Latest / Dollars In The Dirt / #049 - This Software Can Change Your Conversation With The Bank

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#049 - This Software Can Change Your Conversation With The Bank · Dollars In The Dirt

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  Most producers think a budget is something you set at the start of the year and
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  check it later if things get tight. After helping hundreds of farmers secure
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  over a billion dollars in finance, I can tell you that a live forecast that
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  updates with your actual numbers before the cash pressure hits gives you
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  far more options than a tidy spreadsheet after the fact. So
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  in this video, I'm going to show you on screen how we pull actuals from
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  Xero into a live forecast, run a variance report, and move a
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  cattle sale from October to January to see the cash gap and
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  how to handle it. This is Figured On Farm. It's an accounting program that
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  links to your Xero or Myob. and brings in your actual figured expenses
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  and income as they occur into real live data, so into real
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  live budget. As your expenses are occurring, this is rolling across
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  your budget that you set for the year. It's really powerful in terms that you can
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  re-forecast at any point in time using your actual figures
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  that as they occur, but also changing the budget
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  to be able to see what that has and what impact that has on your cash flow moving forward.
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  So we're going to click through this and I'm going to give you a real life demonstration here
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  on how the software works and how this could be used with your business
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  and different enterprises. So on the front page, we have the basic dashboard,
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  which has you keep ratios within your business around equity
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  percentage, operating ratios, gross profit percentages. This
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  is really good snapshot of how the business is tracking and how that's comparing to
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  the year before. And further down it shows your cash position.
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  So the black line is your actual forecasted cash position, the
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  red line being your overdraft position. So you can see there how
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  much cash you've got above your overdraft, which is
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  really handy from a snapshot to see how the forecast is
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  playing out for you as the year goes on. And then the next one is around variances
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  per category, how your business is tracking for the year and
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  your variances against your actual plan versus the forecast.
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  It's another really insightful insight as well. And then
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  this is your top operating expenses category. So this shows for the last three
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  years, how much you're spending on each operating expense and
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  how that compares to the two previous years. Another key
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  part of the software is around your different enterprise mix. And
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  so this Figadon farm calls your different enterprises trackers,
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  so you can set up different trackers within the software. So
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  you got wheat 23, 24 here, you got beef cattle. This
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  is a demo farm, it's got a dairy as well. This shows we can have all sorts
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  of different enterprises, sheep, different crops. Everything can be set
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  up in here so you can track each enterprise as it plays out. For
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  example, in the beef category, we've got like a stock schedule built into
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  it. So it shows exactly what your opening numbers are in
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  terms of your livestock numbers, what your birth, purchases and
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  aging. And it also has your forecasted year to go. So
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  it shows what's going to happen throughout as the year plays on. So this
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  is your actuals up until August 26, and then the forecasted
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  transactions throughout the year as well. I
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  won't go into the detail around loading transactions in here, but it just
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  shows the stock schedule and how that can work. And
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  you can hit view transactions and it'll show down
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  below if there's any transactions and how many dollars
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  per head and all that sort of thing and how that works. Probably the most important
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  part of this program or the most powerful piece is around the planning grid.
