00:00:00
00:00:01
Farm Finance Reporting with Taylor Bridges
449 Plays1 month ago
In this week's episode, James talks with Taylor Bridges of Bridging the Gap Financial Services LLC to discuss a streamlined process for Farms to report on their finances. She discusses practices to keep finances organized and to save time when tracking and reporting, as well as her recommended financial software.
Join our Finance Academy: barn2door.com/academy
Find more Farm resources: barn2door.com/resources
Transcript
00:00:10
Speaker
Hello and welcome to the Independent Farmer Podcast, the go-to podcast for do-it-yourself farmers who are taking control of their own business, skipping the middleman, and selling direct to local consumer and wholesale buyers. This podcast is hosted by Barn to Door, the number one business tool for independent farmers to manage their business, promote their brand, and sell online and in person. Let's dive in to today's Independent Farmer Podcast.
00:00:43
Speaker
Welcome to the Independent Farmer Podcast. I'm James, the Chief Operating Officer of Barnadore and your host for today's episode. As many of our listeners may be aware, Barnadore offers an on-one business solution for independent farmers who are cutting out the middleman and taking control of their business, selling under their brand and making sure their customers can purchase from their farm directly, online and in person.
00:01:06
Speaker
We also had the pleasure of working directly with Intuit QuickBooks Online to offer a direct integration for your financial accounting, and that's really critical for your farm business. Today, we're thrilled to work with Taylor Bridges, a QuickBooks Pro Advisor and owner of Bridging the Gap Financial Services, LLC. Today, Taylor and I are going to dive into how to report on your farm finances, and I'm happy to welcome back Taylor Bridges who has experience working alongside farmers all across the country, helping them manage their books, understand their finances, and how to improve margins for building a successful farm business. Taylor also hosts our Finance Academy, giving farmers tangible tips to maintain a healthy business, including the basics of our profit and loss statement, income statement, and much more.
00:01:54
Speaker
I'm excited to talk with Taylor today about finances and how to manage your data and how to look at your reporting to improve your finances over time. Welcome back Taylor, it's great to see you. Yeah, it's great to be here today. Well, that's a long preamble. You do a lot of great stuff for many of the farmers we work with. How have you been?
00:02:12
Speaker
Good, good. Well, Taylor, I know it's been a little bit of time since we've had a podcast together. And for any of our new listeners who haven't had a chance to hear us have a conversation before, can you share a little bit more about who you are and what you do as a farmer and as an accountant? Yeah, my name is Taylor Bridges. My family and I live on a farm in the mountains in Virginia. We have horses, a dairy ca cow, beef cows, cattle dogs, and bees.
00:02:36
Speaker
My husband and I have two kids that I homeschool and we knew once we we had kids that I would want to do be home with them. So I went back to school online. I got a bachelor's and a master's degree in accounting with the goal of eventually opening my own firm. I did so in 2022 and we just haven't looked back. It's been a really great experience. Well, blessings to you and your family. How lucky your children are to be homeschooled by their mom. That's awesome. Well done.
00:03:02
Speaker
Well, let's talk a little bit about your accounting practice, right? Because you get a chance to work with farmers today all across the state of Virginia and elsewhere. Tell me a little bit about what that looks like. How do you work with farmers today? Yeah, my firm primarily works with people in the ag industry, a few other service businesses all across the country. I grew up with a passion for ag and then pursuing accounting really just gave me the ability to combine my favorite things. Makes work a joy for me. No two days ever look the same, but I find that having having an ag background means I can really understand what my farmer clients are dealing with. And that's really helped me a lot. Well, and hopefully you get to barter a little bit for a few things here and there.
