Re-purpose the data you are creating for your Accountant and ATO
Sometimes, we can get trapped into collecting information solely for the benefit of the ATO. Whilst this solves a compliance problem, we should all be aware now in this data driven world of ours, that there is so much more that you can derive from the data when you have your systems set up to do so. Farm managers across Australia are looking to being more efficient by keeping themselves better informed, understanding their cost of production and finding cost savings in their operations.
In the 1990’s, AGDATA Australia partnered with the NSW Agriculture and Fisheries in relation to the Farm Cheque Program which had a solid foundation of Comparative Analysis, now commonly referred to as benchmarking. As with most changes of government a change of direction occurred that left the program unfunded and eventually AGDATA was able to progress the project unfettered by the whims of government (full commercialisation).
What evolved and continues to develop from this project many will know as Phoenix Financial Pro. Phoenix Financial Pro provides for Season based enterprise comparison reports using standardised report formatting. The Enterprise Report calculates Gross Margin using a production basis rather than strict sales achieved and dollars spent.
Agriculture specific enterprise types for farm management are catered for with standardised report formats and production related data. Generic enterprises allow for flexibility in transaction recording to handle the diversity of farming operations.
The farm manager can allocate transactions to generic enterprise types to have those costs spread across many specific enterprises according to the size of those enterprises.
Costs to inventory can also be allocated, so later transactions can record how that inventory is used for specific enterprises.
Costs and incomes for an enterprise are allocated to a management season. That season may or may not correspond directly to the actual date of the transaction. This management season approach allows for a transaction to be recorded against one-time frame for compliance reporting requirements, and a different time frame for enterprise management reporting.
Common Mapping Codes
Phoenix Financial Pro includes an extensive list of codes that can be associated with the categories and sub categories specific to a set of books. This allows the farm manager greater flexibility in setting up the ledger to suit their own reporting and compliance needs, while allowing the standardised reports to be generated for comparisons.
Livestock and Commodity Values
The gross margin for a management enterprise will often be affected by a change in the value of commodities or livestock on hand even though there may be no actual financial transaction to record. This may be because of physical production from the enterprise that has yet to be sold, production created in one enterprise, but consumed in another or just the items in stock changing value because of market forces, growth or spoilage. Phoenix Financial Pro allows for this by allocating physical assets (accounts) to the enterprise that they belong to.
Physical enterprise data
To present the enterprise data in relation to the size and scope of the enterprise, Phoenix Financial Pro allows the farm manager to collect data specific to the enterprise. This data can vary from season to season. Each enterprise can also have a nominal seasonal period. The farm manager can specify a nominal season start date for each farm management enterprise, and specific enterprise data for each annual season for that enterprise.
The rigour of taxation compliance-based accounting requires that every cent that passes through the accounts must be allocated to a ledger code and accounted for into the reports. Farm production requires much more flexibility in the actual operations of the farm. To calculate the real gross margin of a farming enterprise, and meet the rigour of compliance accounting, using Phoenix Financial Pro you can meet both requirements.
Once you have setup Farm Management enterprises, daily management involves very little extra effort beyond simply using the program for compliance accounting.