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  This is your plan for the year. So this has your actual budget forecast for
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  the year. So all these cells are open. You can import your previous year's
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  actual results to a next year's budget to be the baseline for the
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  next year's budget. It shows you put all your different expenses in
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  here as per your zero chart of accounts and it categorizes
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  them together. So it brings all your rates together, all your fertilizer expenses
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  together. It groups them all together so that it's a lot easier to manage all your
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  motor vehicle expenses. All these categories here are just exactly as
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  per your chart of accounts in zero. So as you code things in zero, these
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  actual expenses will roll across your budget. In
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  this example, this is your actual budget for the year, and then we're going to go, we're
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  sitting in September now, so we've got actuals up until August. So
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  this will bring in what's actually occurred over the last two months. So if
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  you look at that, so the green now, rather than being the forecasted expenses
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  and income, it's now your actual expenses, but we still have the forecast ahead
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  for the balance of the year. What this does is it
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  allows you to, in real time, bring in your income and expenses
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  as it occurs and upstates your budget to then be able to change. You
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  can change, for example here, you know, put a
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  $200,000 AI cost in there. What that does is show exactly what
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  your cash position is for the rest of the year. By putting that cost in
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  there, it automatically updates to show what's going to
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  happen for the rest of the year. And this can be done in Excel, and this is
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  based off of similar to what would happen in an Excel cashflow budget. But the
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  beauty of this software is it's bringing your actual data from
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  zero into the budget, and then you're re-forecasting for
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  the rest of the year at the same time. So it's really powerful to show if
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  income's delayed or income's brought forward. You know, if there's a big expense
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  that was unexpected, what does that do to your cash position? You know, I
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  was sitting with a client last week doing this, and we were able
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  to change around the timing of cattle sales really quickly
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  to be able to show what that meant for their cash position, where they're able to get through the
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  next season, and how that impact is going to have on their business. So
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  it's really good to be able to do that in real time, which not a
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  lot of programs allow you to do that. So in this example here, let's
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  put a fodder bill in January. So there's a big drought expense. Let's put
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  in a $500,000 fodder expense there. So
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  we change that straight away. Automatically, it'll update
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  our closing balance. Oh, that was $5 million, so
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  it's turned red because that means we're out of cash. It shows that we've busted
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  our limit because I put $5 million in there instead of $500,000. So
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  there we go, $500,000 fodder bill. It shows that we've still got $2 million,
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  $2.2 million in the headroom in the overdraft. The closing balance
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  is $2.2. There's a $50,000 overdraft, so there's plenty of headroom in
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  the overdraft. to be able to make a $500,000 purchase
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  in December 26 with the current facilities in place.
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  So it just shows that you can change things around as your
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  business evolves. You can re-forecast at any point in time and quickly you can
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  show whether you're going to have enough cash in the bank to do it. And
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  the best thing also is it's bringing in your actual expenses as they occur. And
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  I'll show shortly how you can do variance reports around so you can
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  show whether there's any changes from what you budgeted to
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  what actually occurs. So one of the key features of Figaroon Farm
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  is around the reporting. So you click on the reports. There's
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  a whole range of reports here, but one of the valuable reports is
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  your variance report. So what this does is you can set
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  it up to show for each month or each quarter how
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  you're tracking against the budget that you set for the year. So
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  in this example here, we're just going to show what we're actually tracking year-to-date against
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  the forecast that we set. So it'll show any variances for
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  the two months for July, August on how we're tracking
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  compared to the budget that we set for the full year. So this
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  shows here what's actually occurred up until August against the
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  forecast up until August. We'd forecast we've had beef sales
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  of $17,000. We didn't have anything in the original budget. We had purchases
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  of $7,000, so we didn't have any purchases. We had dairy cattle purchases
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  of $12,000 forecasted. We only spent $2,600, so we're
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  $10,000 better off there. If we scroll down to our
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  gross profit, it shows our actual gross profit so far for
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  the year is $57,000 against a budget of only $13,000, so we're $44,000 up in gross profit for the year. It
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  does the same for each expense item as well. So you can look how you're
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  tracking where expenses are blowing out, if there's anything that you've budgeted
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  to spend that you haven't. It's really powerful to be able to show where
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  we're at. So like there's working capital, working general expenses
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  there of $41,000 when we didn't have anything budgeted. So
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  there's a major blowout there for the two months. So overall it shows
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  what our operating expenses, we've actually incurred $182,000 where we
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  budgeted on $287,000 so we're $100,000 better
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  off in operating expenses and then it shows the overall
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  positions. We forecasted a net profit of negative two, a
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  loss of $275,000 and the actual loss is only coming at $125,000 so we're $150,000, $148,000 better
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  off. As
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  you can imagine, you can do that on a month-by-month basis. There's a whole range of
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  variance reports. You look at the options that are available here. There's
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  all sorts of different... You can look at last year's, compare your actual results
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  currently to last year's actuals. It's a very powerful
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  report to be able to show that. There's a whole different range of other reports in
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  the reporting packs within Figured On Farm. There's profit
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  and loss, cash flow statements, balance sheets. Just went through the
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  variance reports. We can produce a statement of financial position. That's pulling
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  a lot of data from Xero, but it also allows you to update that in
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  real-time values. And then you've got your production reports as well. So
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  you've got how much kilograms of beef you're producing around your
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  milk solids, your cropping season summaries. We'll just quickly click
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  into the cropping season. So this crop season summary report
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  just shows around your financial summary of this season,
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  total quantity produced, units per hectare, break
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  even per unit. So it's really a powerful report to be
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  able to show you can work out on a field or different crops for
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  working at gross margin and that sort of thing. So it's a good report to look
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  at. So guys, I'm just going to run an example here where we're going to move some cattle around in
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  terms of sales. So we'll just click into the cattle tracker. Currently
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  we've got 87 cows on hand. So we're going to go add a forecasted transaction.
