Red Wing Software offers tips for deciding whether an agricultural operation is ready to implement management accounting.
Management Accounting is a popular buzzword in today’s world of agriculture. When used properly, management accounting enables owners and managers to match costs to revenue for a more accurate picture of profitability. Cost center reports allow users to measure the impact of strategic decisions when managing costs for a particular responsibility center, and profit center reports match those costs against revenue generated.
“Management accounting helps owners and managers efficiently manage and improve their profitability,” said Ken Hilton, Red Wing Software President. “Understanding and properly allocating all costs is the key to better decision making and will give managers the analysis needed to make strategic decisions that impact their financial performance.”
While the benefits are clear, not all agricultural operations are ready to begin using management accounting. Here are some tips to help with the decision.
Implementing management accounting without understanding or paying consistent attention to it will not provide optimal results. Current staff should be considered: who would manage the setup and processes associated with management accounting? Having a designated business manager or a trusted consultant to help with the process is crucial to success.
Good accounting practices are always important, and even more so when management accounting is being used. Consider whether the operation is currently collecting, recording and reporting financial information from several divisions or departments. If so, this could be a sign that they are ready to take the next step to management accounting.
If an agricultural operation wants to reap the benefits of management accounting but does not know where to begin, they can start by educating themselves and taking it one step at a time. The Farm Financial Standards Council offers excellent and up-to-date information for farmers interested in learning more. Visit their web site to learn more or to purchase and download their publication: “Management Accounting Guidelines for Agricultural Producers”.
Red Wing Software, Inc., along with its nationwide network of business partners, offers industry-leading service, as well as training, on-site installation and implementation of the software. Their vision is “Creating the best management software experience”.
Red Wing Software, Inc. develops, integrates and supports the accounting and financial management needs of small- to mid-sized businesses, agribusinesses, Non profits, and municipals across North America. For more information on Red Wing Software products, including CenterPoint Accounting, CenterPoint Accounting for Agriculture, CenterPoint Fund Accounting, CenterPoint Payroll, call 1-800-732-9464 or visit www.redwingsoftware.com.