit all concerned. And that is where Figured comes in.
Figured is a cloud-based platform where the farmer, accountant, consultant and bank can work and collaborate together using real-time data to help make the best decisions for their farming clients. Sharing a single-ledger with Xero means this data is of high quality and the inputs of the professionals (accountant, consultant and bank) serves to reinforce the integrity of this information. Together with the pool of historical and current data available, this assists the farmer and the professional team in budgeting and forecasting with confidence, all the while having full visibility of the financial plan and the capacity of the business to deal with change.
Figured has the ability to address all the critical gaps I outlined above:
- timely access to information - we now have information up to the present day and in one place and are not relying on (or waiting for) out of date financials.
- integrity of information - we now have data pulling directly from a Xero ledger in addition to the farmer and the professional team all having had input.
- visibility of the financial plan - we now have full visibility of the financial plan and a better understanding of the financial management and the input of their professional partners.
Coming full-circle to a hypothetical lending proposition now in front of the credit manager: through Figured the bank now has a clear view on the financials and can take comfort knowing they are current and up-to-date and have been prepared by the farmer and their professional team. The bank can also take comfort in the financial management of the farmer and that there is a plan in place and they have the resources to tackle any challenges.
All of this serves to meet the needs of the bank, the farmer and the accountant or adviser simultaneously. For the bank, it's speed-to-market through faster decisions and better risk management through more timely and accurate information; for the farmer it’s a demonstration of financial management which reinforces trust and strengthens the relationship with their bank; while for the accountant and the adviser it’s a platform to introduce and facilitate their advice and share their expertise.
In summary, farmers face enough challenges as it is and with increasing volatility in global markets, uncertainty around commodity prices and unpredictable weather it's good to know there is a now a solution for farmers to facilitate discussion and engage with their professional partners to maximise the benefits for the farmer and their family and minimise the risks for the stakeholders.