As long summer days begin to turn into chilly mornings and earlier sunsets, harvest season is right around the corner. You may have already started getting ready for the season through equipment inspections and maintenance, preparing your grain storage, or making labor and trucking arrangements. However, your farm’s financial preparation is just as important when it comes to this busy time of year. Here’s how to make sure your operation is financially ready for the season ahead.

Review Operating Lines of Credit

Harvest season expenses like fuel and supplies, seasonal labor, trucking and transportation, equipment and land payments, and other operational expenses can fluctuate and may be more than you were anticipating earlier in the season.

You should determine ahead of time whether you have enough cash flow available to cover these expenses, or if you should start a conversation with your lender about increasing your operating line of credit.

An operating loan with GreenStone can help you manage your cash flow through flexible terms, competitive interest rates, and a variety of repayment options. Your financial services officer can help you determine if increasing your operating line of credit is the right move for your operation this harvest season.

Revisit Your Marketing Plan

If the last time you reviewed your marketing strategy was at the beginning of the year, it’s time to revisit it again before harvest season ramps up. Updating financial projections before harvest allows you to determine whether marketing targets still align with current profitability goals.

Ask yourself the following questions:

• What fertilizer or input costs have increased throughout the year?
• Has my break-even price changed?
• Do I need to adjust my marketing targets?
• Am I still on budget?

If changes to expenses have raised your break-even costs, you may need to consider adjusting your marketing strategy. If it looks like you may encounter a loss this season, early communication with your lender is key.

Whether the issue involves lower-than-expected yields, delayed grain sales or reduced profitability, discussing concerns with lenders early provides more flexibility than waiting until payments become overdue. The earlier you communicate with your lender, the more solutions they will be able to offer you.

Don’t Wait Until December for Tax Planning

Don’t wait until the last month of the year to try to organize a year’s worth of financial records. Instead of creating unnecessary stress for yourself and limiting strategic tax planning opportunities, getting your financial records in order ahead of time will help you go into year-end with peace of mind.

Staying as current as possible on your bookkeeping will give you a better understanding of your tax position and will allow you more time to evaluate your options such as prepaid expenses, equipment purchases, and other tax management strategies. That’s where working with an experienced tax accountant comes in. GreenStone offers a dedicated team of tax and accounting specialists with full accounting services, tax planning and preparation, farm record keeping, and payroll management to help you minimize your liabilities and maximize your savings.

Improve Decision-Making by Planning Ahead

In addition to updating your bookwork for the current year, getting your projections ready for the next year will help you get a head start on the upcoming seasons. Now is the time to look ahead to what input costs will be in the spring, and if possible, purchasing those inputs ahead of time.

Are you planning on upgrading any of your equipment next year, or improving your facilities? If so, share your plans with your lender so they can work with you on a solution that will best fit your needs. If you’re not sure of your financial position or if you can afford to make a purchase such as land or equipment next year, your lender can work with you to see where you are at!

Work with a Lender Who Understands Your Operation

By preparing both operationally and financially ahead of harvest, producers can reduce risk, improve decision-making and position their businesses for a stronger finish to the year. When you work with a lender who speaks your language and understands the agriculture industry, you’re setting your operation up for success.

Contact your local team of lending experts at your nearest GreenStone branch to learn more.

 

This article was originally published in Michigan Farm News.