00:03:37
Speaker
I imagine you can trade your honey for some things sometime to time. I love honey, by the way, Taylor. I have honey every day. Are you guys doing raw honey? We do. We've got a pantry stock full from what we harvested last year. And I definitely had a new client last week contact me and say, Hey, I need your services. And I was like, yes, I saw your website. And they're like, how do you feel about pesto? I could totally mail you some. It was awesome. yeah Well, let's let's be very clear for our listeners. Taylor doesn't need more pesto now at this point. No. She does does work fee-for-service to be very clear. Well, let's talk about when it comes to advising your clients, I know that, quote unquote, reporting is a big deal for helping a lot of folks better understand their business. To begin with, for our listeners, help them but understand what's the difference between data and reporting, right? Because I think there's a lot of confusion from time to time.
00:04:25
Speaker
Sure, data is really just the numbers by themselves. It's figures of, you know, how much did we spend and on pig feed last month or what did we make selling tomatoes in our greenhouse this season? But it's simply that, it's just numbers. The numbers by themselves don't really tell you much more than what your bank statement would.
00:04:40
Speaker
But when we organize those different sets of numbers and combine them together in different ways, we get the magic that is reports. So our report can really tell us a lot more information than the numbers alone can do. We like to use reports with our clients to show comparisons. Maybe month to month or season to season, whatever combination makes the most sense for their business.
00:04:59
Speaker
Every farm is super unique, so those numbers look different for everybody. but But then we also turn around and we can use those same data numbers and create KPIs or key performance indicators, which help the farmers know if they're meeting their goals and how they're stacking up.
00:05:12
Speaker
That's super, right? Everyone loves to measure themselves against others or against their own targets to know what am I doing well or am I doing really well, right? Or do I need to improve? Well, I know there's a ton of data when it comes to running a farm business. What data do you find the most insightful when it comes to assembling reports for farmers, right? I mean, imagine on the revenue side, like what comes to mind? What are the things that you're trying to assemble? What data are you trying to assemble for farmers?
00:05:37
Speaker
Yeah, the 1st thing most farmers or any business owner looks at is going to be revenue numbers because everyone likes earning money. Obviously, ah the majority of the time, what we're looking at in the revenue category is breaking down their incomes in ways that make the most sense. So, frequently, that means separating an income into categories based on enterprises. So, sheet versus cattle sales or by different crops.
00:05:58
Speaker
or that could look like separating out income based on where they earn it from. So different market locations versus their in-farm shop, that kind of thing. We just want to see exactly how they're making their money usually in that category. of Yeah, so that's critical, right? So you're trying to capture their income so that way you can have a better understand what are the revenue drivers. I think too often we talk to farmers and they don't even necessarily know what is the primary driver of revenue for their business, right?
00:06:22
Speaker
And sometimes I know, sometimes it can be a little bit illusory, right? You could have something that drives a lot of revenue, but may not be profitable, right? So let's talk about the cost side of that data, right? So you talked about breaking down and having a better understanding of where the revenue is coming from or what types of revenue they're receiving. What about operating costs? What are the things you're looking for there? What type of data are you assembling?
00:06:43
Speaker
We want to know exactly how much the farmers going to be spending across their different categories could be how much they're spending on feed, or maybe they should be looking at a bulk supplier and cut down their costs. And once we round down those numbers and really look at them, we can figure those kinds of things out. We want to see if.
00:06:58
Speaker
Maybe their spending is trending the same as it was the prior year for the same expense categories or if maybe something turned drastically different in those numbers. We want to figure out why that is and if it can be done better. So we're looking at everything from their feed costs to tractor parts to the land lease and their office supplies, insurance, everything in between so we can make those kinds of connections. So you're really taking a holistic view of those costs, right? Because I think too often times, my perception is many times farmers look just narrowly at just the revenue and and the cost associated with just the product from a production standpoint, right? But it looks like you're talking about like all the cost of the business. How often do you see farmers fail to include their own labor cost, right? Or time when they're thinking about, am I actually profitable? Is that a common misconception for for some farmers?
