Forms of Payment and Record Keeping
There is no single paradigm for a local food system: there is no template to follow, because every institution must adapt to the conditions of their institution and to the unique circumstances of their surrounding region. The economics of a local food system are somewhat similar to that of a conventional food system; in the end, all spending must be accounted for and the producers must be paid. Yet a local food system requires meticulous record keeping and steady organization, because a local system involves significantly more individual producers to keep track of. Flexibility and adaptability are essential. Whoever is in charge of the institution’s local food accounting must understand the nuances of the market and must have an organized system of record keeping, such as Excel spreadsheets or a database. In our local food system, the majority of our expenditures are accounted for by John Marsh.
An integral part of any food system, local or conventional, involves obtaining the food and then paying the suppliers for it. There are two payment systems that Kenyon uses regularly: an accounts payable system, and petty cash. Some of our producers prefer to be paid in cash, while others prefer to send invoices to AVI’s accounting department. It all depends on the producer’s individual preference and on the nature of the business. We adapt to our producer’s wants and needs and must be flexible to establish a payment plan that works well for them.
The accounts payable system is most typical when dealing with large-scale and industrial vendors. We use an accounts payable system when dealing with those producers from whom we either purchase most frequently or in the largest quantities, or for those who already have a system in place to work with invoices. Of the total money that Kenyon spends on local food, Marsh estimates that 89% is allocated through accounts payable transactions. When we buy food from a vendor who uses accounts payable, we give invoices to our clerk, who ensures their payment within 30 days. For many of our producers, it’s easier to get a check from the company than a large wad of cash. All of our industrial producers work on the accounts payable system, and some of our local suppliers do too. We use an accounts payable system in working with both Jonathan Yoder, one of our largest local suppliers of produce and our local apple producer Glen Hill Orchards, among others.
The petty cash transaction is unique to the economics of a local food system. We find that many of our individual suppliers, particularly the Amish, prefer receiving direct cash payments. A petty cash system is most implemented for our smaller or less frequent purchases, or if our vendors simply prefer to be paid in cash. Petty cash is the dominant method of payment for most of our suppliers; three-fourths of all of Kenyon’s vendors are on petty cash accounts. Petty cash is sent from AVI headquarters multiple times a week. Each day our clerk gives Marsh up to $2,000 in cash to purchase local items from various vendors. Once Marsh has purchased that day’s food, he gives the remaining cash back to our clerk. He collects all of the receipts acquired from his purchases throughout the day and assures that all of the money he spent is accounted for.
Petty cash transactions entail a great deal of bookkeeping and organization and a change from traditional protocol. The sheer magnitude of the cash that we have on hand at any given time, coupled with the quantity of individual producers that we deal with using petty cash, can at times be overwhelming. At one point during the summer, our clerk handed Marsh $275 entirely in one-dollar bills. We often receive receipts written out on scratch paper. The key to mastering the petty cash system is flexibility—we must improvise and work with what we’re given. One of the major challenges of our petty cash system is that corporate AVI isn’t always on time in getting us the cash. If the money has yet to arrive or if all of the cash has been used up, Marsh will often pay out of his pocket or with his credit card and then settle up later. Yet because of the strong relationships we have formed with our individual producers, if we run out cash of one week, they trust that we’ll pay them back the following week. For a petty cash system to truly work, a shift in the conventional paradigm for institutional accounting is essential.
Spreadsheets play a major role in documenting the economics behind Kenyon’s local food system and in justifying Kenyon’s local food expenditures. Just like the clerical position of any institutional food system, Marsh works with various spreadsheets on a regular basis in order to keep track of all of our food purchases and to maintain general organization. Our spreadsheets keep track of all our food expenditures for each week. We include purchases from all our local vendors as well as from industrial distributors like Sysco, Dairymens, and Lanning’s. Marsh marks every local source as such, which allows him to keep track of the program’s growth over time.
Marsh also utilizes the spreadsheets to maximize our local food expenditures in the future. In addition to marking local foods, he identifies items such as beans or pasta that could potentially be sourced from local producers as potential local. We also make an effort to distinguish local from local industrial products. These distinctions help us calculate how much money we spend on local items and how much more money we could spend locally in the future if we maximized our local food expenditures. These spreadsheets provide us with the statistics that demonstrate the viability of purchasing local to both the college administration and to the leaders of corporate AVI. An organized system like this is the best way to make a local food program sustainable, because it sets a precedent that can be continued and improved upon. It also keeps track of expenditures so that the food service knows where it saves and where it loses money. Especially for a new or developing program, careful records are the best way to demonstrate to the college and to the food service that buying local is a viable and even profitable option.