As an ag lender, I’ve had the honor of partnering with hardworking farmers for the last 23 years, signing off on farm loans and providing consultative financial advice to keep our nation’s farms strong. It’s from this vantage point that I encourage farmers to maximize their financial relationships by digging deeper with their bankers and accountants.
You’ll accelerate your loan process and put your accountant miles ahead by scheduling periodic, three-way conversations to discuss goals. Your banker and accountant can help you develop a personalized roadmap to meet your objectives, especially when you come with numbers in hand. Here’s what you’ll need to make the most of those conversations:
A thought-out budget: Your banker and accountant will be best equipped to help you if you’ve thought through your budget in advance of a meeting. Budgets eliminate guesswork by helping you identify your most profitable choices and curb losses, providing a firm foundation to stand on when it comes to future planning.
Key numbers: Be prepared to talk specifics when it comes to your breakeven and/or profit positions, crop sales, fixed and variable costs, purchasing incentives and rebates on inputs like seed, chemical and fertilizer. Any labor costs – including employees (seasonal and full-time) and family expenses – are also a good idea to have on hand. And while you’re updating your banker and accountant on these essential numbers, don’t miss the opportunity to discuss larger financial trends that might affect your farm.
Relevant documents: Records of yield history and acres planted are key to obtain the personalized financial advice you’re after. Not to mention, these documents are also important when working with crop insurance and the Farm Service Agency.
Next, be sure to bring contracts for crop rental agreements, terms and cash/crop-share. Crop inventory documents should also cover any plans for sales, stored inventory, booking contracts and delivery points.
Equipment information: Any equipment list you have that reflects recent purchases, trades and sales would be of interest for your banker and accountant. Equipment leases are also helpful, as these reveal a lot about depreciation and your tax implications. Be ready to discuss depreciation on your farm’s assets to put yourself ahead when it comes to financial statements and tax discussions.
Exit plan: A hallmark of responsible business ownership, a succession plan helps set up your family and farm for continued success after your retirement. These plans are a special comfort for families and safeguard for farms that suffer the unexpected loss of their business leader, whether temporarily through an accident or illness or permanently through death. An exit plan should be discussed years before retirement, so it’s never too soon to start.
Chad Pittillo is Simmons Bank’s lending manager for Pine Bluff, Ark.