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Get the Most out of Meetings with your Ag Lender

Date: 
Author: 
Joel Larson
Educational Opportunities: 
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Home > Education & Events > November 2019 > Get the Most out of Meetings with your Ag Lender
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How often are you meeting with your trusted Ag lending partner? When you approach these meetings how do you feel about it?  Is it a meeting you look forward to or is it something that fills you with anxiety?  If it isn’t something you enjoy, try looking at it as a way to update your lender on your operation and “tell your story.”
 
An effective and productive discussion begins with presenting a good set of records from your operation.  You will want to use this information to show where you are and help determine where you want your operation to go.  The minimum financial and production records you should prepare for this meeting include:

1.  Updated Financial Statement
Taking the time to complete a financial statement prior to the meeting saves a significant amount of time vs. having to complete it with your lender where you might forget something.
  • Make sure you have verified its accuracy, including all cash balances, inventories – priced and not priced – and accounts receivables. 
  • Include detailed machinery, vehicle, buildings, land and investment assets.   It may be a good idea to review your depreciation schedule to make sure you haven’t missed anything.
  • A complete listing of all your liabilities, including accounts payables and current loan balances with interest rate, payment amount, and due date. Consider providing an estimate of expected income tax payments to provide a more holistic picture.
  • Assess your change of net worth and working capital position compared to your previous financial statement.
2.  Year to date income & expense information
  • Accrual is preferred, but cash is acceptable if you also provide a previous year-end financial statement.
  • Include capital purchases made in the current year.
  • Include non-farm income and family living expense.
  • If your lender has not already received it, be prepared to provide previous year’s complete tax return including depreciation schedule.
  • Do you have a listing of expected income & expenses for the remainder of the year?
3.  Production Information
  • Production history/crop insurance records.
  • Inventories priced & unpriced.
  • Current marketing plan including cash & futures or options contracts.
  • Include future years contracts.
4.  Cost of Production Information
  • On a per acre or per bushel basis.  Many producers present a margin manager type of analysis. If this is something you are interested, check out the free Grain Margin Manager tool available on Compeer.com
  • If you know your break even, are you marketing from that information?
  • Market facilitation expected payments
5.  Cash flow Projections
  • Monthly cash flow plan for the coming year.  Some producers find that FINPACK (Finflo) does a nice job laying out a projection and marketing plan.
  • Actual to budgeted comparisons for the current or previous year. 
  • If you have a major expansion in mind, do you have a structured business plan?
6.  Risk Management Strategy
  • How do you deal with risk in your farm operation? 
  • Do you have adequate levels of crop insurance, property & casualty, and life insurance?
7. Recap
  • You may include a personal recap of how the year has gone, including major weather and production events that impacted your operation.
With the current challenges facing the agriculture industry, making good use of the time you have with your trusted financial partner is extremely important. Having open communication with them will allow you to face any potential problems head-on and be proactive in finding solutions.

Use these meetings to your advantage. By making good use of your time by being prepared, your trusted ag lending partner will be better equipped to serve you because they will understand the whole picture. By following these steps, hopefully the meetings with your ag lender will become something that you look forward to, and can be a productive use of your time.
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