Introduction
This is the introduction to the MISTRO Finance Manual
Welcome to Mistro Finance! Mistro Finance is an easy-to-use accounting, benchmarking and budgeting system, specially designed for use by dairyfarmers. It’s a system that you can use in several ways on your farm to help with a range of tasks from basic bookkeeping and cheque writing through to feed planning and cash budgeting.
Here are just some of the tasks that Mistro Finance can do for you. It can:
· Simplify your annual visit to the accountant and reduce his or her charges. The accountant will no longer have to spend time sorting through a box of milk statements, cheque buts, invoices and receipts etc.;
· Replace your current cash book, and reduce all the frustration and much of the time involved in entering and balancing transactions each month;
· Prepare your monthly cheques for you and, at the same time, transfer information from each cheque to your new bookkeeping system;
· Prepare a range of reports for handing to the accountant at the end of each year - or during the year, as you seek to manage your taxation responsibilities;
· Prepare a range of reports for your use, in managing your farm;
· Prepare a cash budget for you at the start of each year, so that you can see the level of income you are likely to earn in the year ahead, and test one or two ideas you might have for improving it;
· Prepare a feed plan for your farm at the start of each year so that you can work out how much feed you’re going to have to buy and when;
· Make comparisons at any time, between the current year’s costs and returns and those of your budget or those of previous years.
· Prepare your Business Activity Statement and assist in the management of GST obligations.
· Calculate business performance benchmarks.
The most important thing that Mistro Finance will do for you is record all your transactions throughout the year and the amount of GST that is paid or received. Transactions are the payments you receive (from the milk company and stock agents etc), the payments you make (to farmers’ stores, shops and contractors etc.), and any transfers of funds from one part of your business to another.
Towards the end of each month, Mistro Finance will require you to use your computer to type in the key details of each of the transactions made in your business during the month. This is a fairly simple task - even for people not familiar with computers. It is certainly much simpler than filling in a cashbook and making it balance.
What you’ll need to have in front of you as you complete this task are:
The month’s invoices that you have received;
Your cheque book;
Your latest credit card statement and associated Tax invoices;
Your bank pay-in book;
Stock agent notices for the sale of stock or other produce;
The monthly milk statement;
Your latest bank statements; and
Any other documents describing recent transactions.
For the first few months you may also need to have in front of you a list of your transaction categories. Categories are the various groupings (of expenditure and income) into which you place each transaction, so that you can develop useful reports on your business as the year progresses and at the year’s end. Categories are similar to columns in a cashbook. Examples of categories are MILK SALES, STOCK SALES, GRAIN (purchases), FERTIISER etc.
While some categories may be considered to stand alone, most fall into distinct groupings under larger Parent Categories. For example, the categories MILK SALES and STOCK SALES could be considered to be sub categories of a larger category (Parent Category) called FARM INCOME. Likewise, the categories GRAIN and HAY could be considered to be sub categories of SUPPLEMENT, which in turn could be a sub category of FARM EXPENSES.
Mistro Finance contains a list of standard categories, which should satisfy the farm management and accounting requirements of most dairyfarm businesses. You will be able to view and print this list once you have installed the programme and begin to set up its components (see Section 3.3 Setting up Categories).
Mistro Finance’s built-in list of categories is recommended for your use. You can, of course, easily change or add to the list if you wish, or even delete it and replace it with a list of categories of your own. However, if at any stage you want to make comparisons between the performance of your farm and those of other farms or groups of farms, you should use, wherever possible, the standard categories. Each category can be customised for GST processing, so that GST will be calculated for you automatically in most cases.
Mistro Finance also contains a second list of the categories (Accountant Groups), for use by you at the end of the year when preparing information for your accountant. This is generally a shorter list and consists of the category names commonly used by accountants. It too can be altered to suit the particular needs of your accountant.
Once the month’s transactions are recorded, your main task is over. Mistro Finance can then sort the transactions in any way in which you and or your accountant may require, in just a few seconds, and provide a useful report on the results. It will also make sure everything balances.
Reports can be prepared as often as you like, in numerous formats, to contain or exclude whatever information you require. And they can be presented on the screen of your computer or as a printed document.
As you enter transactions, Mistro Finance will also develop for you a list of your traders. Traders are all the companies and people with whom you do business - the companies and people from whom you buy and to whom you sell.
At any time you choose, Mistro Finance will produce for you a list of all your traders, in alphabetical order. The list can also include their addresses and telephone numbers, if you take the time to enter this information at some stage. Mistro Finance will give you the opportunity to do this (enter addresses etc.) each time you enter a transaction with a new trader.
To regularly check the accuracy of your bookkeeping, Mistro Finance allows you to reconcile your entries once a month. Reconciling is the process that matches all transactions in your books with those that appear on your bank statements. It then points to any discrepancies (either in your books or in the bank statement) in need of correction.
At the end of each quarter, Mistro Finance can generate a special report that looks exactly like the Business Activity Statement required by the tax office. It calculates many of the entries that are required, although these can be modified manually if necessary. In most cases, all you will need to do is copy the values from the printed report to the original document provided by the tax office, and your GST obligations will be complete.
While the keeping of books (involving past transactions) is Mistro Finance’s most basic function, another function that can be of real assistance to you as farm manager is budgeting. Budgeting [1] involves the prediction of future costs and expenses, so that plans can be made and adjusted to get the best outcome before expenses are actually incurred.
Mistro Finance will help you prepare your cash budget for each season, before the season actually begins, and will then automatically tell you how you are progressing towards your budgeted net income (and other targets) as the season proceeds.
Furthermore, Mistro Finance will help you plan your feed budget for the months or year ahead. A Feed Budget is a prediction of the types and quantities of feed (pasture as well as supplements) likely to be required from month to month to feed all stock on the farm and meet anticipated levels of milk production.
Once your feed budget is prepared, Mistro Finance will transfer the information on requirements for “purchased feed” to the cash budget for the same period and thus further assist you with the preparation of your cash budget.
All budgets prepared by Mistro Finance are presented on spreadsheets. These are like large tables that cover whole pages. Each spreadsheet is divided up into several columns (one for each month and several for totals) and numerous rows (for categories, monthly totals and various calculated measures of performance). Rows are made up of lots of small cells (one cell per column) and it is in these areas that all information is stored. Mistro Finance will allow you to open most cells one at a time and enter new or alter existing information.
The aim of Mistro Finance is to provide you with a simple means of processing your accounting information and allowing it to be put to good use in budgeting, planning and managing your farm.
