Typical growing pains for an agribusiness include managing the overhead of accounting and finance.
I like to think of the operations and sales team as the invading army — looking to conquer more acres, market share and revenue.
Meanwhile the accounting and finance team functions in a supporting role as the supply lines, providing current information, forecasts and strategy.
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Without the invading army, there is no business. But without the accounting and finance team, the invading army operates without up-to-date information and may eventually run out of supplies (cash).
Building the finance team for your agribusiness or invading army will require the right mix of processes, technology and people.
Processes
We start with processes because they are less expensive than technology and people.
Processes reduce waste, complexity and errors, and they allow a business to scale. Processes are more detailed than high level policies, but less descriptive than procedures. Processes are less of an issue when the owner/manager does everything, but they become more important as you start to hire employees.
Administrative processes include identifying who reads emails, who pays the bills and who has credit card and online banking access. Admin processes answer questions, such as how you want to pay vendors and receive payment from customers. Cheque fraud still exists, and online banking fraudsters can mimic company employees, so a good process is to always verify new banking information received online independently with the employee over the phone.
Financial reporting processes include how often financial reports are prepared and for whom. Are there accrual accounting adjustments? Sometimes people do what’s inspected and not what’s expected.
Is anyone reviewing the financial reports that are being prepared? Some business owners don’t have the time, experience or training to review reports. They need a trusted advisor to tell them what they need to know so they can execute their next business decision.
Technology
Once high-level administrative processes and financial reporting cadence are determined you can begin shopping for technology and software solutions. The options can quickly feel overwhelming. There are all types of software: payroll, bookkeeping, customer relationship management (CRM), and financial planning and analysis (F, P & A) software for budgeting and forecasting. Not to mention tax software, cash management and payables software and digital receipt software to name a few more.
When you combine these different solutions into one platform you have an ERP, an enterprise resource planning software solution. The reason companies don’t go directly to an ERP solution is the cost of implementation and onboarding.
Your software subscriptions and digital infrastructure together make up your technology (tech) stack. Too few software solutions and you risk slow, manual, error-prone processes. Too many software solutions and you run the risk of creating more manual processes to reconcile them all. Whether it’s payroll, invoicing or accounting records, companies require a source of truth they can rely on.
People
One of your initial decisions is whether you require an in-house or remote finance team or some combination.
An in-house team can gel faster and there’s less room for miscommunication but limits you to talent within driving distance.
A virtual team will have to work harder at processes and building connection but allows you to hire from across the country and the world.
Founders and owners should start with hiring administrative and bookkeeping positions first. Otherwise, they’re hiring at a higher price point to do this work.
Sometimes owners/managers do the bookkeeping themselves. They have the best pulse on their business, and this isn’t necessarily a bad thing. However, growth involves more transactions, people and decision-making, and bookkeeping is a common role to hire or “farm” out.
In general, bookkeepers and controllers focus on reconciling historical information. Financial planning and analysis pros and chief financial officers (CFOs) focus on go-forward forecasting and strategy. Often, companies have one person doing everything from bookkeeping, cash flow, strategy, HR and IT. Part-time contractors and fractional professionals should be considered for their expertise and to prevent burnout.
Stay ahead of the curve
In general, agriculture is ahead of the curve in adopting remote and digital finance teams because agribusinesses are often in remote rural settings.
Due to the current speed of business, even in-house teams require fast, reliable internet connections. Connecting your finance team with better processes, the right tech stack and people should alleviate the growing pains of your agribusiness.
