Most agri accountants know their clients well, but they usually see the farm's numbers too late to be able to help year-round. For most practices, it's how things have always run. One Southland firm is making a change.

Dairy farmers only ever see one set of books - their own. That means, from inside the farm gate, it's hard to tell if a bad season is just that, or something to do with how the farm is being run.

Their accountant is one of the few people who can bring that outside perspective, the mix of detailed regional knowledge and an intimate view of the farm's own books. But those views are only as useful as the numbers behind them, and for a lot of farms those numbers only come together once a year - for compliance, well after the decisions they could have shaped.

Invercargill firm McCulloch & Partners is working on changing that, bringing its farmers into a single platform where partners can capture both the broad and detailed view year-round. Here's how it's changing their work.

Why a Good Year on Paper Can Still Mislead

Farmers are busy people, and bookkeeping isn't the job they get up in the morning to do. As a result, farm numbers tend to run on a compliance deadline.

“Farmers normally don’t have a handle on their numbers because they are too busy farming,” said Megan Clark, a partner with the firm. “Bookwork is done at nighttime the day before a GST return is due and they just want to basically get the transactions coded so they can file the GST return.”

Coded transactions are enough to file a return and, eventually, to produce a set of annual accounts. But they're missing an important piece of the puzzle, from an accounting point of view: the farm's production story.

Costs and invoices tell the farmer what's being spent or received, but monthly kgMS, stock movements, and feed explain why the results look like they do. Without those numbers, the accountant is holding a profit figure with little to explain it, and can't help in nearly as much detail.

Learn more: Handling Geopolitical Risks as a New Zealand Dairy Team

Why McCulloch & Partners Wants the Missing Story

“You can be that typical accountant where you can just look at the numbers and tell them, ‘you've had a good year because the profit looks good,’” said James Harvey, also a partner at the firm. “But that means nothing to a net profit when you have to take into consideration drawings, bank repayments, and again, performance on farm.”

A healthy-looking profit can still leave a farm short of cash, and with no clear view of whether next season will go the same way.

How McCulloch & Partners Sees Every Farm at Once

McCulloch & Partners runs its farm clients on Figured, which brings each farm’s actuals from Xero together with its production data and forecast.

“Figured has been a great tool. It’s given us the vision of what’s happening on farm both from a financial point of view but also a driver point of view,” said James.

For a dairy client, milk production arrives straight from the processor and livestock movements update the plan as they happen. The forecast moves with the season, and the partners can see the drivers behind each number.

Learn more: Figured for Dairy Accountants

Seeing Across the Whole Client Book

Having every farm client in one platform via Figured Insights also gives James and Megan a view across their whole book at once.

“We’re able to pull all of our data for our farmer clients into one platform and then we can run analysis over that data,” said Megan. “So you can at scale quite quickly see which clients will be mostly impacted and then direct your energy into those clients that may need to make a decision sooner rather than later.”

If the milk price forecast drops, for example, they can see which clients’ cashflow will absorb it and which won’t, and call the ones who need to act first.

What It Changed for Tom Severn, Dairy Farmer

Tom Severn came into dairy from outside the industry, learning the job from scratch on a Southland farm while raising three children under five.

“You can be a busy fool in farming,” said Tom. “You can do a lot of stuff and not actually make any ground any better than the next person who's doing half as much work.”

Tom’s answer has been a plan he checks the farm against as the season goes.

“By mapping out what you're doing on Figured, you can see: right, I'm doing this, this is the result, this is our feed inputs, this is the output from the cows,” he said. “I use Figured probably too much. I use it a lot. I log in on my phone a lot. It's an awesome tool for me to road map our year.”

Working From the Same File

James is Tom's accountant and business adviser, and works from the same Figured file as his client. He doesn’t need to ring Tom for a stock rec because the numbers are already there, which leaves their conversations free for bigger questions, like whether the farm could milk more cows.

“What makes it click for [Tom] is he understands the drivers of the farm and he's able to look at those drivers and then take those drivers into the financial part of the business, which is key,” said James.

Learn more: How One Dairy Farmer Ensures His Hard Work Matters Each Day

What It Changed With the Bank

When a client needs extra finance, the bank wants evidence: what’s changed, why, and how the farm will trade through it. Because McCulloch & Partners’ clients already have their actuals, stock, and forecasts in Figured, that evidence exists before anyone asks for it, and the firm can report to the bank from it directly.

“Classic example I had, it was actually a sheep and beef farmer who didn’t sell all their lambs as quickly - just due to lack of grass,” said Megan. “So short-term overdraft extension was really easy to prove to the bank because all the information was in there. So you can get bank approvals through pretty easily.”

Where It All Leads: Reassurance for the Farmers

Eight years ago, dairy was going through a bad stretch. Farmers were coming up to James at the McCulloch & Partners Field Days tent, and James still recalls their conversations. The farmers explained their production wasn't good, and said they were struggling - with costs out of control.

They were worried because they didn't realise it was an industrywide problem.

“And I remember saying to one of my clients, ‘Hey, you’re the same as everyone else,'" said James, "and you should have seen the weight go off his shoulders."

“Sometimes dairy farmers can be a very lonely space. They don’t tend to talk to their neighbour. For a lot of farmers it’s just getting some confidence from their adviser that they’re doing the right thing and being in touch, and Figured is improving every single day on that stuff."

To read more about what forward-looking dairy farm teams are doing differently, download our free Dairy Insights Brief.