00:07:47
Speaker
Absolutely. A lot of farmers miss those overview costs like admin costs and labor like you said, but when we separate those income and expense data out, um instead of focusing just on the sales or expenses as a whole giant number, we can see which enterprises are doing well by themselves and which might not be worth it for the farm developerper to pursue in the current fashion that they are. We can see maybe a certain market venues are making the bulk of their money or maybe dropping a specific venue would save them a lot of time and money and they just don't know it because they're looking at all of their data in one big pot instead of breaking it down. So it really helps make the reports and the KPIs more meaningful and guide them in their decision making. That's a huge value add for farmers. right Like you said, help guide them in their decision making. So give me some examples. What are some snapshots of data that you like to provide reports on for a farmer to to make those informed decisions?
00:08:37
Speaker
So I send out report packages every month. It might look a little bit different for different farmers because some people like different information ah but usually includes things like an income statement and a balance sheet so we can kind of see what's going on at that point in time. And sometimes ratios are really helpful. We'll look at a net income ratio or even an asset turnover ratio and use that to compare what they're doing now versus what they have or even like you said earlier against other people in the same industry as them.
00:09:03
Speaker
Well, that you mentioned two terms there, right? Net income ratio and asset, bo was it the balance sheet or asset ratio? Asset turnover. The asset turnover ratio, my apologies. Can you define both of those for our listeners so they understand what you're talking about? Because you're talking in accounting speak, which for many people they don't understand. So let's turn it into plain jargon for us.
00:09:22
Speaker
Yeah, my nerd was showing. The net income ratio ah is a ratio that just helps gauge if a farm is being profitable. So it tells you whether or not your farm business is going to be efficient. You you want a higher percentage means your operation is more efficient. Essentially, it's how easy and effectively your business is generating its income. It's net income, which is earnings after expenses divided by gross income, which is all income before any expenses were taken out.
00:09:47
Speaker
And then the second one I mentioned is called an asset turnover ratio. And that's just measuring the efficiency of how farm capital is used to grow the business. Higher yields or production with lower input costs or lower expenses means a higher rate of turnover, which is a good thing. If you have a lower rate, then you might be a little more susceptible to market fluctuations and that's not what you want. So a higher rate is always a good thing. Well, that's probably super informative and insightful piece of data for someone to have a report on.
00:10:15
Speaker
because I would imagine those scenarios, like you said, maybe they're analyzing the efficiency of their markets, right? Maybe, in fact, I know I was ah doing a podcast fairly recently with one of our other farmers who's at almost 30 markets, and he was sharing how some of his markets are highly profitable and others right on the brink of profitability, but he makes decisions as to whether or not to keep the market open or not. He'll shut one down. If it's not profitable, he'll lean in and make an investment, but after a certain period of time, he'll just move on because He's not paying for people just to be present at a market. If it's not profitable, why go through the effort, right? Absolutely. It makes all the sense. And if you aren't looking at those numbers and tracking them, then you just don't know the answer to that. Great, great feedback. Now, as you know, Barnador offers a direct integration with QuickBooks Online, which aggregates a lot of data for different types of reports generally. However, I know most accounts like yourself use other third party solutions.
00:11:09
Speaker
So I'd love to hear a little bit more about the why behind that one. First off, what are the options that other accountants are looking at? And why do you prefer to use another third party solution versus just QuickBooks itself? Most accountants I know do use a third party tool. QuickBooks allows some customization of reports within their software. But I find a lot of times it just doesn't always give me the info I need or want to share with my clients. There's a lot of different options out there for reports. And a lot of people will create their own reports within Excel or Google Sheets.
00:11:39
Speaker
I've used both like them both they're great if you're looking for some more specific reporting needs and KPIs because of all the formula options they offer. Sometimes I just need a clean report package for other purposes for that I move all my data into a program called keeper that's another third-party solution and that just gives my clients all the big info but with more custom options for me to utilize and the reports turn out a lot prettier so if they're heading into a bank that's a nice feature to have.
00:12:04
Speaker
I also get graphs and other things. And my nerdy heart really likes that. They also connect into QuickBooks Online. And so I can use some of that data that I've already spent all that time amassing and organizing to get those figures sent right to my clients through the Keeper. That's super. What are the other options outside of Keeper? I know, um imagine you said accountants use a variety of other solutions. What are a few of the other ones? There are a ton. Yeah, some are really industry specific. It depends on what you're doing. Domo is another really nice one as well.
