Tend-R-Leen: The original no-roughage feeding program

Accurate and up-to-date records are essential to successful farm management. Before any financial analysis, budgeting, or financial decisions can be made farm records must be maintained. Managers usually keep farm records for three reasons:

Ø Legal requirement, such as income tax purposes.

Ø Obtaining credit, such as filling out loan applications.

Ø Management tool, such as planning and budgeting.

There are two basic types of record keeping: financial and production.

The financial side of record keeping relates to money or the financial transactions and interactions of the operation. It tracks all income and expenses and is utilized for tax purposes, business analysis, credit/loan applications, and budgeting.

Production records pertain to the inputs (cattle purchased, feed, medication, etc) and levels

of production by enterprise and are utilized to evaluate performance of each enterprise as well as each group or individual.

Financial Record Keeping

Some records that will be helpful to keep your farm operation are: income, depreciation, farm expenses, farm business travel expenses, and employee tax information.

Income records should include the source of the income, be it livestock, crops, or farm services provided. Record the date the income was received and the amount. For tax purposes it is important to keep income from raised livestock separate from income generated from livestock purchased with the intent of reselling it. Taxes are determined differently on this income. Records of insurance payments, cooperative dividends and government agricultural program income should also be listed separately to identify the source properly. This income should not be credited to the profitability of a particular enterprise in doing a business analysis.

Depreciation allows for the recovery of the cost of a farm machine or farm asset over the depreciable life of that asset for tax purposes. Keep a record of the cost of the item and other specific information to establish the depreciation basis.

Farm expenses are those expenses specifically related to the farm business. Record the date of the expense, as well as the purpose and amount. This information will be again helpful in analyzing the profitability of the business as well as for the income tax filing.

If you incur travel expenses related to your business it is extremely important that these items be specifically detailed. When listing these expenses, again include the date, place, purpose of the trip and the amount of the expense. Specific detail in relation to these records is necessary to avoid problems in the future. If you employ people in your business, you must keep all employment tax records for at least four years after the employment taxes are either due or paid, which ever is later.

Statement

Records Required

Balance Sheet (or net worth statement)

A listing of all assets and liabilities of the operation. Reports the financial strength and progress of the operation.

Farm assets cost & value

Farm & personal asset changes

Livestock, crop, & other inventories

Loan balances

Cash flow

Provides a monthly or quarterly look at all inflow and outflow of money. Shows possible cash shortfalls and allows for corrective measures.

Farm income & expenses

Non-farm income & expenses

Debt payments

Enterprise Analysis

A comparitive look at the performance of an enterprise.

Farm income & expenses

Livestock & crop yields

Production & performance data

Income Statement

Reflects the profitability of the farm, more accurate when using the accrual accounting method.

Farm income & expenses

Interest payments

Livestock & grain inventories

Accounts payable & receivable

Income Taxes

Records of cash sales, expenses, depreciation, and government program participation for IRS purposes.

Farm income & expenses

Non-farm income & expenses

Interest payments

Depreciation schedule

Production Record Keeping

Tracking animal performance is another very important piece of your record keeping. By documenting your inputs and performance results, you have the information available to help you analyze your production and management practices. Calculating performance measures like average daily gain, feed per pound of gain, feed per day, and cost per pound of gain, will allow you to make management decisions and develop goals. Combining production records with your financial records will give you a very accurate picture of the performance of your operation.

Production records can be kept for individual animals or for groups or pens of animals. What kinds of information should be tracked?

Inputs:

Ø Animal ID or group/pen ID

Ø Age or date started

Ø Starting weight

Ø Purchase cost

Ø All feed fed (including corn, purchased feeds, etc.)

Ø Medications, vaccinations, implants, treatments administered

Ø Bedding used

Ø Miscellaneous supplies

Ø Additions or repairs to facilities and/or equipment

Output:

Ø Feed refusals

Ø Manure hauled

Ø Cattle died

Ø Cattle culled

Ø Cattle sold (including ID, age, date, weight, price)

Ø Closeouts/carcass evals (yield grade, quality grade)

Summary

Accurate, well-kept records will assist farm business operators in planning for the future. Records must be retained for three years after the filing date for income tax purposes; however, keeping records for longer periods of time can provide historical data that can be helpful in analyzing the business' profitability.

Sources: U of MN Extension Service, David J. Resch, Univeristy of Tennessee, Delton C. Gerloff, Robert W. Holland Jr.

Quicken is an easy to use computerized record keeping software package that enables the user to keep detailed farm financial records. It can also be used to track a total of ten different account types including asset, liability, and all bank accounts. Quicken enables the user to keep basic cash receipts and expense records and provide financial data to you, your tax preparer and other members of your farm management team. Other Quicken features include easy account reconciliation and income and expense budgeting. Quicken reports that may be generated include income statements, cash flow reports, enterprise summaries, personal and business income tax reports and others. Quicken does not easily track inventories and does not allow you to keep depreciation records. Does not offer record keeping or enterprise analysis capabilities.