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  So we're going to sell these cows. And then I'll show you how that
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  we can move that around quickly. So we're going to go into the cows. We're
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  going to sell all 87 of them. And we put in the weight, 500 kilograms
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  per head. We can do carcass or live weight. So
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  we'll just go live weight. We'll put in say $3.50 at
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  the current sort of rate. And then per kilogram.
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  So that automatically calculates the sale cost. You
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  can put some also notes here. We use this a lot around putting notes in
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  there to remind us what we're thinking when we put that sale in. So
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  save that transaction. So that's been forecast for
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  14th of September. So if we go back
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  into the planning grid now, we will see that sale
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  come through into the cash flow forecast. So
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  there it is there, $152,250 has come in in
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  sales, so that automatically upstates as
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  a forecast, updates your cash balance for the rest of the year. And
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  so to change that, say we decided, oh, we're not going to sell those cattle now
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  in September, but we're going to sell them in March next
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  year. You click on back into the cattle tracker.
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  So we've got the forecasted sales over here, 87 cows.
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  So we click back on that. It's really simple to change that. It shows
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  down below here. The sale, 87, so to change that
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  transaction date, we'll make that March next year, 1st
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  of March, sale, update straight away, and
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  then we go back to the planning grid, and we'll be able to see that sale
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  has moved from September to March. So
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  there it is there now, so now it's in March. everything's updated in
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  terms of your cash balance. It's really, you can play
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  around moving timing of sales and what that means for your business
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  and around income and expenses. So you've got the peace of mind to know that your
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  cash flow is still going to work and you've got plenty of headroom in your overdraft facility, where your
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  cash reserves to be able to meet your commitments and payments. So this software
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  we use a lot with our clients in terms of understanding their business and
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  cash flow position and, you know, presenting reporting
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  to banks, so the beauty of this software is it
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  allows you to invite your banker to the software, you
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  can invite your accountant, you can invite other advisors to the software, so
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  everyone's on the same page and can see the business in one view. We
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  find that quite powerful when dealing with funders, they have full transparency on
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  how the business is tracking, and we also produce monthly, quarterly reports
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  for our customers out of the software. that gives them quite
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  good insight into their business on how they're tracking to budget, what's coming
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  up ahead, and if we need to change anything. And having those conversations with
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  a funder early is way better than having that after the fact that
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  the business has run out of money or we're in trouble. So we're
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  able to foresee any issues six, 12, 18 months
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  in advance effectively, which allows us to then be able
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  to talk to the banks, talk to your funders, put facilities in place in
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  a proactive approach rather than looking at it from a reactive
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  when things have gone wrong and it's a whole different conversation. It's a lot worse
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  conversation, uncomfortable conversation. Having that with a bank that
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  we've run out of money, we need help rather than saying in six months
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  time, it looks like we're going to have a little issue on our cash flow. Can we get
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  some assistance just to carry us through for a couple of months? Or we decide that
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  we're going to change expenses, move things around so that we don't need
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  to go back to the bank and ask for that assistance. We're able to deal with it ourselves
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  rather than relying on extra funding to be able to get through situations
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  where cash might run short. It's really powerful in terms of being able
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  to do that. There's not a lot of other options out there in the market at
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  the moment that I can find that can provide such good insight
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  into your business, especially from a farming point of view. So that's
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  the value of a live forecast that pulls your zero actuals into a
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  working plan. You can see the variances as they happen, test
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  moving key sales or bringing expenses forward and
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  see the cash effects months ahead instead of just guessing. We use this
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  with selected clients to send monthly quality management reports. Keep communication
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  with funders early. Keep decision levels when timing shifts
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  on the farm. And if you're looking at buying a place or growing your operation, this
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  is the type of life story we prepare so lenders can see how the business runs,
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  how timing is managed. And book a free call if you're interested in
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  the description. The details are there and we're happy to run through how this might help