Dairy farmers will be able to extract greater value from the accounting process and make better informed business decisions with the launch of a new Standard Chart of Accounts for the dairy industry.
Developed by Dairy Australia in response to requests from farmers and service providers, the Standard Chart of Accounts will also drive consistency in how the dairy industry reports and discusses farm business performance.
Dairy Australia’s Farm Business Capability Program manager Neil Lane said the Standard Chart of Accounts enabled dairy farmers to manage the flow of financial information through their business and establish an efficient system for paying bills and complying with Australian tax regulations.
“While ensuring tax compliance, the Standard Chart of Accounts can also be converted to management accounts with relative ease to enable farmers to make informed decisions in their businesses,” Mr Lane said.
“The management accounts enable farmers to complete end-of-year and comparative analysis on their business by ensuring a consistent approach to the allocation of financial information and financial terminology used within the dairy industry.
“It will also enable conversion to a regular cash flow and could be utilised for budgeting within businesses.”
The new Standard Chart of Accounts is based on previous work including the Financial Records Guide for Dairy Farms from Murray Dairy and the Dairy Farm Monitor Project from DEDJTR.
The launch of DairyBase, the industry’s new online farm business management tool, also prompted a review of farm business management terminology.
Mr Lane said the Standard Chart of Accounts had not been established as a rigid tool to prescribe the exact set-up of farm accounts on all dairy farms, but a guide for farmers to keep financial records.
If used correctly, it would give consistency in record keeping, he said.
As well as providing farmers with data to make informed financial and farm management decisions, the Standard Chart of Accounts will also allow farmers to effectively compare their business with others.
“The use of comparative analysis by some sectors of the dairy industry is more accurate if each business doing the comparisons has put their income and expenses in the same category in their financial recording system,” Mr Lane said.