00:12:32
Speaker
It's not cheap. Holy smokes. I know. No. yeah We use Tableau here at Barn to Doran. I think we pay close to $5,000 a seat just for that license, not including a consultant to help us get it set up and continue to manage it. It's not cheap, but very powerful, like you said. Now, why do most accountants prefer to move things into third party solutions altogether? Why isn't reporting just standardized? Because isn't one foreign business the same as the next, or are there nuances that you have to make adjustments for all the time?
00:12:59
Speaker
Yeah, every business industry is going to be super unique. Even within the Ag industry itself, you feel like it's more narrowed down, but every farm is so very different. Everybody has different goals, different data and different things that they're concerned or not concerned about knowing within all those data points. For example, I have clients ranging from like a national fiber cooperative that does llama fiber.
00:13:20
Speaker
to a micro dairy that sells cheese and then more normal CSA clients. The revenues across all those different farm models are just going to be totally different. So some of them are getting upfront CSA fees in the winter and spring months that they use it over the rest of the year. Some are getting regular subscription customers and study trip income that way. All of them are super different. Some people are just getting one-time sales at their farmers markets. And then we see people that make those purchases and cards and checks and cash.
00:13:47
Speaker
And their incomes just look so different that way as well. So, same principle applies to their expenses. Knowing that what one farm is spending their money on to run that business is going to be very different from another farm and the types of costs. So, admin, feed, advertising, or insurance, all those different ways they're spending their money are going to vary.
00:14:05
Speaker
And so using that information, going into the recording aspect of accounting, it just looks so different for every farm. So it's really next to impossible to get all that info from one single program for all the different needs. And it just makes the most sense usually to use either an accountant that's going to use a separate program to do that to make sense for their particular business and give them helpful information.
00:14:27
Speaker
Yeah, I know we as a business, we we have third party accounts as well at Barnadore. Even a business of our size with over 50 employees, we still use a third party set of accounts and separate reporting tools because it's not easy. It's complicated, even though our books are in QuickBooks, right? But like you said,
00:14:44
Speaker
every business is so different. So what I'm hearing from you, net net, it's obviously more complicated than it appears, right? And there's no one size fits all, right? It always requires some to degree of customization. Now, I know all of our top performing farmers that we have across the country, you know, pretty much all of them work exclusively with outside accountants. Why is it that farmers, in your opinion, who work with outside accountants are more successful?
00:15:10
Speaker
It makes a lot of sense for farmers working the accountants to be successful because when you work with an accountant, it's literally their job just to make sure that things are done on time. And I find that that helps my client stay more accountable. So, when I know I'll be sending them an email, like a reminder or that they haven't seen any receipts in 2 months and I'm like, hey, I really need that information.
00:15:29
Speaker
They're a lot more likely to follow through on keeping up on their end of things and sending that information into me. No one likes to feel like they're behind and that really helps a lot with the accountability factor. And a lot of my clients know I'm not here to butter them up. They're literally paying me to give them all the cold, hard numbers and facts about their foreign finances. So.
00:15:47
Speaker
They're going to get the right information. And I'm showing them their numbers across their comparative quarters, showing them changes in how things are improving or not, and all the different trends. And that's really motivating to them so they can fix issues right then and do better. So when they're seeing those trends, they can more effectively make decisions that are pushing them towards their financial goals. Having someone behind them like an accountant makes it a whole lot easier to do that. Yeah, I imagine it's just much more objective. I know working with our accountants at the end of every month, there's a set of questions we get every single time.
