Western Australia practice, STA Accountants, have a farming background that provides them with a strong connection to their clients.
This first-hand experience of the issues they face, provides valuable insight into the dynamics and relationships of the farming family.
Jane Sparkes, an accountant at STA, says that they see many issues that are common among all farming families. She shares some of this insight below and talks about a typical experience working with farming clients in their practice.
“Steve, the son in the family, is 32, has worked closely with his father on the farm since leaving school and is keen to try his ideas and make his mark. But he also carries the weight of family tradition. The farm has been in his family for two or three generations, with his forebears farming successfully in the area for years.
“Therefore the wish to prove himself is also tempered by the pressure not to fail and not to let his family down. His father, Ron, has been at the helm for many years, has firm ideas about how things should be done and is very conservative with a tight hold on the purse strings.”
Jane says that establishing a viable succession plan is also one of the top concerns facing their farming clients. “From Ron’s perspective, he’s also worried about how he and his wife will eventually be able to retire. For example, will the farm be able to support two families? Can he afford to invest in off-farm assets to provide for his other children in his will, without Steve having to sell off part of the farm?”
She says that although Ron has always been a good farmer with good intuition and a wealth of knowledge of good farming practices, times are changing. “There is a lot more data and technology available to farmers now as well as farming experts, consultants and agronomists. It’s meaning that that generation of farmers are having to ask themselves: will the farm maximise its return by continuing to use traditional farming methods and good old intuition, or what do they have to do to remain viable?”
Jane says it’s common for farmers like Steve to be itching to use new technology available to them, but then find the amount of information available to be overwhelming. So, where do they start?
“This is where an accountant with a farming background and knowledge of the latest technology and tools available to farmers is invaluable."
At STA Accountants, they do this by arming their farming clients with some important tools:
A forum: for the exchange of information and knowledge and family discussions through monthly or quarterly family meetings,
Budgeting: know how the funds can be utilised and plan for the future (including for retirement, aged care, school fees, tax instalments and for off-farm investments), make capital expenditure decisions with confidence and experiment with “what if” scenarios in the event of changing prices or yields,
Tax Planning: certainty of tax liabilities in advance and make tax effective decisions,
Profit Analysis: know which areas of the farming operations are making or losing money. Analyse the profitability of different paddocks or farms.
Production Analysis: drill down into production figures to analyse returns and direct costs, whether it’s the average price per kg or head for each livestock class or the profitability of each grain type.
“The tools that allow us to deliver this service and deliver it in a timely manner are Xero and Figured."
Xero allows the practice to use real-time data so that management accounts can be produced in a matter of days not months. Information is readily available to make timely decisions on pressing issues such as buying a new piece of equipment or a new farm or to determine the effect of a seasonal change.
“Figured’s powerful budgeting capabilities and integration with Xero allow the analysis of actuals to budget and tweaking of forecasts for the remainder of the year allowing farmers to closely predict year end outcomes."
“These tools are changing the way that we do business."
"They allow us to work much more closely with our farming clients to help them make more meaningful decisions and improve their bottom line and we find that very rewarding. It also helps us address succession planning issues in a much more collaborative and positive way as it becomes a much more transparent process.”