5 Steps to Financial Success for Cannabis Growers and Processors 

Maintaining a financially healthy business by understanding cash flow, generating revenue forecasts, and streamlining AR/AP is vital to the success of your cannabis operations.

Sara Silver

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    Maintaining a financially healthy business by understanding cash flow, generating revenue forecasts, and streamlining AR/AP is vital to the success of your cannabis operations. And when cannabis growers and processors begin to expand, it becomes even more crucial to have visibility into specific KPIs to protect the bottom line.  

    In this blog, we outline the five steps to financial success for cannabis growers and processors. We also present how you can leverage SilverLeaf—a complete cannabis business management solution, running on Microsoft Dynamics 365 Business Central—enabling growers to ditch using inefficient spreadsheets, speed up the process of generating cash flow metrics and accelerate accounting processes.  

    The better you keep your internal teams informed, the more profitable your business becomes.  

    The 5 Steps to Financial Success 

    Analyze Activity by Dimension—The Dimensions capability built into Dynamics 365 Business Central allows you to assign attributes and values to categorize entries in your ERP system. They provide a way to segment the general ledger and other financial reports without having a cumbersome chart of accounts that create a lot of clutter.  

    You can quickly add and remove Dimensions as you determine the types of reports your business needs to run. You may also run financial reports using any combination of Dimension filters. Examples of common Dimensions used by cannabis businesses include department, product line, product components, brand, customer type, customer groups, region, state, and salesperson. The financial team can produce income statements, for example, using any combination of these and other Dimensions. 

    Within a chart of accounts, accounting assigns default Dimensions to customers and items so that each time a customer purchases an item, or when an item is purchased, the data automatically flows into any pertinent reports. You can also run reports to see which products a customer group or specific customers have purchased. Another handy report enabled by Dimensions is a view of the marketing costs associated with each item when you run a campaign to promote a particular brand or product line. 

    Manage Inter-Company Activity—many cannabis companies set up several legal entities, particularly if they operate in multiple states. (Velosio has some cannabis clients with between 75 and 100 legal entities). Each entity may have different owners and a different corporate structure. But the same people may be involved in managing all the entities or handling accounting processes. If they need to use a different application instance for each entity, it becomes difficult to work efficiently.  

    With SilverLeaf, you can create (in one single system) as many unique financial entities as required by your corporate structure. You also set security rules for each entity to limit who has access to each entity and what each user can do within the ERP system of each entity.  

    In addition to reducing administrative overhead, the ability to manage inter-company activity is helpful for entities that have different processes—such as cultivation, processing, wholesaling, and retailing. You can set up buying and selling relationships among the entities. And if you operate in different states, you will appreciate the ability to implement Metrc tracking where required while submitting reports for states that don’t have tracking requirements. 

    As you run financial reports on individual entities with the SilverLeaf Company Central view, it’s easy to consolidate by any combination or by the entire company. Within this view, you see all the entities at a glance for things such as posting date ranges and users. You can also sync general ledger account Dimensions and vendors shared by multiple entities.  

    Know your Costs—tracking and identifying costs manually with spreadsheets and multiple applications takes a long time and is error-prone. With SilverLeaf, all costs are saved within one system, and you have the option to select your costing method—standard, average, LIFO, or FIFO. (If you’re not sure which method to use, we will help you decide!) 

    Many of our cannabis customers appreciate the SilverLeaf Value Entries tool, which shows adjustments made to any items, so you better understand the cost of finished goods. SilverLeaf makes it easy to assign overhead costs to each item by tracking the material, labor, and machinery costs of each work center. The system also rolls up item costs on finished costs. From there, you can assign landed costs, such as a freight bill that pertains to multiple items—based on the weight or volume of each item.  

    Maintain Data Integrity—The keys to maintaining data integrity are to set policies as to who can do what, and then generate audit trails that prove your teams follow the policies. The policies you implement in SilverLeaf include user security—what each person can do based on their role. This is assigned across multiple entities and specifies the time periods during which users post to avoid activity posted to previous periods. 

    The audit trail allows you to see who has changed any records and when, such as a customer’s credit limit. You can also set up and audit workflows for credit limit approvals, bills of material validation, packaging verification, and the allowance of orders from customers over their credit limit. 

    Scale Operations—Many cannabis companies start out using QuickBooks, spreadsheets, or a seed-to-sale solution designed for the cannabis industry that does not support the extensive accounting requirements that a full ERP solution offers. These approaches make it difficult to scale as your company grows. 

    With SilverLeaf, you quickly add new entities as you expand into other states, and no matter how many entities, you generate financial reports fast to reduce your month-end closing process. Most importantly, you achieve the coveted “single source of the truth” in one system that eliminates conflicting data in spreadsheets—where it’s difficult to maintain different versions of the “truth” and validate accuracy.  

    With that single source in SilverLeaf, you always know exactly what’s going on in real time. 

    A “Green Thumb” for the Cannabis Industry  

    SilverLeaf is the “Green Thumb” of cloud ERP—enhancing the base Dynamics 365 Business Central ERP platform with embedded functions geared specifically to cannabis businesses. Because the system runs on the Microsoft tech stack, you also benefit from integrations with Power BI (for enhanced dashboard reporting) and Office applications.  

    With collaborative tools such as Outlook and Teams, your staff works in those applications and accesses data in SilverLeaf without switching over. They also port data to Excel if they are more comfortable manipulating spreadsheets. Any changes they make are automatically moved back and validated, and SilverLeaf then updates the single source of truth repository.  

    Check out our webinar, Mastering Cannabis Operations: Five Steps to Financial Success for a deeper dive into the capabilities of SilverLeaf and to see the software in action.  

    And, if you’re ready to transform your cannabis operations with a complete cannabis ERP, contact us today.  




    Sara Silver

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