00:16:16
Speaker
tell me what this is, why is this trending these ways? right And you know if you're too close to it, first off, you might miss it if you're trying to do the books yourself. right But when you have a third party accountant whose job it is, like you said, is to hold you accountable right to your outcomes and your goals, it's really a bit of a come to Jesus conversation sometimes. They're like, hey, we really had to make this decision, or you have to really dig into the why behind it, and you have to understand the pros and the cons of each of those decisions and how that might impact their profitability. of your business. So I'm really glad to see that the farmers you're working with are having such success, Taylor. So if I'm a farmer, who's always done it on my own, why should I spend the money with an accountant to improve my reporting and just to get third party accountability, right?
00:17:03
Speaker
Honestly, it's totally up to the farmer what they choose to do. Technically, they can do nothing and they can keep going about their books the same way they always have, but usually someone in this position already realizes that something isn't working. So in my experience, when farmers start working with an accountant, the gains are pretty much always worth it. Most successful farms, like you said, they use the expertise of a professional. Accountants spend years of education and training to know the things that they do. Personally, I spent eight years on college coursework,
00:17:29
Speaker
To get me into this profession and to make me feel comfortable with what I was doing and then hours of specializations and software training and everything else that goes with it to take forever. Yeah, but it was worth it because there's just so many nuances and things that I was unaware of beforehand.
00:17:44
Speaker
that I wouldn't have known if I hadn't gone into it um as a professional purpose. So having an accountant means that a farmer gets to use all that experience and education without actually having to spend all that time in the years in training for it themselves. Then they get to use that free time better. A lot of more productive ways that farmers can use their time than doing their books. A lot of farmers are also missing out on tax deductible expenses and write-offs by not using a professional. As a bonus, the cost that you spend on an accountant is also going to be a write-off. So it's a win all the way around.
00:18:12
Speaker
Ultimately, the job of an accountant is to help you guys make better at informed decisions and take so much stress off your shoulders. So it makes a lot of sense. Yeah, I know a lot of businesses, not just farmers. If you're not working with an accountant, you're probably leaving money on the table, like you said, right? Whether it's in tax deductions or just in being able to manage your money better, right? I think it just makes absolutely a sense.
00:18:32
Speaker
And as I shared earlier, I think one of the things we see consistently is that the best performing farms that we work with across the country, six figure and seven figure farmers, all work with third party accountants like yourself. So hey, before we sign off, is there any other last bits of advice or feedback that you'd like to share with our listeners when they think about like how to take their business to the next level and think about working with an accountant like yourself?
00:18:57
Speaker
Sure. Yeah. My number one tip is usually making sure that your numbers are accurate, because if they're not accurate and up to date, the information that farmers are getting from their reports, if they're trying to use those kinds of features, aren't going to be helpful. They're not going to be making the best, most informed decisions. ah You have to really start with a solid base here, and if that's not something that they've done, we definitely say, hey, you should get a cleanup done, because you'll feel so much better. You have the right information going forward, and everything's accurate, so you can be making those better decisions. Garbage in, garbage out, right? Absolutely.
00:19:27
Speaker
Well, hey, I want to extend my thanks to Taylor for joining us on this week's podcast episode. You can check out more of Taylor at btgfinancialservices.com, or you can join one of Barnadore's Finance Academy if you're an existing Barnadore customer, where Taylor shares more tips and best practices for farmers looking to maintain and build healthy finances for their business. Here at Barnadore, we are humbled to support thousands of independent farmers across the country, and we're delighted to offer services and tools to help farmers access more customers increase sales and save time for their business. If you're an independent farmer who is just getting started or transitioning to sound direct, or if you've been at it a while and simply want to simplify your business management, please visit barn to door.com backslash learn more. Thank you for tuning in today. And we look forward to joining you next time on the independent farmer podcast.
00:20:27
Speaker
Thank you for joining us on the Independent Farmer Podcast. At Barn to Door, we are passionate about empowering independent farmers to build a thriving business. To all the farmers out there, thank you for all you do to grow amazing food, care for the soil, and serve your local communities. You are the backbone of our country. For free farm resources or to listen to prior podcasts, go to barntodoor dot.com backslash resources. We hope you join us again and subscribe to the Independent Farmer Podcast wherever you stream your podcasts. Until next time.