Agribusiness Accounting: Data Vs. Information

In using a grain accounting or crop inputs agribusiness accounting solution, many of your organization’s key requirements will involve reporting. These requirements may include:

• Margin Analysis
• Traceability
• Freight Optimization
• Hedging & Risk Management
• Customer Analysis / Cross Selling Opportunities
• Inventory Management

An accounting system will record the transactions that will contain the information needed to answer these queries. But a modern Commodities Trade Risk Management Solution (CTRM) needs to do more than record data, it needs to format the data into information that can solve business problems, and provide a reporting toolset and report writer that will enable you to answer the questions that have not even been asked yet in order to take advantage of new opportunities. A robust reporting toolset will enable you to implement better grain bin management, grain hedging, and grain inventory blending solutions. 

Paradox of Agribusiness Accounting Software Reporting

The paradox of reporting is that a well written, insightful, and thoughtful report will inevitably lead to a request for another report. 

For example, let’s assume that you wrote a report that shows your grain elevator, feed mill, fertilizer plant, crush facility, or crop inputs retail store in Tiptown is your highest volume location. After reading this report your team may ask:

1. Why is Tiptown Your Highest Volume Grain Elevator?  Is it because of:

• Location?  
• Customer Service?  
• Legacy Customer Relationship?  
• Scale of the Facility?
• Competitive Factors?

 

2.  Is Volume the Right Metric? What about:

• Customer Satisfaction Levels?
• Repeat Business
• Profitability?
• Cross Selling of Other Products?  Are there grain bank,, feed, fertilizer, or other crop inputs related products or services we can sell?

 

3.  Is Volume the Right Metric? What about:

• Is the volume increasing or decreasing over time?
• Is your volume growing faster or slower than than your competitors, or the market as a whole?
• Are your margins trending up or down?

In grain accounting, every answer leads to more questions. Questions on volume may spark questions on growth, profitability, and risk management. Are there opportunities for the grain elevator to sell fertilizer or feed products or services?  And how does the growth fit into our organization’s risk management strategy? 

CTRM Reporting -- Too Fast, Too Furious

Each of the subqueries above will in turn lead to other subqueries. Why is this grain country elevator / feed mill more profitable?  Is there a particular grain or value added service that is driving the profitability?  Can the lessons of this profitability be extended to other locations?

The problem for IT is that when every answer spawns dozens of new questions, the challenge of creating yet another report can become overwhelming. The more you give, the more that is asked, and without the proper toolset, you can quickly become the victim of your own success. 

Paradox of Cost Accounting

In cost accounting, if you measure performance based on volume, or profitability, your organization will change their behavior to maximize those metrics. While this can increase productivity and profitability, overtime it can also create perverse incentives. For example, a grain elevator might be less likely to do an internal transfer to another facility if it believes the transfer might hurt its own bottom line, even though it increases overall profitability for the organization. Operational management may spend more time working on allocating overhead costs to other grain elevators or crop inputs divisions than serving their customers, because the management structure has inadvertently created a perverse incentive structure for them to do so. 

Agrosoft -- A Toolbox For Building Solutions 

The solution to all of these dilemmas is to think of reporting not as an answer but as a process. Your CTRM should not only contain standard reports, it should contain a toolset for modifying and creating reports, so that end users can answer their own questions as they arise. 

In Agrosoft, our robust agribusiness enterprise wide accounting solution (ERP), we offer Work With Screens that serve as the starting point for all transactions and all queries into the system. Information can be entered into the top half of the screen, and then retrieved immediately for the user to see. You can sort it, add totals, and print it in a report format.

If the end user wants to build a more complex search (find all corn merchandising contracts created in the last quarter of 2023, at Cornville or Mayberry locations) they can build it without making a request to IT. 

Reports and queries that you build in Agrosoft can be saved and even shared, so they can be used again, or modified in the future. Standard reports can be modified, and saved under different names in the reporting tree. Customized queries such as the ones shown above can be saved in the users Favorites menu. 

This flexibility gives you the ability to constantly refine your reporting criteria, and set goals that benefit your organization, rather than the manager who learned the best way to massage the data to maximize their bonus.

Conclusion:  CTRM Reporting Flexibility

Every answer will lead to more questions, which is why you need a system that will:

• Allow you to build new queries on the fly
• Adjust reporting to measure performance in new ways
• Save, share, and enhance reports for future use

As the old proverb goes, “Give a man a fish, and you feed them for a day. Teach a man to fish, and you feed them for a lifetime.” 

The updated version of this might be, “Build a user a report, and they will ask you for another report. Give a user Agrosoft’s robust, built in reporting functionality, and they will bring a lifetime of value, to themselves, and to your organization.”