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Outsourcing the finances: What to know

Rebecca Lampman Published on 24 November 2015
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Editor’s note: This article is the final in a series covering the topic of QuickBooks and farm financials.

Most dairy farms today still manage their own finances, but as operations swell in size, one of the tasks increasingly outsourced is bookkeeping and payroll duties.

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Career coach and television personality Ryan Kahn said, “Master your strengths; outsource your weaknesses.” If the people involved in your dairy operation are finding bookkeeping tasks overwhelming, or they simply would like to have more time to devote to the dairy itself, outsourcing may be something to consider.

Outsourcing your bookkeeping and payroll duties comes with benefits and risks, according to Lance Fenton, a CPA who works with Cooper Norman, an accounting firm in Twin Falls, Idaho.

Every dairy farm is different, and when considering a change as important as this, you need to weigh the benefits with the risks while keeping your operation and its human strengths and weaknesses in mind.

The most obvious benefit to outsourcing is that this arrangement allows dairy owners to focus all of their working energy on dairy farming duties. Also, the dairy farm owner can know that bookkeeping functions are taken care of in a timely regular fashion.

Outsourcing can allow for increased flexibility and personal freedom to enjoy much-needed family time, and a separation of duties can provide added security to a business, making sure that all business responsibilities are not vested with just one person.

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Finally, a successful outsourcing situation includes more frequent meetings and communications with people that are experts in the field of financial management and accounting. These experts can provide answers to financial questions that arise and address current financial issues as well.

Outsourcing comes with risks and drawbacks to consider as well. The first and possibly foremost risk to outsourcing is making sure that you find a bookkeeping and payroll service that is reputable and has the manpower and knowledge of the dairy farming business needed to provide consistent quality services.

Another formidable risk when considering whether or not to outsource is that it is imperative to realize that just because you are outsourcing bookkeeping or payroll duties doesn’t mean you should no longer be involved with the business side of your operation.

It is important to remember that while outsourcing does relieve you of some duties, it doesn’t relieve you of your responsibility to track expenditures and income and stay up to date on your farm’s financial picture.

Finally, if you are considering outsourcing, keep in mind that it may be necessary to switch to using QuickBooks online. This is a common platform used by outsourcing firms that allows collaboration with the dairy owner.

Fenton warns that QuickBooks online is a very different platform and not as user-friendly as the PC version, which could prove frustrating to a dairy farm owner who is not accustomed to QuickBooks online.

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Costs are also a huge consideration and can vary depending on the range of services the accounting firm provides. Fenton explains that the cost of these services is sometimes based on a percentage of your monthly revenue, or it can also be a set monthly billing.

Charges are usually figured out on a case-by-case basis, and accounting firms are happy to provide a cost estimate for your individual farm operation.

Finally, Fenton explains that a successful partnership with a dairy farm operation always “includes a high level of engagement from the dairy farmer.” He says, “They are the ‘boots on the ground’ and will provide insight into the operation that the outsourcer will not have.”

The best relationships with dairy operations work as partnerships where both individuals have an interest in the performance of the operation. A good outsourcing group will provide advisory services and should be able to “identify areas where the dairy can improve operations and reduce risk for the owner,” Fenton says.

Obviously, outsourcing financial duties isn’t for every operation, but it is a very important task that is vital to the success of your business. If the human strengths on your farm don’t include financial management and bookkeeping, you may find having experts manage your finances are well worth the cost.  PD

Rebecca Lampman lives and works on her 250-cow dairy with her husband and three children in Bruneau, Idaho, where she raises calves and manages the farm’s finances.

PHOTO: Photo by Thinkstock.

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