The majority of my clients have already made the move to computerize their operations. However, the infamous Y2K computer bug is causing a number of clients to review their present accounting programs. A lot of the programs, as well as a number of computers, will need to be upgraded to avoid surprises in the year 2000.

When making decisions about computerized accounting systems, use the following tips:

1. Don't be overly cheap.

If you've already shopped for a program, you've probably experienced sticker shock. Most programs range in price from $250 to $2,800. However, I recommend using a commercially-tested program rather than trying to develop your own spreadsheet. With homemade spreadsheet programs, adding accounts can be difficult and you can easily outgrow the program you have designed. And, you greatly increase your chance of making mistakes.

2. Ask for input.

As you select a new program, don't forget about your tax preparer, lender and other advisers who will be using your records. Ask for their input before making a final decision. For example, one particular software package creates a number of problems in our office. If a client uses this package, his bill from our accounting firm will be at least $150 higher because it requires more of my time to detect problems in the program.

3. Consider non-agricultural programs.

Don't look at just the mainline agriculture programs but look at some "non-agricultural" programs, such as Quicken and QuickBooks. You'll find QuickBooks is one of the most utilized programs in agriculture - even though it's not agriculture-specific.

QuickBooks works well for grain operations because it tracks the quantities sold as well as dollars. This becomes a bit tricky for dairy producers who want to track the number of animals as well as hundredweights of milk produced. However, some specialized programs can be added that work with QuickBooks to add another quantity. I have set up an actual account within QuickBooks, called "head," to input animals sold and purchased. Since everyone knows that accounting entries must balance, I have our clients set up an account called "dump" to serve as the offsetting entry.

4. Learn how to use the system.

If you don't currently have a good record system that you understand, computerizing your records may not improve your situation. The one thing I have learned about computers is that I can now foul things up much faster than I could when working by hand!! Take the time to sit down with your accountant (or the people who sold you the program) to develop procedures that ensure you have accurate records.

One of my favorite stories involves an operator who, after having us prepare monthly records for him, purchased a new computer system. He didn't feel it was necessary to let us help him set up the accounting program. When he proudly brought in his computer printout at the end of the year for my review, the first thing that struck me was that he was overdrawn by more than $50,000. After a brief discussion, we determined that even though the client was reconciling his checking account each month, he was not reconciling the bank balance with the balance on the computer system. The client had missed some deposits and had entered some checks twice. After we worked through all of the errors, I was able to help him design safeguards to make sure his record system
was accurate.

5. Look before you leap.

When shopping for software, it's a good idea to know what is available. My newsletter, Ag Executive, offers a listing of available programs. This listing has the major features of each package, as well as the phone number and mailing address of each company. We have also reviewed some of the packages for accuracy and other features.

To receive a copy, send a self-addressed business-size envelope with 79 cents postage to Darrell Dunteman, 115 East Twyman, Bushnell, Ill. 61422.

Darrell Dunteman, AAC, is an Accredited Agricultural Consultant and accountant with offices in Bushnell, Ill.