Available: CTN Data Service Inc., PO Box 250, Hamilton, IN 46742, 1-800-225-2848

This company offers a number of different programs that interface with each other to offer a complete farm record keeping and enterprise analysis package, that includes financial as well as production data.

A complete farm cost management package, fully integrated with Farm Trac and Farm Stock that maintains your books on both the accrual and cash basis. This allows you to know exactly how profitable each enterprise really is on your farm, while still maintaining the records you need for tax purposes. It allows double entry farm accounting for both cash and accrual sets of books.

Farm Trac $75

A full mapping and auto notation package written for Microsoft Windows. Designed with the farmer in mind, Farm Trac lets you draw, and farm your fields to keep automatic notations for field history and chemical usage on each field.

Farm Stock $150

From the handy calendar with automatic event scheduling to the hassle-free blood line area; from the extensive yet flexible record-keeping to the comprehensive reports, Farm Stock has something for every livestock operation, no matter how large or how small. It allows you to maintain complete and detailed records and histories on livestock by individual or group of animals.

Available: Center for Farm Financial Management, University of Minnesota, 130 Classroom Office Building, 1994 Buford Ave, St. Paul, MN 55108, 1-800-234-1111

This is a comprehensive computerized farm financial planning analysis system. It will help evaluate your financial situation, explore alternatives, and make informed decisions about the future of your operation. FINPACK allows you to easily develop balance sheets, long range plans, cash flow plans, year end analysis, historic financial and production reports. Another feature is the loan calculator with full schedules. It is not a record keeping system.

Available: University of Wisconsin Center for Dairy Profitability, 1675 Observatory Drive, Madison, WI 53706, 1-608-263-5665, http://cdp.wisc.edu/software.htm

AAIMS© is an integrated financial records system that enables farmers to use a personal computer to organize and quickly analyze their financial records. The program allows for the concurrent storage of physical information associated with the financial data.

Available: University of Wisconsin Center for Dairy Profitability, 1675 Observatory Drive, Madison, WI 53706, 1-608-263-5665, http://cdp.wisc.edu/software.htm

ABCS© is a farm management tool for the distribution, editing, printing, and creation of single and whole farm crop and livestock enterprise budgets and data sets. ABCS© is an interactive menu-driven stand alone computer program for use by extension personnel, researchers, farm managers, students and teachers.

Cost: Contact supplier

Available: #350, 7326 10^th St. NE, Calgary, Alberta, T2E 8W1 Canada (403) 263-2727 or 888-300-2727, Fax: (403) 263-3435, http://www.cattlemedical.com

Cattle Medical System

Cattle Medical System (CMS) is a Windows^® based medical management program for feedlot operations. With a few simple keystrokes you can induct hundreds of animals, apply predefined protocols, produce managerial reports and analyze the effectiveness of your health management program. With CMS, feedlot operators manipulate thousands of records to produce bottom line information and make effective managerial decisions. A trial version is available to download.

Feedlot Solutions

Feedlot Solutions is a Windows based feedlot management program. Designed to be easy to use, FLS puts you in the driver's seat through quick entry and analysis of your information. This program offers your commercial feedlot the opportunity to manage cattle purchases and sales, feedstuff inventories, conversions, closeouts and invoices. This program is comprised of a series of screens each designed to streamline the daily activities of your business. A trial version is available to download.

Available: Extension Distribution Center, 119 Printing & Publications Building, Ames, IA 50091-3171, Ph: 515-294-5247, Fax: 515-294-2945, Web site: http: //www.exnet.iastate.edu/ESS/

Cattle feeding and purchase decisions are evaluated within a budget format. Alternative cattle types, cattle weights, feed prices, feeding programs, market prices, marketing timeliness, and variable as well as fixed non-feed costs can be evaluated for their effect on profitability. Sensitivity tables are created that can help evaluate changes in feed cost, purchase price, and market selling price. Anticipated risk is evaluated through a triangular distribution analysis on expected market selling price.

Updated in December 2000 to Version 2.0 (includes 1997 updates for 1996 NRC requirements for beef cattle)

The program computes performance projections for ADG, cost per pound of gain, and breakevens. The program also allows for variable degrees of ownership. The Beef Feedlot Performance and Cost Monitoring program prints pen closeout data that includes: inventory of feeds consumed, performance, and cost analysis. Other printout provided is billing invoices for custom feedlots. The program is designed to handle multiple feedlots for businesses offering feedlot monitoring as a service.

Quicken

Farm Trac $75

Farm Stock $150

Cost: Contact supplier

Available: #350, 7326 10th St. NE, Calgary, Alberta, T2E 8W1 Canada (403) 263-2727 or 888-300-2727, Fax: (403) 263-3435, http://www.cattlemedical.com

Cattle Medical System

Feedlot Solutions

Available: #350, 7326 10^th St. NE, Calgary, Alberta, T2E 8W1 Canada (403) 263-2727 or 888-300-2727, Fax: (403) 263-3435, http://www.cattlemedical.com