Figured and Heartland partner in lending deal
Farm financial management software company Figured and Heartland Bank have partnered with the aim of driving streamlined decision-making and access to lending for farmers.
“Figured exists to improve the profitability of the farming sector,” Dodds told Rural News.
“The number of farmers exercising good quality financial management is far too low, considering they are businesses with multimillion-dollar capital investment.
“Only about 20-30% have a decent financial plan and can run their financial management at the level required of a business with that capital investment. That’s a problem we want to fix.
“Imagine if we can improve profitability by 5-10% by doing that; that’s a big lift, particularly for a country like New Zealand.”
Figured is the farming add-on for Xero, which provides online accounting systems for small businesses. Essentially, it makes Xero work for farmers by providing farming financial management tools such as budgeting, forecasting and scenarios, and combining this with production data.
Customers represent about 50/50 dairy and sheep/beef in NZ, and Figured is moving into cropping with its business in the US and Australia. In 2015 they started their operation in Australia and now have at least 1200 farms on board.
The dairy downturn has prompted more farmers to look at their financial management systems. With Figured, if Fonterra releases a new milk price the farmer can log in and get a re-forecast cash profit position in a matter of moments.
The company grew 500% last year, admittedly off a small base. But Dodds says that is the sort of growth the industry also needs to see in the next year or two.
Figured has always used Amazon Web Services (AWS) for all its cloud-based services. It chose AWS because it is the leader in cloud services and because of what they can do and the time they can do it in.
An important aspect of the cloud is they can integrate it in one place and it works for everybody, Dodds says.
“For farmers to have better financial plans, they need better access to the people who can help them -- accountants and agri-bankers particularly,” he explains.
Farmers traditionally have – in their top drawer -- a budget they prepared with the bank, another budget in their head, and the accountant has something different and the data is often not up to date.
“About 60% of farmers only ever see their financial results probably six months after balance date.” So, the annual report comes 18 months after onfarm operation decisions.
Meanwhile, they may have applied to a bank for credit or similar and someone hastily did a budget on a spreadsheet.
“They are all on different systems: there’s an onfarm system, there’s one the banks have and the one the accountants have.”
Instead, with Figured, “by being in the cloud they are all working on the same system. When they ring their accountant, they are seeing what the farmer is seeing, the bank is seeing what they are seeing – they are all working off ‘one sheet of paper’ and although that sounds simple, in business terms that is a breakthrough.
“In NZ we’re getting a lot of support from agri-banks, saying ‘if you’ve got this farming financial planning tool, why don’t we use it and have that as part of our credit submission?’
“If they feed information into their credit scoring systems they can turn around credit applications much more easily.
“That got the attention of US banks, so we’re talking to some of the largest agri banks in the world. We’re not able to make an announcement yet but hope to soon.
“We’re pretty excited about what it offers a small NZ company. It will be good for us and for the country.”
Working with AWS, Dodds says, gives far greater ability to use technology to solve problems in financial management. Working with its massive global resources also lowers the costs of trying new things.
“There is ability using Amazon to take existing data and create new insights for farmers based on the data that already exists,” he says.
“We’ve done a proof of concept using Amazon machine learning to create a budget just by asking a few simple questions, and using the data in Figured to create a budget as a starting point.
“That has been a huge barrier for farmers – being given a rounded budget.”
Dodds says at Fieldays last year they launched the product they wanted to take further after having a prototype in the market the previous year. Since then they have added about 1800 incremental product releases.
